01 small and medium-sized enterprises go out to sea: those undervalued needs

When going out to sea from a distant vision to a black and white letter in strategic planning, small and medium-sized enterprises seem to be no different from large groups, regardless of whether their original intention is to escape from the industry and explore the unknown blue ocean. or to respond to the dual-cycle policy and improve the international industrial ecology, their ultimate goal is to make a profit. However, the gap between the beautiful imagination of going out to sea and the cruel management reality is more obvious here in small and medium-sized enterprises:The difficulty of short-term financing, the difficulty of applying for enterprise accounts and bank cards, and the long cycle of overseas collection and payment and settlement and sale of foreign exchange have become insurmountable obstacles in the financial management of small and medium-sized enterprises.

This is not a dilemma that only Chinese enterprises will face, but a common problem facing small and medium-sized enterprises all over the world. Like large enterprises, they also want to obtain customized and efficient financial services from third parties, but in fact, third-party financial institutions, especially banks as typical traditional institutions, more around the core aspirations of large enterprises to design financial products, but also more willing to provide supporting services for them. For financial institutions, large enterprises with sound business and sound operation mean considerable revenue and controllable risks, which naturally become an ideal customer group for many financial institutions. In the financial market, people see more banks'"icing on the cake" to large enterprises, but rarely "timely help" for small and medium-sized enterprises. In 2023, payment consulting company Edgar,Dunn&Company (hereinafter referred to as EDC) and global payment and financial platform Airwallex conducted a global survey of thousands of small and medium-sized enterprises. Their statistics also confirm the above point of view: small and medium-sized enterprises do not think that traditional financial institutions such as banks can meet their needs. Take payment as an example.Only 44 per cent of respondents said banking services were relatively in line with expectations, while in the retail industry with more complex payment scenarios, the proportion fell to 13 per cent.

02 platform + embedded Finance: timely help for small and medium-sized Enterprises

The financial services that meet the needs of small and medium-sized enterprises are like a "hidden corner" in the capacity quadrant of traditional financial institutions, with limited value and little attention. However, with the emergence of more and more small and medium-sized enterprises in the queue, their neglected needs and the contradiction between supply and demand have become propositions and challenges that can not be ignored.

The challenge is predicament on one side and opportunity on the other. The service gap of traditional financial institutions provides a vast soil for the rise of SaaS platform and online trading platform. Compared with the former, the generalization ecology of the platform realizes the effective aggregation of resources and provides enterprise users with easily accessible, customized, fluent and data-driven financial services, so it is widely favored by small and medium-sized enterprises: according to the EDC&Airwallex survey, 83% of small and medium-sized enterprises in the world are interested in platform financial services, and 93% of Chinese small and medium-sized enterprises have expressed the same wish.

SaaS platform and online trading platform fill the gap of traditional financial institutions in serving small and medium-sized enterprises, but in practical application, although the platform business continues to expand to meet the needs of enterprises, after all, "technical expertise", large and comprehensive platform actually does not exist, which also means that small and medium-sized enterprises often need to rely on multiple institutions when obtaining multiple financial services, and the systems and systems are relatively separated. As a result, new challenges are emerging. Still take the payment link as an exampleThe independent payment system weakens the global capital flow efficiency of small and medium-sized enterprises, and the resulting timeliness of receipt and payment, foreign exchange costs and multi-currency and multi-payment management have become barriers restricting the revenue capacity of small and medium-sized enterprises.

It seems that building a SaaS and online trading platform with all financial functions is a solution to break the fragmentation of the system, but it also means that the platform will face the dilemma of "impossible triangle", that is, subject to the limitation of resources, the platform can not achieve unlimited amplification of functional breadth, service depth and operational efficiency at the same time. Fortunately, the innovative practices brought by open API and embedded finance make the platform not to fight alone, but to expand the ecosystem to meet the various financial needs of small and medium-sized enterprises.Embedded finance relies on open API to integrate all kinds of financial products and services into SaaS platform and online trading platform, providing one-stop comprehensive financial service solutions for small and medium-sized enterprises.Without repeatedly jumping between different platforms and systems, and without having to open multiple UI interfaces, small and medium-sized enterprises can access customized financial services with one click. In fact,Small and medium-sized enterprises are more interested in SaaS platforms and online trading platforms with embedded financial functions such as foreign exchange, payment processing, multi-currency corporate accounts and corporate credit cards. 82% of small and medium-sized enterprises are willing to replace existing financial service providers for platforms with embedded functions.

