Actor David Hasselhoff's career took off in the early 1980s when he was cast in the lead role of TV show Knight Rider. But it was the series Baywatch that helped him become a household name in the US. Following Baywatch, however, Hasselhoff's star began to fade, yet only in the US. His music career proved wildly popular overseas. Not only did some of his songs top the charts in Austria and Germany, but to this day he remains hugely popular in Germany — 40Ys later. Much like Hasselhoff found a strong source of revenue for himself by going abroad, many small- and medium-sized businesses (SMBs) are also looking to international expansion to grow their organizations. A Broad NetDigital sales have eliminated many of the restrictions that once kept SMBs from expanding businesses beyond their immediate geographic regions, so many organizations have set their sights abroad. According to data from FedEx Corp.’s Small Business Trade Index, 86% of SMBs credit global trade for their business growth, aided largely by ecommerce platforms that have helped simplify international expansion. Despite macroeconomic challenges, 44% of businesses are planning international expansion in 2024, according to research from Outleap. As beneficial as ecommerce platforms have been, however, the hefty fees attached to their use are a major concern for retailers. According to FedEx’s findings, 75% of businesses find the expenses involved with using international ecommerce consultants a constraint. Merely relying on an ecommerce platform does not necessarily provide ample support for smaller businesses, either. SMBs may not be aware of the additional challenges and complications involved with international expansion, such as foreign tax implications and regulations (depending on the line of business), or even just the additional cost and burden of international shipping and customs regulations. The intricacies of international expansion create an opportunity for community financial institutions (CFIs) to market their expertise in these areas to their SMBs, as well as potentially tap new foreign transaction fee revenues. An Opportunity SetNot all businesses operating outside the country, or looking to do so, are obvious. Particularly in the case of retailers, the ease of marketing goods internationally means that almost any business could have international banking needs and may be receptive to any such services your organization provides. That is particularly true when it comes to businesses owned and operated by members of younger generations, such as Millennials and Gen Z, who tend to view the world as being smaller and more interconnected than previous generations that didn’t grow up with the internet. Given such realities, CFIs should not assume that there is no need for international banking services within the communities they serve and should actively market their expertise and offerings on this front to SMBs. An International Action PlanHere are a few of the things that CFIs should keep in mind when it comes to touting their international banking services:
- Be transparent about your offerings. Make sure business customers are aware of the availability of services such as international payment processing through wire transfers, foreign check clearance to reduce costs and increase fund access, and currency exchange services. Also, foreign exchange forward contracts can help your SMBs lock in exchange rates, making their cash flow more predictable and generating your organization additional fee income.
- Provide international expansion education. Include educational materials about some of the less obvious complications involved with international business and transactions in marketing to business customers. Highlight both the benefits and risks of operating abroad. Since SMBs may be less likely to think about factors such as how fluctuating exchange rates or different compliance rules could impact their efforts to do business in other countries, highlighting such things is a good way to demonstrate the value of your expertise.
- Emphasize cybersecurity. Given the high occurrence of online fraud, it is important to emphasize the security measures your organization has in place for international transactions to SMBs. According to data from the International Monetary Fund, financial institutions have been hit with more than 20K cyberattacks in the past two decades, resulting in roughly $12B in losses.
- Offer in-person knowledge sessions. Beyond digital marketing, such as targeted emails and online ads, CFIs should consider offering in-person seminars to highlight key aspects of international business that customers should be aware of.
- Be aware of the competition. Keep in mind the growing number of fintech offerings available to SMBs when determining pricing for products and services. Make sure that your own international banking solutions stay comparable so that the customers who use your international services do not leave in favor of a competitor.
In an increasingly global world, even the smallest businesses may have need of international banking services. As SMBs turn their attention overseas to look for new revenue sources, CFIs can benefit from such activities by actively touting their expertise and services.
