Why small businesses should set up transactional bank accounts in Singapore
Banking in Europe is getting harder and harder. Find out why you should start banking in Asia.
Why is banking in Europe getting harder and harder?
A lot of small to medium-sized businesses today have a global footprint importing from across continents, sending payments across the world to their suppliers, and receiving payments from customers from all over the world in different currencies.
Like all businesses, these global small to medium sized companies need banks to support and expedite their financial transactions. Europe was the favorite for these small businesses mainly for two reasons:
Europe is one of the biggest markets in the world for consumers.
The fintech revolution in Europe was quite ahead of its time which made it relatively easy to open accounts in the continent.
Unfortunately, this has changed. Due to a lot of problems that had been seen: money laundering from Russia, the Danske Bank money laundering scandal, touted as possibly the largest money laundering scandal ever in Europe, and some of the big banks in the UK, there has been a lot of anti money laundering legislation. The stricter anti money laundering regulations require more energy, time and money from the businesses thereby driving up the cost of compliance and heating up the European banking scene.
With stricter regulations, banks are given the significant burden of doing a lot of checks on all their customers. They have the responsibility to scrutinize multiple aspects of a transaction, such as what the business reasons are for payment and whether there is tax involved. In effect, banks and payment institutions have become the policemen for Europe.
With more rigid regulations on the one hand and clever money laundering criminals on the other, legitimate businesses and even consumers are caught in the financial policing crossfire. Sadly in the line of fire are small to medium sized ecommerce, consulting firms and online businesses. These businesses now have a more challenging time doing their banking transactions.
1.) Payments that are sent out are more and more often being checked and held up by the banks.
2.) Payments coming in from customers are being examined more closely with a lot of questions being asked by the bank as to why this payment was made.
3.) Bank accounts are being closed more often now than it used to in the past.
Bearing the brunt of these online frauds and stricter compliance regulations are payment service providers. PSPs have to double check screening and verification procedures when setting up accounts. They have to carefully scrutinize every new client and merchant using the best tools at hand.
This is creating a lot of uncertainty for small businesses which are already having a hard time; they’re already struggling to start with and if the bank isn't helping them, it makes it even worse for them. Putting a significant burden on small businesses, this raises the question: should European global businesses look to set up accounts in Asia? Is it better for small businesses doing global banking to conduct their banking transactions from Asia or other parts of the world? If you're a small business with a global footprint, would it make sense for you to set up an account overseas?
Benefits of Opening a Bank Account in Asia
While Europe is battling against money laundering, Singapore, Hongkong and other Asian countries are busy creating game-changing growth and innovations in the banking industry. This auspicious Asian financial landscape makes it more attractive for businesses around the world, especially small to medium businesses in Europe who are struggling with tough compliance regulations. Whereas if they conduct their banking affairs in Singapore or Hongkong, they can be enjoying these benefits.
Fast and Easy Bank Account Set-up
Small businesses can set up a bank account relatively easily in Singapore or Hongkong. In as fast as 48 hours, they can already have an account. Compare this to opening an account in Europe which takes weeks or sometimes even months.
Less Payment Delays
Owing to the stricter anti money laundering regulations in Europe, payments can be held up on numerous occasions. Businesses can expect less of these setbacks when transacting in Asia.
Faster Banking Speed
With fast account set-up and less payment delays, banking in Asia is 10 times faster than what it is now in Europe. Businesses do not have to answer a thousand questions for very basic business practices. All these, in turn, reduce the overall cost of doing business
Given the more rigorous and expensive banking in Europe and faster and less expensive banking in Asia, it may make sense for European small to medium businesses to maintain a primary bank in Europe, where their money can be held more securely, while keeping a second transactional bank account in places like Singapore, Hongkong, and some other market.