How digitalization became a key enabler for SMEs
Covid-19 spurs banks to accelerate shift to electronic channels
28 Apr 2021 | The Asset

Covid-19 has had a profound impact on small and medium enterprises (SMEs). As the pandemic unravelled, they faced challenges in accessing funding while business disruption hit their revenues, creating a liquidity shortage that threatened their survival. There was no shortage, though, of government assistance in the form of credit intervention.

SMEs account for a significant percentage of employment in economies across Asia and they are expected to play a crucial role in the economic recovery post-pandemic. Banks and other service providers did their fair share to help the SMEs weather the effects of the coronavirus. Several banks initiated SME-themed fund raising, the proceeds of which were used to finance eligible SME projects under their sustainability finance framework. Banks also lent support through supply chain finance programmes, providing capital with lower-than-market funding cost. SMEs on their own normally do not have strong financial metrics to enable the banks to provide them with the needed working capital financing.

Like many industries, digitalization has become a key enabler for SME businesses to stay afloat during the pandemic and, at the same time, enhance their competitiveness. There was a recognition of the urgent need to accelerate the conversion of cash transactions into digital payments and collections, and to transition from manual processes to electronic channels. Banks have expanded their digital onboarding capabilities, enabling customers to open accounts electronically, thus reducing branch visits and initiating contact-free banking.

In Singapore, the government in May 2020 announced the launch of the digital resilience bonus (DRB) as part of the Fortitude Budget 2020, under which S$500 million (US$376 million) was allocated to support the digital transformation of businesses, including support for e-payments. Companies in the food & beverage and retail sectors, which were most affected by social distancing requirements, could receive S$10,000 each in payouts under a new scheme to accelerate digital transformation.

The winner of the Best bank for SMEs in Singapore, DBS, has implemented its trademark RAPID solutions designed to help customers digitally transform their business. For instance, it delivered a contactless payments solution for the healthcare services business and implemented an online virtual account solution with instant reconciliation for an online travel marketplace in India.

A digital transformation initiative that benefited the SMEs in Singapore was the launch of the electronic banker’s guarantee (eBG) by the Singapore Customs in collaboration with financial institutions. Under this programme, United Overseas Bank was able to assist Storbest Group, a third-party logistics provider, to issue and digitally send the Customs bond in electronic form directly to Singapore Customs as soon as it is issued by the bank, instead of the previously required hard copy.

Over the next few days, The Asset will be revealing the other winners of The Triple A Treasury, Trade, Sustainable Supply Chain and Risk Management Awards 2021.

To see the Best SME solutions please click here.

To learn more about these awards, please click here.

For more information about receiving the awards, please contact events@theasset.com.

The virtual awards ceremony for The Asset Triple A Treasury, Trade, SSC and Risk Management Awards 2021 is scheduled to take place on June 17, 2021.