Toolkit: Trading internationally and winning with fintech

For businesses of all sectors and sizes, going international means:

• innovating products and services
• identifying new opportunities
• understanding the rules of the road when doing business in target markets
• accessing the right products and services to manage risk and finance new business cost effectively

As a business, navigating an export journey can initially be complex, not to mention time- and resource-intensive.

Depending on your needs as a business there are a wide range of support services in the public and private sector, many of them great for if you're just starting out:

• GREAT.gov.uk is your first port of call for advice on exporting, including ‘how to’ guides, finding your local DIT adviser, information on events to attend, and links to wider resources.
• The Export Support Service (ESS) is a government helpline offering practical advice about exporting to specific markets, and will route through to relevant government officials where necessary.
• UK Export Finance (UKEF) is a government-led facility offering financial products for companies to fulfil export orders where the private sector is unable to do so.
• The Institute of Export and International Trade (IOE&IT) is an independent body offering practical advice on exporting, including issues such as customs and paperwork.
• The Department for International Trade (DIT) has a very busy agenda that is worth monitoring to understand new opportunities for your business.
• Our Global Trade Hub is regularly updated by CBI’s International team and overseas offices with the latest trade insights, the export strategy, and guidance on specific trade challenges. You can also become a member and start to engage with our work.

As international trade takes place across borders and with companies that are unlikely to be familiar with one another, there are various risks to deal with. These include:

• Payment risk: Will the exporter be paid in full and on time? Will the importer get the goods they wanted?
• Country risk: A collection of risks associated with doing business with a foreign country, such as exchange rate risk, political risk, and sovereign risk. For example, a company may not like exporting goods to certain countries because of the political situation, a deteriorating economy, the lack of legal structures, etc.
• Counterparty risk: The risks associated with the company (exporter/importer): What is their credit rating? Do they have a history of non-payment?

To reduce these risks, financiers have stepped in to provide trade finance products. Traditional banks continue to play an integral role in the provision of trade finance. Alongside this, fintechs are also helping to create more finance options for businesses and helping them to access the most relevant financial product depending on their need.

The demand for faster, more agile, and more tailored trade finance solutions across industries and sectors is driving corporate banks to embark on a digital transformation journey to change how they position themselves to meet new customer needs.

Traditional relationship models are being reimagined through digital transformation – creating a shift away from traditional relationship management to an increased focus on being connected to customers through digitally powered platform players, be they in-house or third party. The key is to meet the customer where they are doing business.

The objective is not to completely remove the relationship manager from banks, but to increase their ability to make informed, flexible, and bespoke decisions – fast. By developing their position as a platform provider, banks will be more able to automate and accelerate trade finance processes. Ultimately, this will lead to a more efficient financing ecosystem for businesses to obtain tailored finance products fit to their needs.