Singapore MSMBs most impacted by international banking complexities and COVID-19 challenges when expanding overseas

  • Singapore MSMBs are most discouraged from expanding internationally compared to counterparts around the world
  • They are also the most impacted by international payments-related factors when expanding internationally; ahead of other factors including lack of capital resources, import tariffs and culture or language considerations
  • Pandemic further stalled global dreams with 60% of Singapore MSMBs that are operating internationally delaying or cancelling overseas expansion plans, highest among the countries surveyed

Singapore, 2 December 2021 — Singapore micro, small and medium-sized businesses (MSMBs) have global ambitions, but COVID-19 and international payments are major stumbling blocks when operating, venturing or expanding abroad, revealed new research released by Wise Business today. 

The study, which polled more than 4,800 MSMBs across the world, found that Singapore has the highest percentage of MSMBs (80%) who have been discouraged or prevented from expanding internationally. Payments emerged as a top challenge for these businesses 一 63% cite the cost and complexity of managing international payments as a major deterrent to either venturing or further expanding overseas, followed by lack of capital or resources (44%), import tariffs (36%), and culture or language considerations (32%). 

But, more worryingly, challenges with international payments are compounded for those already overseas. Singapore is home to the highest proportion (70%) of MSMBs operating abroad (classed as ‘micro-multinationals), but a whopping 88% of them say it's harder to run a global business today as compared to five years ago, particularly due to the challenges of international payments and banking (61%). Other factors include tariffs/taxes (40%) and complexity of managing international supply chains (25%). 

The global pandemic has only further stymied expansion dreams, with 60% of Singapore micro-multinationals having had to either cancel or delay their global expansion plans due to COVID-19 — the highest among the countries surveyed.

Growing pains: traditional banking blocking Singapore MSMBs’ ambitions 

More than one-third (36%) of the over 500 Singapore MSMBs surveyed report ambitions to expand internationally in the next 5 years, particularly in neighbouring countries, including Malaysia, Australia, China, Indonesia and the United States.

Yet, the struggles of international banking, which includes managing multiple currencies, foreign exchange rates and opening up foreign bank accounts, prevents businesses from reaching their full potential.

The majority of local micro-multinationals are still relying on old, outdated systems for sending or receiving cross-border payments — 83% use old-school methods like bank transfers or card payments, followed by PayPal (47%) as the next most popular method. 

Interestingly, while the cost of international payments is a top consideration for 86% of local micro-multinationals, only 2 in 10 (22%) think banks offer value for money — and it’s mostly familiarity with their traditional provider that’s keeping them from leveraging better options.  Indeed, micro-multinationals here are more likely to stick to their banks out of convenience than in other markets like Japan and Australia, as 38% believe it’s easier to use the same provider to manage both domestic and international payments. 

Where it matters: technology helps Singapore micro-multinationals gain more market share but under-utilised in addressing biggest pain point, international banking 

Technology has played an important role in helping MSMBs navigate the pandemic. Over eight in ten (85%) of Singapore micro-multinationals say technology has helped them get through COVID-19, specifically through enabling the offering of products/services digitally (39%) and reaching new customers (33%). 

What’s more, the pandemic has also shown the potential of digital banking systems in helping MSMBs better operate abroad. Indeed, 15% of local micro-multinationals that use digital providers for international payments accelerated their expansion plans during COVID-19, compared to 6% of those that do not use digital payments.

Yet, MSMBs have not embraced technology to manage international payments — barely half of local micro-multinationals (53%) use digital providers. Equally noteworthy is that 24% of Singapore micro-multinationals are unaware of, or don’t know enough, about digital payment options. 

With cost (86%), transparency (83%), convenience (82%) and  speed (81%) emerging as important factors for Singapore micro-multinationals when managing international payments, there’s a large potential for tech and digital options to help these businesses ease their expansion path. 

Abhishek Choudhari, Wise’s APAC Product Director, said: “We’ve consistently seen how micro, small and medium-sized businesses flourish when they look abroad, especially as we enter a new age of digitisation and internationalisation. Technology has helped MSMBs reach new audiences, yet many see their global ambitions held back by an international banking system that is slow and negates cost efficiencies brought about by going digital. Today’s findings tell us that international banking is their number one headache, and it’s clear why: fees are hidden and prohibitive, services too slow and painful.

“At Wise Business, we believe that now more than ever, MSMBs deserve better support, and access to a transparent and efficient international payments system can help these businesses realise their expansion dreams.” 

Ron Kwok, Chief Executive Officer of skincare company Clearly Basics, said: “International expansion is important to us and the majority of our sales channels today are in the US and Europe. We struggled with expensive exchange rates and fees with traditional banks, and it was a real hassle to have to go to a bank and wait in line. With Wise, I can spend and pay in the local currency without exchange rate markups or transaction fees, and it’s really great.”

Wise Business provides an alternative to traditional providers. Businesses can send money abroad for a small, up-front fee, with no fee hidden in the exchange rate – and 40% of all payments arrive instantly. Business-friendly features include Wise’s local account details, which save businesses having to open bank accounts in other countries, as well as the ability to schedule mass payouts, and integrate accounting software for auto-reconciliation.

About Wise

Wise is a global technology company, building the best way to move and manage the world’s money.

With Wise Account and Wise Business, people and businesses can hold over 40 currencies, move money between countries and spend money abroad. Large companies and banks use Wise technology too; an entirely new network for the world’s money. Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched in 2011 under its original name TransferWise. It is one of the world’s fastest growing, profitable tech companies and is listed on the London Stock Exchange under the ticker, WISE.

10 million people and businesses use Wise. In fiscal year 2023, Wise processed approximately £105 billion in cross-border transactions, saving customers around £1.5 billion.

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