Xero's Asia pathway widens with HSBC, DBS bank feed deals
Xero has extended its global footprint into Asia, signing two major bank feeds in the region that chief executive Rod Drury says will make it much easier for Australasian businesses to export into the region.
The Wellington-based cloud accounting software developer this week signed deals with the Hong Kong Shanghai Banking Corp and the Development Bank of Singapore to bring the Asian lenders into Xero's expanding "financial web." The HSBC deal will let Hong Kong and Singapore HSBC customers connect their bank accounts with Xero's platform, while the DBS partnership aims to align the firms' platforms that would ultimately enable small and medium-sized businesses to make payments and apply for loans.
The Asian deals come hot on the heels of Xero's information sharing arrangement with Californian lender Silicon Valley Bank, and is part of the New Zealand firm's goal to become embedded in a broader 'financial web' that links SMEs with financial institutions, freeing up their access to capital which is a major constraint for smaller firms.
Mr Drury says the new Asian bank feeds give Xero a leg over its competitors, operating the only global platform in the world and enabling small firms to operate across borders more easily. He says that's important because 5-1% of SMEs not exporting are expected to branch out into international markets in the coming years.
"It's the emergence of global platforms, not just software but also networks of companies using it," Mr Drury said from Singapore yesterday. "Since the TPPA, we've got a lot of people thinking about how they really need to get into Asia," he said referring to the Trans-Pacific Partnership investment and trade agreement that stalled when US President Donald Trump said he wouldn't ratify the deal.
At the same time, some Asian nations are increasingly looking to liberalise their trade frameworks and a growing number of Chinese firms are entering new markets, such as online marketplace and payments service Alibaba Group.
Mr Drury said he sees Xero as taking a cornerstone role in enabling this interconnectedness with bank feeds allowing seamless cross-border transactions directly into a customer's bank account. Ultimately, that should encourage more small New Zealand businesses to enter international markets.
"The technology is a big part of that. Smaller business owners now need to work it out for themselves," he said.
Xero shares slipped 0.8% to $18.55 and have gained 6.8% so far this year.