It can be said that "platform + embedded Finance" has brought end-to-end innovative solutions to alleviate the financial management difficulties of small and medium-sized enterprises going abroad. In improving the global collection and payment process, avoiding unnecessary foreign exchange losses, and optimizing multi-currency and multi-system payment management, guide small and medium-sized enterprises to effectively manage global cash flow.

03 embedded finance, not only empowers small and medium-sized enterprises to go abroad

On the one hand, embedded finance provides convenient and smooth financial services for small and medium-sized enterprises, on the other hand, it also brings revenue growth to the SaaS platform and online trading platform that introduces embedded finance.For the platform, embedded financial services can reduce customer acquisition costs, improve customer retention and significantly increase customer life cycle value.A 2020 study by four people, including Kristina, a partner at US venture capital firm Andreessen Horowitz, showed that the platform could increase revenue by up to five times by providing embedded financial services to individual corporate customers. The revenue increment of the platform is directly related to the embedded financial services, and the sources of income increase cover global bill-to-order transaction fees, subscription service fees, loan product interest, foreign exchange fees, card exchange fees and so on. With the deepening of the degree of small and medium-sized enterprises going to sea, the financial products and service programs of the platform can also be expanded, so as to continue to expand income channels. Different from the stereotype, price is not the primary consideration for small and medium-sized enterprises when choosing a cooperation platform. In contrast, the ease of use of embedded financial products is the key decision-making factor.76% of small and medium-sized enterprises even said that if they had easy access to a variety of financial services on a single platform, they were willing to pay for the product premium.This proves,If the platform can embed the one-stop financial solution into its own service matrix, its customer acquisition and retention effect will achieve a qualitative leap.

In some vertical industries, embedded financial services have even become the entry chips of the platform, and the enterprises that can not integrate the financial services functions needed by small and medium-sized enterprises seem to be on the verge of elimination. On the other hand, with embedded financial enabling platforms, their high valuations or market capitalization also send a booming signal to the primary and secondary markets. Research data from data provider Dealroom shows that platforms with embedded financial services have a median market capitalization-to-revenue ratio of about 6.7, compared with 5.3 for platforms that do not yet provide such services.

04 BaaS: a better solution for embedded financial services on the platform

Embedded finance, which is at the forefront of financial innovation, is still in the early stage of development when supply exceeds demand, which means that embedded financial products that are convenient and easy to use can be launched as soon as possible. The platform can seize the first opportunity as soon as possible and stand out in the increasingly fierce industry competition. However, in the stage of practice and landing, SaaS platform and online trading platform need to consider many factors: legal compliance review of territory, product region and content restrictions, product development cost and online speed, license acquisition and so on. These factors are not only affected by the laws and regulations of the country where the business is located, but also related to the cooperation model of embedded financial service providers and platforms.

On the one hand, the differences between regional compliance standards and license plate review standards and cycles determine that the platform must ensure the compliance of embedded financial services in accordance with the times and local conditions. On the other hand, the partner also affects the product development cost and launch speed to a certain extent. If the platform chooses the bank as the collaborator, the product development cycle of more than 2 years, the pre-development cost of nearly 15 million yuan and the high bank transaction cost in the middle and later period have almost become the consensus of the industry. For the financial technology industry, where speed is life, this is obviously not a better solution for the platform.

