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Research from the CBI and Finastra, canvassing the opinions of UK small and medium-sized businesses (SMEs), suggests that there’s a gap between the ambition of firms to trade internationally and the reality of doing so. 

While just 44% of businesses surveyed currently engage in international trade, only 23% said they were not interested in doing so. 

One third of respondents believe there’s potential value, but do not trade internationally due to perceived barriers and a lack of support.

Common barriers cited by respondents include: the impact of Brexit (23%); being too small to trade internationally (16%); and limited knowledge about international markets (15%).  

To better understand current business attitudes to international trade and accessing finance, the CBI and Finastra worked with YouGov to survey over 200 financial decision makers at UK-based SMEs to gain more insight into the challenges businesses are facing, attitudes to finance and ambitions for international growth. 

The findings are included in the CBI’s International Trade Toolkit, being launched this week, which is designed to help UK SMEs across all sectors increase their international trade ambitions.

Rain Newton, CBI chief economist said, “Our International Trade Toolkit, developed with Finastra, is designed to provide advice and guidance for SMEs, as well as helping to facilitate connections with fintech players and financial institutions that can help support such growth. 

Our Seize the Moment strategy estimates that a new generation of SME exporters could raise around £20 billion in additional UK export revenues by 2030, and the UK’s fintech sector can play a key role as a driver of productivity gains and enabler of broader economic transformation.”  

Additional takeaways from the survey include:

·       Ambitions for growth: those businesses that currently engage in international trade see opportunities for further growth, with 27% expecting to increase their imports or exports compared to only 4% of those who do not currently trade. 

·       Sources of finance: financial institutions that businesses have an existing relationship with are the most common provider of finance (51%), although many businesses use their credit card (43%) and overdraft (28%) which are traditionally more expensive. 

Nearly 2 in 5 businesses have never applied for financing, suggesting more needs to be done to help them understand how finance can help them with their growth ambitions and find the option best suited to their needs.

·       Potential for embedded finance: With 3 in 10 respondents expressing interest in using embedded finance solutions, helping businesses understand the value embedded finance can deliver will be key to future growth. 

For example, ecosystems created by tech and fintech companies can support the matching of supply and demand of loans, using third-party data to provide personalised loan offers for SMEs.

Jonathan McPhail, lead client partner, banking as a service, Finastra said, “Finastra is delighted to partner with the CBI in creating the International Trade Toolkit and in helping UK businesses unlock the benefits of international trade.

Harnessing the power of fintech solutions can help firms overcome some of the barriers to international trade and give them a competitive edge – reaping efficiency gains through process improvements in payments, finance, cash management, compliance and operations, as well as improving business development opportunities through enhanced customer propositions. The toolkit shines a spotlight on just some of these use cases as the landscape continues to evolve.”

Finastra and the CBI have invited UK SMEs to join them at an event to mark the launch of the International Trade Toolkit, Winning with Fintech: International trade and accessing finance, taking place in London, 18 January 2023.