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OCBC: Why going digital now is crucial for SMEs

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The significant acceleration in the digital transformation of small and medium-sized enterprises (SMEs) – the engine of the global and Southeast Asian economies – in recent years is expected to drive higher revenues and increase productivity, supporting economic growth and development in the region. Christie Chu, head of emerging business and commercial banking cash, global commercial banking at OCBC Bank, explores how SMEs are navigating the opportunities and challenges in digitalisation, and how the bank is supporting them in their efforts.

Many of our SME customers across Singapore are increasingly moving their business onto industry ecosystems such as fintech, supply chain platforms and other industry consortiums.
Christie Chu, head of emerging business and commercial banking cash, global commercial banking, OCBC Bank
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Many SMEs, especially smaller businesses and start-ups, know that digitalisation would benefit their businesses.

But often, such companies – which tend to focus on starting their business operations quickly rather than on how to digitalise – lack the manpower and resources to know where they should begin or what best fits their business.

As a financier, we have observed how businesses thrive when they are able to digitalise.

We found that among the younger SMEs in Singapore, such as newly incorporated start-ups that tend to be digital natives, the revenues of highly digital companies (those that conduct more than 50% of their banking activities digitally) outstripped their less digital peers by two and a half times.

While among the more mature SMEs, this difference goes up to as much as four times.

Addressing digital adoption early – and in the right way – opens up endless opportunities leading to new revenue streams as businesses grow, enabling them to quickly identify and access new customer segments and markets, and even new sources for supplies.

Digitalisation also helps businesses mitigate constraints in the operating environment. For instance, our OCBC SME Index in Singapore, the first of its kind, tracked the performance of SMEs as they emerged from the first year of the Covid-19 pandemic.

The index – derived from the transactional data of over 100,000 of our SME customers with annual sales turnover of up to $30 million – found that SMEs across most industries delivered healthy year-on-year growth in sales, demonstrating the positive impact of digitalisation.

Today, productivity gains that come with digitalisation can help businesses overcome a tight labour market and rising manpower costs.

How OCBC Bank supports SMEs in their digital journeys

We believe that starting right is critical, which is why we are the first bank in Singapore to have a team of digital specialists dedicated to providing newly incorporated SMEs personalised recommendations and assistance with digital solutions.

Our specialists first build an understanding of the customer’s business, identifying the stage of growth they are at, then provide personalised recommendations on suitable banking and beyond-banking solutions offered by the bank, as well as selected third-party solutions supported by government grants.

We were the first bank in Singapore to integrate business financial management capabilities into our digital business banking offerings enabling SMEs to easily mine their business data.

These capabilities allow SMEs to have easy access to a 360-view of their sales, expenses and cashflow trends, which enables them to identify patterns and gain insights for better business planning.

Many of our SME customers across Singapore are increasingly moving their business onto industry ecosystems such as fintech, supply chain platforms and other industry consortiums.

On our part, we are building more capabilities on our platforms that will provide rich data that can be used to track flows and anticipate customers’ needs to create relevant products, giving them access to more clients and suppliers.

In addition, we have entrenched ourselves in digital ecosystems with significant SME presence, for instance, by forming partnerships with trade platforms with established anchor buyer-supplier network relationships.

This will help our SMEs to trade securely among global partners with improved transparency, as well as reduce delays in shipments and payments.

Furthermore, digitalisation will increasingly aid SMEs to achieve their sustainability goals, as consumers and regulators demand higher ESG standards and more transparency from companies.

One of our customers, Bok Seng Logistics, is leveraging the data from its digitalisation efforts to participate in an industry pilot to help participants to track their carbon footprint, to benchmark and drive emission reduction strategies that in turn help reduce the fuel and energy costs of doing business.

OCBC Bank is helping SMEs access digital tools and solutions that will help them transform their operations and gain business insights easily. This will help lift a business’ growth trajectory in an ever-increasing digital world and open up more business opportunities for SMEs.

Find out more about what we do for SMEs here

To read other articles by OCBC Bank in this series, see below:

The sustainability agenda unlocking opportunities for a greener future

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