DBS digital banking strategies for Hong Kong SMEs

Alexander W.L. Lau, executive director and Digital Innovation Head for the Institutional Banking Group at DBS Bank (Hong Kong)

When you get right down to it, businesses of all shapes and sizes share many common characteristics: they have leaders gushing with entrepreneurial drive, they started out by identifying a market need and specializing in it, and they bring together the right set of skills and resources to fulfil that need. More often than not, the commonalities end here and differentiation begins.

For while large enterprises have access to financial resources limited only by the willingness of financial institutions to fund their initiatives, small and medium enterprises, particularly small businesses, they often find themselves struggling to finance next month’s operations. This is an exaggeration, of course, but the numbers may not be that far from the truth.

According to the “Financing SMEs and Entrepreneurs 2017 – an OECD scoreboard” financing in emerging countries continue to favor large enterprises with the median interest rate charge to SMEs being 56% higher than those charged to large enterprises.

Among entrepreneurs, the lack of financial knowledge, strategic vision, resources and the willingness to attract sources of finance other than straight debt, limit SMEs’ uptake of non-bank finance instruments, especially from capital markets. Then there is also the disadvantageous tax treatment vis-à-vis straight debt. But beyond the financing challenge, other operational issues remain: most entrepreneurs are not technology savvy, they are very focused on running a business and likely have little knowledge in understanding how and what technology can help them, and who to turn to for help.

Arguably DBS Bank (Hong Kong) is taking the right approach with the launch of DBS BusinessClass – a program and platform aimed at bringing together different parties to aid SMEs in understanding how technology can support their business.

“Customers [SME] are expecting banks to provide more tailored-made, more suitable, products for them. For some of the services that are not core competency of the bank, we have built a platform that brings together partners and experts to help SMEs,” commented Alexander W.L. Lau, executive director and Digital Innovation Head for the Institutional Banking Group at DBS Bank (Hong Kong).

At a DBS BusinessClass event, he spoke to Fintech Innovation about the bank’s strategy for engaging customers including bringing in third party experts, many of which are SMEs themselves, to showcase some innovations that might be suitable for these small businesses.

 “Our approach to helping customers is to build an ecosystem, a platform and bring in the partners – not just from the bank’s perspective – with a holistic view to helping SMEs solve their business problems,” he explained.

In May 2016, DBS Bank (Hong Kong) launched its “Meet Online” service designed specifically to allow SMEs to conduct banking services with the bank without having to physically go to a bank branch.