Banks are not the choice of platform. Payment institutions born out of financial innovation and financial technology companies that provide BaaS services (Banking as a service, bank as a service) provide another way for the platform to embrace embedded finance. These new financial service institutions have usually established partnerships with a number of banks and haveComprehensive and perfect financial payment service facilities. With existing service facilities and open API, the platform no longer needs to build products from 0 to 1, but simply integrates pre-built components with existing productsIt not only greatly shortens the cycle of embedded financial products from R & D to commercial use, but also reduces the burden and related costs of the platform in product research and development, financial license application and maintenance.

05 Global SaaS platform and transaction platform embedded Financial Innovation practice

Admittedly, the popularity of small and medium-sized enterprises out to the sea has brought new growth points to the global SaaS platform and trading platform, and embedded finance has just become a path for the platform to meet the needs of small and medium-sized enterprises for one-stop and easy-to-use financial services, but in the face of a wide variety of financial service providers in the market, the platform is particularly important to select partners. High-quality financial services partners often mean a rich product portfolio, flexible service content, reliable product revenue distribution, rapid integration of technical capabilities and extensive regional coverage. It also means that the platform can manage global security compliance and product integration with relatively little upfront investment, laying a solid foundation for future product development and revenue opportunities. Better serve small and medium-sized enterprises, enhance customer group stickiness and its life cycle value.

For unicorn, a global fee-control platform, Brex has spent years and millions of dollars to strengthen its financial services network to meet the needs of the SME clientele for global employee spending and expense management. As Brex founder and CEO said, the platform is "very cautious about choosing partners". After much consideration, Brex finally made the decision they considered prudent and satisfactory: to work with Airwallex to lay out a global money management solution.

"Seamless cross-border payment is necessary for digital-first small and medium-sized enterprises, but our research shows that these companies do not believe that banks provide the right solutions to help them achieve their global development goals," said Shannon Scott, global product head and vice president of Airwallex.

"SaaS platform and online trading platform can well fill this gap, because the platform has a closer relationship with customers and can better understand the particularity of the industry. For example, if the e-commerce platform intends to provide loans to sellers, the visibility of the payment process is very important for their capital pre-approval and risk assessment. "

"In addition, industry data shows that embedded financial services can have a positive impact on the valuation and market value of SaaS companies. They can not only better serve customers by providing customized services, but also unlock new sources of revenue for the company itself. Therefore, embedded financial services have huge development opportunities in this area, and their potential still needs to be fully explored. It can not only better serve customers by providing customized services, but also unlock new sources of revenue for the company itself."

As a financial technology company favored by many capitals at home and abroad, such as Red Shirts, Tencent, and DST, Airwallex is already in the air.More than 180 regions have realized the layout of financial payment service facilities,Provide comprehensive financial products and services such as white-labeled financial payment solutions, global fund management solutions, and BaaS financial account services for SaaS platforms and trading platforms.With the support of more than 60 financial licenses around the world and stable and rapidly integrated API capabilities, Airwallex Sky Cloud has natively embedded its complete financial capabilities into the platform, driving platform growth with technology.In fact, at the revenue distribution level of embedded financial services, Airwallex adopts more win-win strategies, clarifying possible revenue channels for the platform based on service characteristics, while the latter can explore multi-dimensionally based on embedded financial services. New profit points, such as credit line interest, exchange and payment transaction fees. In cooperation with Brex, Airwallex's API integration allows Brex customers to recharge their accounts in local currency through local payment networks around the world, and pay supplier fees in batches through the platform's fast and economical global payment solutions. Employee reimbursement payments are highly consistent with the financial decision management needs of small and medium-sized enterprise customers on the platform.

It is foreseeable that as small and medium-sized enterprises further go abroad, more intangible regional boundaries will be broken, and small and medium-sized enterprises will accelerate their growth in upgrading from products and technologies to brands and ecology going abroad. From the perspective of SaaS platforms and trading platforms, this means that the financial needs of small and medium-sized enterprise customers will also be enriched, expanded and deepened. Embedded finance will undoubtedly become a powerful engine for the platform's future unbounded growth.