Democratising digital banking for micro SMEs

Much ink has been spilled on how businesses must go digital to thrive in the digital economy. With Covid-19 accelerating digital adoption and changing consumer behaviours, the need for businesses large and small to digitalise has gained new urgency.

While digital transformation is high on the business agenda, my conversations with business owners show that micro SMEs (MSMEs), which DBS defines as businesses with annual revenues below S$1 million, find it challenging to adapt to this "never" normal.

MSMEs are typically the most vulnerable of businesses in an economic downturn, including the current one induced by Covid-19. While many MSMEs have viable business models, their owners still have had to cope with the double whammy of meeting overheads while facing a cash crunch as business slowed to a crawl.

While these are extraordinary times, MSMEs' hierarchy of needs remains similar to those of small and medium-sized enterprises. MSMEs need speedy access to liquidity, reliable digital solutions to future-proof their businesses, and resources to upskill employees. They also want a seamless customer experience as they may not have the resources to look into these areas. DBS is uniquely placed to help MSMEs meet all these needs, and more.

Democratising access to working capital support to survive Covid-19

Our focus when the pandemic began unfolding was to ensure that MSMEs had access to working capital to keep their operations afloat. Since early March 2020, DBS has approved over 9,000 collateral-free loans totalling more than S$3 billion for micro and small enterprises, with over 5,000 loans worth some S$800 million for MSMEs.

Our data also showed that the average quanta of loans taken by MSMEs was just over S$140,000. DBS put together a Digital Business Loan, granting business owners access of up to S$200,000 in collateral-free funding as quickly as the day after approval. This is double what MSMEs can typically get from digital banking competitors.

We also simplified the credit documentation process to relieve MSMEs of the onerous task of producing audited financial statements. Instead, they need only provide their most recent bank statement or Notice of Assessment.

DIGITAL BUSINESS LOAN

Providing MSMEs with liquidity support to meet their most urgent cash-flow needs has helped stabilise their businesses amid the economic storm. I am relieved to learn that these enterprises now find themselves in a much better position than when the pandemic started. DBS surveyed some 250 SMEs in the sectors most acutely affected by Covid-19 - retail; F&B; and building and construction - and found that seven in 10 respondents were confident of meeting their loan repayment obligations without impacting their current business operations. Close to 30 per cent were willing to sacrifice their expansion plans and scale down business operations to make their repayments. Only 3 per cent flagged that they were not confident of meeting their loan repayments in 2021.

ABOUT 70% of SMEs confident of meeting loan repayment obligations without impacting current business operations ABOUT 30% of SMEs confident of meeting loan repayment obligations, but may need to adjust expansion plans or business operations ONLY 3% not confident of meeting loan repayment obligations

To thrive in the long term, MSMEs need to make the best of their breathing space to double down on digitalisation efforts. DBS has been bringing to bear the whole of our digital banking capabilities and partner ecosystems to help MSMEs transform.

Democratising digital banking solutions beyond lending

In March, we worked with technology partners to roll out the DBS F&B Digital Relief Package to enable F&B establishments to build a digital presence and create new income streams online in as fast as three days, roping in more partners to add digital solutions for e-invoicing, accounting, HR and payroll. A similar package curated for MSMEs in the retail sector will be rolled out in the coming weeks.

Earlier this year, DBS supported more than 800 merchants on the e-Bazaar platform, BazaarRia, in receiving instant payments throughout Ramadan by using DBS MAX, the bank's mobile-based QR payment collection solution. DBS also rolled out a digital, near contact-free Logistics Purchasing Card to digitalise the previously cash-based payments and collections processes at container and logistics depots.

Other solutions include trade financing, cross-border FX and supply-chain connectivity. By banking with DBS, MSMEs can conveniently tap a comprehensive range of tried and tested solutions that they would otherwise not be able to access.

Democratising skills upgrading to prepare msmes for the future of work

Another area that MSMEs have found challenging is in upskilling their employees with the right capabilities for the future. Many lack the resources or do not know where to start.

We shifted our DBS SME Academy content online, enabling MSME owners and staff to upskill themselves in their homes and offices, free of charge. MSMEs gained essential business know-how, from cash management to accounting to brand management and marketing - all critical skills to future-proofing their businesses. We complemented these resources with webinars in collaboration with industry partners such as IBM, IMDA and NTUC Learning Hub.

We also developed a complimentary Covid-19 Business Resource Guide to give MSME owners the insights they need to navigate their businesses through the economic uncertainty.

MSMEs banking with us can also tap DBS BusinessClass to plug into the region's wider business community. This engagement platform enables business owners to network with their regional peers, exchange insights and uncover new opportunities for collaboration. We regularly share the latest market insights as well as exclusive access to some of Asia's most knowledgeable industry masterminds.

DBS - ushering MSMEs into the digital economy

In my conversations with business owners, it has become apparent that MSMEs are looking for two key elements in choosing a long-term banking partner - trust and seamless convenience.

MSMEs deserve a bank that has the commitment and stamina to stick with them through thick and thin. They also want access to a range of solutions to meet their myriad business needs.

DBS has been here for our MSMEs through the decades, and, in just eight years we have transformed ourselves into a digital bank to support these small businesses with their own transformation. DBS remains focused on meeting the needs of our MSMEs. We are committed to building relationships with these important members of our local business community that go beyond the transactional - it's part of our purpose.

Physical pet supplies stores were among the non-essential businesses that were ordered to close during Singapore's circuit breaker from April to June.

Mr Terry Peh, the founder of online pet store Good Dog People, recalls: "Pet owners were all rushing online to stock up on supplies. So we saw a sudden surge in our orders." With more physical retailers taking their businesses online, he saw the need to do more - and fast - to get ahead of the competition.

As an e-commerce business, Good Dog People has always worked on improving its user experience to create more engagement with its customers - even before Covid-19. This is why Mr Peh was glad that DBS had a wide range of solutions to help his team upskill their digital capabilities.

Through DBS BusinessClass Online SME Academy, they picked up new skills in digital marketing and branding from the comfort and safety of their homes.

This time last year, Ms Wong Minying's Lucky Plaza food court was bustling with activity. Like other F&B establishments, the Covid-19 pandemic has struck Ms Wong's family business hard.

"With the ceasing of travel, the circuit breaker, the safe distancing measures ... we saw a 70 per cent hit to most of our food stalls," says the 27-year-old general manager of Asian Food Mall

Ms Wong decided to sign up for DBS' relief package for F&B businesses.

Supported by the Infocomm Media Development Authority and Enterprise Singapore, the DBS F&B relief package was started to support the bank's F&B customers. Partnerships with tech start-ups were established to help F&B owners digitalise their companies and build an online presence using an e-commerce site. It also offered help with digital marketing as well.

Besides offering an online platform for customers to order their food, Ms Wong took the opportunity to ensure the business had a stronger social media presence, with DBS' help.

Digitalising her family business gave her the push to start a new online business, Yuan Collagen that sells premium collagen soup online.

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