How is fintech changing business travel?

Business travel was hit hard during the pandemic. At the 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 travelers also canceled domestic work travel plans.

But it looks up for the sector. In accordance ReportLinkeris the business travel market set to reach $928.4 billion by 2030, up 4.3% from 2022 figures.

With the boom comes an opportunity to innovate and replace slow, expensive legacy systems with simplified solutions that meet the needs of the modern traveler – and economy is at the front of the queue.

“If business travel companies choose not to innovate, their customers are going to find other suppliers who can meet their needs,” Ryan O’Holleran, director of corporate sales, EMEA at Airwallex, told Sifted. “What was successful before Covid is not going to be the solution after Covid.”

So how is fintech changing business travel? We ask the experts.

Advantages of working with a fintech

Business travel and travel, in general, is global in nature and if you are going to travel, it is likely that you will visit a country that has a local currency. So one of the benefits of having a fintech partner is that it handles the complexities of payments, financial management (such as changing currency and locking exchange rates) and disbursements (such as bank transfers locally or issuing cards).

“The benefit fintechs can bring is flexibility and adaptability, and that’s what the CTOs, product managers and entrepreneurs we talk to get excited about,” says O’Holleran.

For example, Airwallex offers an API (application programming interface) that can handle all steps throughout the payment cycle on a global scale. If a company has an offer in the UK, it only requires a few changes to then expand to another country such as the Netherlands.

“The advantage fintechs can provide is flexibility and adaptation.”

O’Holleran adds that having a single supplier that can operate in different territories can allow companies to focus on other parts of their business.

“As a travel business, it will take a lot of resources to develop economic partnerships in every geo you want to expand into. Most companies don’t want to spend time keeping up to date with the ever-changing regulations because you won’t be able to launch new products or services as quickly, he says.

“If you’re focused on offering new software services, costing 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 everything in-house with what might have worked in the past.”

James Butland, VP of financial partnerships at Airwallex, adds that working with a fintech can provide more of the specific requirements of travel companies than banks.

“What we’re building is a global network which means it doesn’t matter where the tour group is going or where flights are arriving or departing – we’ll still be able to service the payment on land in the correct currency,” he says. “That’s the biggest difference between using fintech and using a bank. As a fintech, we always try to grow as well – and this translates into a better product for our customers.”

The importance of data

Tanith Langford is Director of Financial Operations at British members-only travel company Secret Escapes. She says a key benefit of working with fintechs is their ability to meet the big data demands of travel businesses.

“When a regulation changes that will affect our business, a partner provides solutions and recommendations on how to meet these changes“

She says that with travel and the complexity around licensing rules, accounting principles and that it is a constantly evolving market, data is integrated to meet the sector’s day-to-day needs.

“Sharing information is a key part of such partnerships,” says Langford. “When a regulation changes that will affect our business, a partner provides solutions and recommendations on how to meet these changes. It will be a very important partnership for us.”

Airwallex has supported Secret Escapes to access local bank accounts so they can process staff expenses and receive funding from businesses outside the UK. After Brexit, having local accounts became a necessity for Secret Escapes to ensure reduced costs associated with receiving and sending funds.

“With these accounts, we can make better decisions about funding various accounts and dramatically reduce our bank fees,” adds Langford.

Choosing a partner

So you operate in the business travel industry and are interested in partnering with a fintech – where do you start?

“Always do your homework,” says Butland. “There are many fintechs out there at different stages of growth operating under different licensing regimes.

“You have to find the right partner for you, if you had a small business in the UK with a couple of holiday homes in the UK, you wouldn’t need the global reach. But if you plan in the next few years to open a location 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 many 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:

1. Ensure that a potential partner maintains its infrastructure directly. Fintechs can be built on another fintech’s platform, which means you pay more money than you need because you pay different layers in the chain
2. Look at where your money will be held and the licensing and protection of your funds. If you book travel six months in advance, are you sure the money you give to this fintech will still be there in six months? Are they regulated by the FCA? Do they have fuses in place?
3. Are you collaborating with an innovator? Does the partner’s roadmap meet the company’s growth goals over the next three to five years?

Butland also recommends looking at a fintech that is integrated with the technology you use, a sentiment shared by Secret Escapes’ Langford.

“When I look at a fintech, I look to see if it already partners with or is integrated with technology that 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.”