Islamic Finance 

SME Bank set to be a game changer in Malaysia’s SME ecosystem

| 18 June, 2019

JUNE 18, 2019 | 10:07AM MYT | KUALA LUMPUR

SMALL-and medium-sized enterprises (SMEs) in the country can look forward to a new initiative that is set to benefit their business.

To be unveiled next month, the new banking revolution called the National SME Digital Platform is set to be a game changer for SMEs.

The new initiative, to be spearheaded by SME Bank, will provide a clear demarcation on targeted segments, as well as create synergy between players in the SME ecosystem and change the way the businesses are assisted.

“The digital platform is one of our efforts in becoming the leader in the SME ecosystem and subsequently help drive the contribution of SMEs to the national economy.

“Under the digital platform, we have SME Insight, which will classify and look at SMEs in close detail and provide leads for selected agencies in the ecosystem.

“Through financial assistance, it provides traditional scoring together with robotic process automation using artificial intelligence, where SMEs can expect shorter turnaround time per proposal.

“With the use of artificial intelligence, we can profile the data of the borrower, not only on the ability to pay, but also on the willingness to service the loan,” SME Bank group president and chief executive officer Aria Putera Ismail told the New Straits Times.

He said, previously, normal financing would take between four and five months for approval.

“We believe it can be shortened under the new initiative, coupled with the improvement of the policy and quality of the proposal papers submitted to us.”

Aria said the digital platform would leverage on e-commerce platforms and provide front-end component of online business for SMEs through its marketplace.

For that matter, SME Bank has signed a memorandum of understanding (MoU) with Orion XL, Telekom Malaysia (TM) and Commerce.Asia.

“Orion XL will assist SME Bank to provide financial technology (fintech) solutions by creating a framework for traditional and alternative credit scores and match them with suitable financing from the bank that will fill the void in the financial needs of the entrepreneurs.

“Under the MoU, both parties will adopt a two-pronged approach by using credit scores to assess the financial strength and creditworthiness of SMEs and matching the scores with suitable financing from SME Bank.

“TM, meanwhile, will provide access to its infrastructure and services, such as high-speed Internet, data centre and cloud computing, which will serve as enablers for the bank to explore providing digital solutions for the financing needs of the SMEs.

“Commerce.Asia will provide SME Bank access to its database of more than 700,000 SMEs in Malaysia and comprehensive ecosystem of e-commerce enabling technologies.”

Aria said, moving forward, SME Bank aimed to break the creation of brokers.

“Some entrepreneurs, when they want to start their business, the first thing they will ask is where to get funding. After that, whether they have connections.

“So we want to eliminate that. As an entrepreneur, when you are good at producing something, just focus on that.

“If you need funding, use the single-window system and we will reroute you to the agencies.”

At present, SMEs make up 99.2 per cent of business establishments in Malaysia, contributing 36 per cent of the gross domestic product. According to the SME Annual Report 2017/2018 by SME Corporation Malaysia, there are 907,065 SMEs in the country.

Aria said the bank always strove to make sure those that started as micro-enterprises would end in Bursa Malaysia.

“No more sentimental value until the SMEs have been listed in Bursa Malaysia, or being taken away by other banks.

“That’s our mission and vision, not only to us but we are trying to emulate this with all government agencies managing SMEs, such as the National Entrepreneur Group Economic Fund, Amanah Ikhtiar Malaysia and Majlis Amanah Rakyat.

“We want to make sure every single entrepreneur that started as a microenterprise can be nurtured and developed to be medium and big, subsequently to the capital market or commercial banks.

“SMEs’ life value should be just like our education system; after kindergarten to primary school, then secondary and university.”

To date, SME Bank has assisted more than 17,000 SMEs since its inception in 2005 with financing of RM30 billion.

Among the successful SMEs are Meditech Gloves Sdn Bhd, Sabah International Dairies Sdn Bhd and Nashmir Capsules Sdn Bhd, which produce medical latex and synthetic gloves, various ranges of milk and beverages, and hard gelatin capsules, respectively.

Asked on SME Bank’s role in nation-building, Aria said it aimed to provide assistance beyond financing.

“Our Centre for Entrepreneur Development and Research Sdn Bhd (CEDAR) provides high-impact intervention services, such as personalised business coaching, structured and guided business consulting and many more.

“Some 38,000 participants have benefited from sessions conducted by CEDAR.”

Aria said under its Upward Migration, the bank would uplift its customers to the next level in the following: registered growth in their profit, increased number of employees, improvement of technology and expansion to the export market.

“To date, 1,661 companies have been successfully migrated.”

Citing the famous Pisang Goreng Bu Nanik in Jakarta, Aria said SMEs in Malaysia could adopt the concept of a shared economy to ensure the growth of their businesses.

“The pisang goreng business initially only catered to the Tanjung Duren area. However, after the introduction of Go-Jek, the market has expanded beyond Jakarta. This concept of a sharing economy has transformed the SMEs’ landscape by connecting entrepreneurs with customers. We hope to emulate the same here,” said Aria, who previously helmed Maybank Syariah Indonesia as president and CEO, focusing on small, medium and large corporate segments in the country.

He said he hoped for SMEs to trade with other SMEs, as at present there was no single platform that connects them.

“At present, if SMEs want to get raw materials they will go to the big names, when actually there are SMEs producing similar products but with no names.”

Copyright New Straits Times