Banks offering comprehensive services to small and medium-sized enterprises cross-border are surprisingly rare. While plenty target small businesses in their home markets, few see the merit in taking those skills overseas.
Singapore is an exception, where all three domestic banks – DBS, OCBC and UOB – take the craft and efficiency they have learned at home and apply these lessons to the far bigger markets that surround them.
OCBC has enjoyed great success in Indonesia and Malaysia, but DBS is present in both and is also making progress in India and Greater China. Both houses were candidates for this award, but DBS wins for the dramatic growth in SME revenue outside its home base over the last three years. Those year-on-year figures for the last three financial years were 50%, then 51%, then 53%.
Numbers like that won’t be sustainable for very long as the business grows. But the success of the business at home gives a clear roadmap for international expansion at this grassroots level.
As with everything else at DBS, a world leader in digital innovation, automation is at the heart of the SME offering. While the overall SME customer base grew just 4% year on year during our review period and deposits by 11%, transaction volumes through the digital channel grew 72%. Revenue per digital customer was up 10% year on year.
Through the use of the bank’s digital capabilities, customers can open an account in a single day in Singapore without needing to go into a branch, with a courier dispatched to collect whatever documents need to be seen, while back-end processes have been streamlined. A dedicated portal, DBS Get Set, also allows entrepreneurs to set up their businesses within a day, although that is partly a reflection of just how easy it is to do business in Singapore.
Digital for its own sake is not enough, however. “We’re mindful that digital innovation is to support the customer,” says Joyce Tee, group head of SME banking. “It has to be an enabler: how do we make the customer journey more seamless?”
DBS has so far attracted 4,000 smaller companies across six markets into its multi-currency account, ideal for those venturing into cross-border business in The Association of Southeast Asian Nations. And its partnership with Xero, a cloud accounting platform, gives SME customers a consolidated view of their accounts from any device at any time.
The bank has also been proactive in trying to help its SME client base grow through its DBS BusinessClass social platform, which runs an annual disruption event; its TechMatch programme, which matches customers with suitable providers and even potential acquisition targets; and its SME Academy, which gives foundation classes to help entrepreneurs get started.
These are all Singapore and Hong Kong initiatives – more than 80% of the bank’s SME business still originates in one of the two – but the roll out across the region is the exciting part. In India, 98% of new customers are acquired online. A tie-up with leading enterprise resource planning provider Tally has already increased the customer acquisition rate there sixfold.
There is no shortage of opportunity. The Greater Bay Area – the preferred term for the section of China embracing Hong Kong, Macau, Guangzhou, Shenzhen and Zhuhai – is a natural source area of small but fast-growing enterprises. India clearly offers huge opportunity too.
And DBS believes this opportunity can be grasped without compromising asset strength.
“Quality of assets comes from onboarding the right customer,” says Tee. “We are so embedded in the customer’s ecosystem that we understand the pain points and are able to move towards more predictive analysis, enhancing our credit assessment.”
In corporate finance, DBS has been involved in deals helping SMEs make their debut endeavours in the capital markets in Indonesia and Hong Kong, as well as Singapore. IPOs for small to mid-sized businesses during our review period included MindChamps Preschool in Singapore, Wah Sun Handbags in Hong Kong and PT Integra Indocabinet in Indonesia. Secondary placements might be as small as $5.5 million for Luen Thai Holdings or $8.1 million for Top Glove in Singapore – for both of which DBS was sole placement agent – but they all matter.
Wah Sun is a good example. It has been making handbags since 1989, and DBS has been banking it for 13 years; back then it was a family-owned SME controlled by five siblings. Having been the family’s main banker for so long, the listing on the main board this year, with DBS as sole sponsor and sole bookrunner, felt like a victory for adviser and customer alike.
SME banks must be nimble and adaptable, as well as comprehensive.
“Every market has important industrial clusters,” says Tee. “We ensure we are connected across the entire network. Greater China, including Hong Kong and Taiwan, are on a totally different track with electronics than India might be; textiles and garments will be different again.
“Whatever the segment, customers can speak to us on anything from hedging to insurance to loans.”
Copyright Euromoney magazine