In the ever-evolving landscape of small and medium-sized businesses (SMBs), one notable shift is the increasing reliance on overseas suppliers and vendors. SMBs today are more global than ever, with nearly 46% reporting an international customer base, and many expanding into new trade corridors. This growing globalization presents both opportunities and challenges—chief among them is the heightened trust risk associated with international operations.

When SMBs work with foreign partners, the risks are multifaceted. Businesses may encounter slow transaction times, legal complexities, or challenges in verifying the legitimacy of a foreign supplier. Additionally, geopolitical disruptions and inconsistent regulations across borders make it difficult to resolve disputes when something goes wrong. Trust risk becomes a central concern because, unlike domestic transactions, SMBs often lack legal recourse or even visibility into their overseas counterparts.  

The Opportunity for Banks

While this increased trust risk poses challenges for SMBs, it presents a significant opportunity for banks. SMBs still rely heavily on their financial institutions for advice and risk mitigation. According to recent research, 68% of SMB customers expect banks to provide proactive, personalized services that help them navigate these global complexities.

Banks are well-positioned to offer solutions that go beyond just financing. For example, they can provide tools to facilitate cross-border payments with greater speed and transparency, reducing the friction in global transactions. Additionally, offering supply chain financing can help SMBs mitigate risk when working with international suppliers. Supply chain financing solutions allow SMBs to receive funds upfront, improving cash flow and ensuring that suppliers are paid in a timely manner.

Moreover, banks can enhance digital tools to provide real-time risk assessments and transaction tracking, making the international supply chain more transparent and reducing the likelihood of fraud. By integrating advanced analytics and AI, banks can offer predictive insights into potential disruptions, further enhancing trust in these global operations.

Building Long-Term Business Relationships

Ultimately, banks that invest in trust-focused solutions will build stronger, longer-term relationships with their SMB clients. By acting as a trusted partner, offering both financial products and strategic risk management tools, banks can position themselves as essential players in the success of global minded SMBs. The opportunity for banks lies not only in solving today’s challenges but in helping SMBs scale with confidence into new markets—while ensuring that trust, the foundation of all business relationships, remains intact. Now it’s even easier to provide the services your customers want the most with LiquidTrust seamlessly integrated on the backend as your forward thinking solution!

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Sources:

• https://investor.payoneer.com/news-events/news/news-details/2024/SMBs-Turn-to-AI-Supply-Chain-Diversification-and-New-Trade-Corridors-to-Grow-Across-Borders-Despite-Headwinds-Global-Research-by-Payoneer-Finds/default.aspx

• https://www.businesswire.com/news/home/20230719683374/en/SMBs-Driving-Globalization-as-the-Ticket-for-Growth-New-Research-From-Payoneer-Shows

• https://www.ey.com/en_ca/digital/transformation/how-banks-can-leverage-digital-innovation-to-compete-in-the-fast-changing-small-medium-business-market

• https://www.oliverwyman.com/our-expertise/insights/2017/dec/supply-chain-finance--riding-the-waves.html

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