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currensea

The current COVID-19 scenario has made things difficult for businesses in almost all domains. There’s also uncertainty around Brexit in the UK, which seems to have added to the surmounting difficulties. A new research by the British fintech firm Currensea reaffirms the same as it finds that around 80% or 4.72 million businesses trade internationally in any given year. Out of them, 1.18 million Small and Medium Businesses (SMEs) halted trade because of the pandemic and an additional 283,000 stopped trading due to Brexit. 

Currensea is a British fintech that was founded by Barclays and JPMorgan alumni in 2018. The company has secured over £5 million in overall funding and in September 2020, it bagged 3rd place on a list of the Top 100 FinTech Disruptors. In an exclusive interview with UKTN, the company’s co-founder and co-CEO, James Lynn reveals how SMEs are being impacted by the current scenario and what can be done to lower the blow. 

COVID and Brexit impact on SMEs 

Both Brexit and COVID-19 had a notable impact on  international trading for SMEs. Currensea’s research unearthed that about 25% of SMEs that used to trade internationally have stopped doing so because of COVID-19. In real world terms, that is about 1.18 million businesses halting international trade. And around 283,000 businesses have halted trading because of Brexit. SME exporting has also decreased by around 10% which is slated to cost the UK about £20 billion this year.

“It’s important to emphasise here that international trade in 2020 isn’t what you may be imagining in the traditional sense, i.e. exporting masses of goods in shipping containers. In a world increasingly characterised by globalisation, it is actually really difficult to run a business without working with international businesses, whether that is in the form of importing building materials or even paying to host a website (paid for in US dollars),” notes Lynn. 

Weathering with COVID-19

With the points made in the new Currensea study, it’s quite evident that COVID-19 has deeply impacted almost every business in some way. Lynn believes that there are multiple factors that help some businesses weather this pandemic better than others. “Whether that is the sector they are based in or how agile the business is able to be. But what is universal for everyone is that there is help out there they should be taking advantage of,” notes Lynn. 

Speaking more on how business could fare better during the pandemic, Lynn adds, “We firstly recommend looking to the Department for International Trade. The DIT is there to support any UK businesses potentially experiencing international trade disruption due to COVID-19, via their Business Support Website. They will assess your business’s specific difficulties and offer tailored support by, for example, helping you find alternative suppliers if your supply chain is affected.”

Lynn also suggests taking advantage of government’s frequent announcements about new measures that are aimed at supporting businesses affected by the pandemic. “ It may seem overwhelming to follow, but it is worth looking into as many of the incentives that are relevant to you as you can: remember, the government wants you to stay in business as much as you do. It has put together this simple “support finder” where you can fill out details about your business to find out what is available for you: https://www.gov.uk/business-coronavirus-support-finder.”

Preparing for Brexit impact

While it’s quite evident that Brexit has discouraged thousands of SMEs from conducting international trade, there needs to be some way to work around it for bettering the UK’s economy. As per Lynn, there are resources from the government available for business to use but these resources aren’t clearly marked for busy SMEs that are dealing with a lot right now. “For example, the government is offering VAT deferral services and small business grants, which have been launched to help offset some of the main issues worrying SMEs ahead of Brexit, namely higher costs and more admin,” Lynn highlights. 

As per Lynn, Brexit has been a challenge to prepare since there’s a lot of unknown effects of it on international trade and travel. He advises SMEs to try to get as much support as they can.  

“A good starting point is the support finder put together by the government, which tells you exactly what your business has to do in order to keep importing and exporting as usual. As well, the British Chambers of Commerce and the Institute of Export can both provide you with useful resources and tips from experts in overseas trade. The British Chambers of Commerce have different offices per region in the UK so will be able to offer you great tailored advice.” Lynn notes. 

Currensea’s brexit strategy 

Currensea wasn’t impacted to a large extent due to Brexit since the company initially focussed on a UK client base. While European expansion could happen next year, the company’s priorities remain clear, which is helping UK SMEs save money and get back on their feet. We also asked Lynn how is the company dealing with the second phase impact, which is bound to restrict travel and increase lockdown during the travel season. 

Lynn replies, “It has been an interesting period for us. We launched our FX debit card for SMEs in October and have experienced a big uptake. As our research identified, in normal times one of the greatest challenges associated with international trade is FX fees so even though the number of people trading internationally has dropped, there is still a very large number doing so who are thus experiencing this issue. We’re the first company to allow firms to use their existing bank account to trade with no fees and the best rates out there, so despite the pandemic people have been seeing this as a game changer.“

On the consumer side of things, Currensea has observed notable uptake over the summer when people were travelling when possible. However, those figures have slightly declined now. “Although, interestingly, we have seen an uptick in people using Currensea outside of Europe, for example the product has proved a hit with aid workers, who spend a lot of time in developing countries, but get paid into their UK bank account. Over the last few weeks we have seen more people start to apply for Currensea again and we reckon this is because they’re preparing to escape to somewhere warm once lockdown 2.0 is over!” reveals Lynn.