Business travel was hit hard during the pandemic. At its height, 86% of people had to cancel all work-related international travel plans due to lockdowns, travel bans and flight restrictions — and 67% of business travellers cancelled domestic work travel plans too.
But things are looking up for the sector. According to ReportLinker, the business travel market is set to reach $928.4bn by 2030, up 4.3% on 2022 figures.
With the uptick comes an opportunity to innovate and replace slow, expensive legacy systems with simplified solutions that meet the needs of the modern-day traveller — and finance is at the front of the queue.
“If business travel companies choose not to innovate, their customers are going to find other providers that can fit their needs,” Ryan O'Holleran, director of enterprise sales, EMEA at Airwallex, tells Sifted. “What succeeded pre-Covid is not going to be the solution post-Covid.”
So how is fintech changing up business travel? We ask the experts.
Perks of partnering with a fintech
Business travel and travel, in general, is global by nature and if you're going on a trip, it’s likely you'll visit a country that has a local currency. So one of the perks of having a fintech partner is that it handles the complexities of payments, treasury management (such as changing currencies and locking in exchange rates) and payouts (like bank transfers locally or issuing cards).
“The benefit that fintechs can provide is flexibility and customisation, and that’s what the CTOs, product managers and founders we’re talking to get excited about,” says O'Holleran.
For example, Airwallex offers an API (application programming interface) that can handle every stage throughout the lifecycle of the payment on a global scale. If a company has an offering in the UK, it requires just a few changes to then expand into another country like the Netherlands.
The benefit that fintechs can provide is flexibility and customisation
O'Holleran adds that having a single provider which can operate in different territories can allow companies to focus on other parts of their business.
“As a travel business, it’s going to take a lot of resources to build out financial partnerships in each geo that you are looking to expand into. Most companies don’t want to spend time trying to stay up to date with constantly changing regulations because you're not going to be able to launch new products or services as quickly,” he says.
“If you're focused on offering new software services, expensing tools or multi-currency needs for your customers, you need to rely on partners — companies that can help you stay innovative rather than trying to do it all in-house with what might have worked in the past.”
James Butland, VP of financial partnerships at Airwallex, adds partnering with a fintech can provide more of the specific requirements of travel companies than banks.
“What we're building is a global network that means it doesn't matter where the tour group is going or where flights are coming to or from — we'll still be able to service the payment onshore in the right currency,” he says. “That's the biggest difference between using a fintech versus using a bank. As a fintech, we're always trying to grow too — and this translates into a better product for our clients.”
The importance of data
Tanith Langford is director of financial operations at members-only British travel company Secret Escapes. She says a key benefit of partnering with fintechs is their ability to address the big data requirements of travel businesses.
When a regulation changes that would impact our business, a partner provides solutions and recommendations on how to meet those changes
She says that with travel and the complexities around licensing rules, accounting principles and it being an ever-evolving market, data is integral to meeting the sector’s day-to-day needs.
“The sharing of information is a key part of such partnerships,” says Langford. “When a regulation changes that would impact our business, a partner provides solutions and recommendations on how to meet those changes. It becomes a very important partnership to us.”
Airwallex has supported Secret Escapes to gain access to local bank accounts so it can process employee expenses and receive funding from its non-UK businesses. Following Brexit, having local accounts became a necessity for Secret Escapes to ensure reduced costs linked to receiving and sending funds.
“With these accounts, we can make better decisions on funding various accounts and reduce our banking fees dramatically,” adds Langford.
Selecting a partner
So, you operate in the business travel industry and you’re interested in partnering with a fintech — where do you begin?
“Always do your homework,” says Butland. “There are a lot of fintechs out there at different stages of growth operating under different licensing regimes.
“You’ve got to find the right partner for you, if you had a small UK business with a couple of holiday lets in the UK, you wouldn’t need that global reach. However, if you plan in the next few years to open a place in France and then the US, in the long term, a global fintech is essential to manage your growing business.”
Always do your homework. There are a lot of fintechs out there at different stages of growth operating under different licensing regimes
There are three points Butland considers looking at when considering a new partnership:
- Make sure a potential partner holds their infrastructure directly. Fintechs can be built on another fintech’s platform, meaning you're paying more money than you need to as you're paying different layers in the chain
- Look at where your money will be held and the licensing and protection of your funds. If you are booking travel trips six months in advance, are you confident the money you give to this fintech will still be there in six months? Are they regulated by the FCA? Do they have safeguarding in place?
- Are you partnering with an innovator? Does the partner's roadmap meet your company's growth objectives over the next three to five years?
Butland also recommends looking at a fintech that’s integrated with the tech you use, a sentiment that Secret Escapes’ Langford shares.
“When I look at any fintech, I look to see if it already partners with or is integrated with technology Secret Escapes uses, such as our ERP (enterprise resource planning) or data warehouse,” she says. “Knowing that integrations already exist allows us to think about automating processes, reducing manual workloads and scalability.”
