How Fintech Companies Can Benefit From Global Expansion

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Fintech was one of the industries that, as a whole, not only survived but won the Covid-19 pandemic. Driven by the world moving more and more online, Fintech companies have managed to cope with new technological and economic challenges.

Moreover, growth was not limited to national borders. It expanded globally in a volatile economic climate and reaped rich dividends by solving complex problems with unique solutions. This global expansion offers a variety of advantages, but it is not without its own challenges. Fintech companies can meet these challenges with the help of uniquely tailored partnerships to capture new markets and help build the next generation of digital financial solutions.

Related: The New Age of Fintech: Benefits, Perils and Unlimited Potential

Covid-19 transformed the future of companies and the workplace

The Covid-19 pandemic caused ripple effects affecting the global psyche towards business and the modern workplace. While professionals occasionally engaged in remote work and similar business innovations before the pandemic, global lockdowns significantly accelerated this adoption.

According to Gartner, post-Covid-19, 48% of employees are likely to work remotely for part of their work week, compared to 30% before the pandemic.

A 2022 survey by Statista could shed light on the reasons for the phenomenon. People have rediscovered the meaning of balancing work and family life and do not want to give up the flexibility they gained thanks to remote work, especially in terms of saving time and money, choosing the workplace and greater attention to their work.

Employers, on the other hand, also love remote work. They are competing to take advantage of a diversely skilled workforce by looking beyond their borders and increasingly tapping into performance workers. These modern remote professionals embody the emergence of a new mutually beneficial arrangement for both employer and employee.

Governments around the world are attracting foreign investment to recover from the devastating economic effects of the pandemic. They are relaxing the conventional processes related to business creation and global expansion, switching to online systems, simplifying applications and allowing verification documents to be submitted later.

These times of uncertainty and efforts towards recovery created the perfect storm for an already blossoming industry to take center stage: the Fintech industry.

Related: Welcome to the Fintech Era: How Digital Currency Is Transforming Payments

Fintech thrived after the pandemic with global expansion

The sudden boom in remote work prompted companies to move their operations online. The resulting increase in online transactions, the need for improved cybersecurity and digital inclusion in developing and pandemic-affected economies led to the rapid adoption of digital financial services.

The Fintech industry as a whole handled the pandemic reasonably well, and the numbers seem to bear this out. According to a study by the World Bank, on average, Fintech companies increased their number of transactions by 13% in the first half of 2020, compared to the same period in 2019. A large part of this growth came from the markets emerging and developing countries that grew the fastest. than their developed counterparts. As the world was forced to move the entire financial system online, Fintech was naturally poised to support and benefit from the transition. For example, companies around the world quickly adopted solutions like Adobe Sign when signing contractual documents online after global lockdowns made traditional ways of working impossible.

Realizing the huge potential for global expansion in terms of market share, revenue, recruiting world-class talent and diversifying investments, Fintech companies are looking to establish their presence in the Asia-Pacific, North America regions and EMEA. Now that governments are willing to reopen their borders, there are new opportunities.

However, due to pre-existing challenges such as lack of funding, reduced workforce and minimization of fixed expenses, expanding global presence may prove to be too challenging. Establishing a presence in a foreign country comes with a myriad of legal and operational challenges, including but not limited to onboarding, hiring, payroll and tax compliance.

A CFO Research survey of 166 senior finance executives revealed that managing foreign stakeholders, navigating international payrolls and dealing with long project timelines were the top concerns for companies considering global expansion . Companies can choose to set up a subsidiary in their target geography, but this is costly and time-consuming in terms of setup. Alternatively, they can choose to partner with a full-service global PEO (Professional Employer Organization) like INS Global.

Companies pursuing this option can outsource all of the administrative and legal burdens of operating in the new country to their PEO partner. This has the added benefit of speeding up onboarding, hiring, visa application and legal compliance processes from months to days.

PEO clients based in the APAC region, in particular, can find our PEO services incredibly useful in facilitating their expansion into more than 30 countries. Our PEO provides end-to-end, tailored employment solutions to over 600 clients to help them pursue international growth in over 80 countries.

Fintech represents one of the most advanced and crucial industries for socio-economic development. The global marketplace has the following major benefits for companies that manage to navigate international waters successfully:

Related: Key Opportunities to Leverage in Fintech and More

1. Attention to the unbanked

The developing nations of the world are still desperately underserved when it comes to efficient banking and financial solutions. The World Bank estimates that around 1.7 billion people remain unbanked worldwide.

Public-private partnerships to solve these problems represent a promising revenue stream for Fintech companies, especially as governments actively encourage foreign investment and seek new solutions to long-standing financial problems.

2. Capture the digital finance boom

Developing economies also offer markets that are actively looking to participate in the advancement of the Fintech industry. Collaboration with foreign entities that are already involved in creating innovative solutions can prove to be incredibly successful for Fintech companies.

Next-generation industries and technologies such as decentralized finance (DeFi) and Web3 offer even more unlimited potential for Fintech companies to seek international partners and build the future of finance together.

3. Exploring business-friendly geographies

Some countries may have laws that prevent businesses from developing and reaching their full potential. In this case, they can move operations to alternative locations that provide a more conducive business environment, while also encouraging Fintech companies to set up within their borders.

Right now, Fintech companies need to assess their short-term and long-term business goals and plan for aggressive expansion in order to take advantage of the current favorable climate created by the pandemic and its aftermath.

Exploring global expansion is not only beneficial, but almost essential in today’s hyper-competitive and globalized world economy. Fintech’s unique nature and flexibility make it an ideal candidate for international aspirations.

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