KUCHING: With small-medium enterprises (SMEs) making up 97 per cent of business in Malaysia while providing close to 4 million employment opportunities, United Overseas Bank (Malaysia) Bhd’s (UOB Bank) next goal is to support this cornerstone through comprehensive and innovative solutioning.
According to UOB Malaysia’s executive director and business banking country head Raymond Chui, supporting local SMEs should be something that all banks need to continue doing as the industry has consistently taken the lead in terms of contribution to our GDP – indicating its importance to our economy.
“We decided that the best way to support this industry is by developing a solution rather than just a product.
“At UOB, we pride ourselves on understanding our product, so we developed a product from the customers’ point of view (POV) on what solution they needed to grow their businesses.
“We did this through focus group studies with our customers to help us better gauge what their environment, needs and requirements for growth are, and how we the bank can come in and support them.”
“Based on their feedback, we were able to develop our products that are more than just financial products, they are solutions that help solve the pain points of our customers,” Chui said in an exclusive interview with The Borneo Post.
He guided that the current set of business products that UOB offers would encompass the entire life cycle of SMEs to ensure that their customers would be well taken care of, from their start-up phase to maturity.
Young start-ups are the SMEs who have been registered less than three years, maturing SMEs are between three to five years in operation and mature SMEs are those who have been operating for more than five years.
“Young start-ups are the ones that most banks do not have any interest in seeing because they do not have a proven track record yet, but at UOB we are able to provide them with a current account (CA) proposition called BizCA+ that provides them with a range of benefits.
“With a BizCA+ account, our customers are able to leverage off generous interest rates of up to. 2.08 per cent and unlimited foreign and local telegraphic transfers to help them with potential payments or orders in their business dealings,” said Chui.
While these young start-ups may not be able to meet UOB’s requirements for loans at this juncture, Chui guided that the bank has in turn collaborated with the funding society in Malaysia to help their growing customers obtain alternative funding by recommending them as incubators where they can obtain basic requirements for their start-up and working capital requirements.
“Once they grown and matured, they have the choice to actually come back to us for more funding support as we understanding that they will likely be in phase of wanting to buy their properties for their business operation.”
At the maturing stage, UOB will come in to help customers with their property asset acquisition through the bank’s Bizproperty scheme.
In the event that a SME has yet to meet the requirements of this loan, Chui said the bank also offers an unsecure loan of up to RM500,000 to help these SMEs continue to grow their business.
“Last month, we signed a joint agreement with Syarikat Jaminan Pembiayaan Perniagaan (SJPP) to offer a government-guarantee funding scheme that will help all these SMEs back their security and get a loan from the bank.
“With a SJPP guarantee, SME customers can actually get a loan of up to RM1 million,” he added.
Moving into an SMEs mature stage, UOB will once again be there to provide its customers with working capital requirements through letter of credits, trust receipts and bankers’ acceptance.
“What we offer at UOB takes care of the entire cycle of the SME,” said Chui.
Beyond this comprehensive suite of products that will help support SMEs throughout their lifecycle, Chui guided that there is so much more that UOB is offering to its customers in terms of solutions.
The focus of these next few UOB products are largely based on providing SMEs with digital solutions that will help enhance the operations of their businesses.
But they unable to do so because they do not have the access or capability.
“So that is why we cannot rely on just the conventional methods to service our customers any longer, we need to move into digital and support them,” said Chui.
One the main pain points UOB has discovered through its focus groups with its customers is that many small SMEs struggle with juggling with their operations and accountancy management as they end up having too much to handle on their own plates.
To help solve this, UOB has come up with a cloud-based integrated digital business solution that will support SMEs by allowing them to streamline and digitise their back-office processes such as their accounting, their HR management, and their stock and inventory management all in one application.
Called UOB SmartBusiness, the product is a tie in with business software provider, SAP, whose enterprise software, SAP Business One, will be available to customers for free.
And to further ease the burden of account reconciliation on their customers, Chui adds that customers can also link their UOB SmartBusiness account to their UOB current account and enable an automated bank reconciliation process by providing a current account statement directly into the SAP software.
“We launched this new product just two months ago and already we have over 1,000 sign ups.
Responses from our roadshows have been overwhelming and indicates that we have definitely hit the mark on what SMEs really need right now,” said Chui.
Another pain point that UOB has identified in local SMEs is the status of financial documents as a lot of smaller SMEs may find themselves struggling to handle documentations well as they are too busy running the day to day operations of their business.
In the past, having missing or incomplete documentation would be a huge blow for SMEs as it could be very well the reason why they are unable to obtain loans for further growth of their business.
“Without the needed financial documents, it is hard to help customers obtain loans because we cannot confirm their financial standings.
So, to help these SMEs, we utilised our digital capacity to create a proxy to better understand their credit behaviour and creditworthiness so we can give them a loan with more certainty,” said Chui.
Since the implementation of the enhanced credit underwriting engine, UOB has seen a 50 per cent reduction in the default rate of its small business loans.