While Asia’s emergence as a centre of global trade is undisputed, the role played by small and medium-size enterprises (SMEs) in this development has not always been reflected in bank services. SMEs have typically been neglected by many banks due to their small size and low margin-high volume business, which puts off many lenders which prefer to focus on multinational corporations (MNCs).
But services provided by some SME banks illustrate both the importance of the sector to the broader Asia-Pacific economy, and the growing demands made by SMEs which generate such a large proportion of Asia-Pacific’s GDP. Put simply, the region is dominated by SMEs which account for as much as 60% of the economies of some countries. Even in developed Singapore, SMEs account for 50% of GDP and employ 60% of its workforce.
While banking SMEs is not straightforward -- or all banks would be doing it -- some SME banks are trying to address some of the specific concerns of SMEs, such as OCBC Bank. The bank’s new OCBC Business Card is a business debit card using the Mastercard network incorporating the ATM cash withdrawal function. It is OCBC’s first corporate card. What makes it different is the recognition it gives its bearers, as imprinted on the card is the name of the company, its logo and the name and designation of the cardholder. At first glance it almost appears like a business card.
“The idea was borne out of a survey we did a couple of years ago and was further validated before we actually launched the card. In the survey SMEs told us two things: they want services from banks to be simple, fast and convenient and they want respect and recognition,” said Raymond Chee, head of group transaction banking, cash management (Singapore), at OCBC.
And it is recognition, of lack thereof, which is driving the business. “I believe the main driver of take-up is the unique feature of card personalisation,” said Chee. “CEOs of SMEs want to be respected as owners of their companies, as CEOs in their own right. While they may not have big companies, they are after all founders or business owners.”
OCBC, which also banks MNCs and financial institutions, considers any company with turnover of between S$10 million ($8 million) and S$100 million to be an SME. It also has a separate department dealing with emerging businesses for firms with turnovers of less than $10 million. Of Singapore’s 200,000 or so SMEs, only about 10% have turnovers of more than S$10 million.
It is still early days for the card which was launched at the end of 2010, but OCBC expects that SME owners who make purchases on behalf of their own companies will not use the card just for travel and entertainment, but for a broad range of purchases such as bills. “We have positioned the card not only to fulfil the functional needs of a corporate card, such as greater control and visibility over card spend, but also to serve an emotional need. Hence, this card is very different from other cards you might find in Singapore,” said Chee.