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Providing a fintech ecosystem

UOB is committed to helping small businesses stay competitive in the digital economy.
Tuesday, November 15, 2016 - 05:50

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OVER the last decade, the advancement of technology and digitalisation has changed the way in which people live. Consumers have embraced mobile and are using it in every aspect of their lives.

In response to this trend, technology startups across various industries, from transport to hospitality, such as Uber, Grab and Airbnb are challenging traditional brick-and-mortar players with their innovative business models.

To continue to stay competitive and meet their customers' needs, these traditional players need to look towards technology and product innovation to improve productivity and gain new market share - both of which are important factors to ensure continued growth.

As Singapore's largest SME bank, UOB recognises that it can be challenging for companies to adopt the best financial technology solutions that suits their needs.

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To help organisations adopt innovative solutions to grow their business, we recently expanded our network of alliances with technology firms to offer fintech solutions that will help organisations in the property management and education sectors increase productivity.

LABORIOUS

For the property management and education sectors, the collection of monthly fees can be a laborious task. Therefore, UOB has partnered hiLife Interactive Private Limited (hiLife Interactive) and MGG Mobileapps Pte Ltd (MGG) to embed in-app payment options for their "hiLife" and "snaapp" apps respectively.

It will be the first time in Singapore that condominium management corporations and schools are increasing their efficiency and generating cost savings through the use of mobile payment technology.

The "hiLife" app will enable condominium management corporations to receive and to process payments for monthly maintenance fees and facility bookings electronically, while the "snaapp" app will enable schools to collect fees from parents directly via mobile transactions.

The property management and education sectors are just two nodes in the network of alliances that UOB is building. To help more organisations grow their business, we aim to work with more key players who are dominant in their industry verticals.

While companies are aware of the need to innovate, rising costs remain a challenge for them. This is in line with the UOB Asian Enterprise Survey 2016, which indicated that rising operating costs was the top growth constraint for Singapore enterprises.

Such cost pressures often hamper efforts to innovate as companies are unable to dedicate the additional funds that are required for innovation.

Access to funding is a key factor for business expansion and it is important that companies understand what their funding options are and how to effectively employ them.

While established companies are able to access funding through conventional methods such as bank loans and working capital, startups and companies at the earlier stages of growth typically are not able to raise the funds needed as easily. This is because they are still developing their concepts, products and services into viable business models, and so may not have consistent cash flow to qualify for traditional loans. Therefore, companies need to be aware of how to tap the range of funding methods available, including alternative financing such as venture capital, venture debt, and debt and equity crowdfunding, which have the potential to help them scale up their businesses.

In the recent Financing for Startups and Small Businesses Survey by UOB, it was found that close to two-thirds of the businesses surveyed did not know where to obtain advice on the range of funding options available. They also felt that the eligibility criteria for these options were unclear which made it difficult for them to know if they would qualify.

As a result of their unfamiliarity with financing options, startups and small businesses indicated a preference to rely on the tried and tested funding sources, such as raising their own working capital, government-assisted schemes and government grants for their business expansion.

LIFELINE

Additional funding is a lifeline for businesses that often face the challenge of tight cash flow. To understand better the best financing option for their business, they should seek professional advice, either from government bodies, accelerators or other organisations in the funding ecosystem such as venture capital firms and financial institutions. With a clear understanding of the various funding options available, these businesses could realise their growth potential more quickly.

To meet the funding needs of startups and businesses across all growth stages, UOB, which banks one in every two small businesses in Singapore, offers end-to-end solutions including equity crowdfunding and venture debt through OurCrowd and InnoVen Capital respectively.

UOB also provides extensive mentorship and guidance to startups and small businesses on their business model and the various funding options available through its innovation lab, The FinLab. The bank has also trained its commercial bankers to provide clients with the most up-to-date information on alternative funding channels beyond traditional financing.

At UOB, we understand the ambitions of small businesses as it was the same entrepreneurial spirit and determination to succeed that propelled our growth from a small local bank 80 years ago to a regional bank today.

This is why we are committed to helping our customers, from startups to SMEs to large corporates, transform their business and remain competitive in the new digital economy through our ecosystem of fintech and alternative financing partnerships.

  • The writer is managing director and head of group commercial banking, United Overseas Bank.
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