MSMEs’ digital shift needs collaboration

The global Covid-19 pandemic has profoundly impacted the micro, small and medium enterprises, or MSMEs, with the economic shocks reverberating worldwide.

However, the pandemic also saw an unprecedented focus on the struggling sector.

Despite being diminutive in size, MSMEs make up for the shortcoming with their sheer volume, making them a source of significant contributions to the local economy.

The latest data from the Philippine Statistics Authority showed MSMEs comprised 99.52 percent of total businesses in the country, or over 998,342 Filipino enterprises delivering goods and services daily.

"In the fast-paced business landscape, MSMEs are facing increased pressure to apply digital technology on their operations to remain competitive and even upscale," Dino Velasco, the senior vice president and institutional segment marketing head at Union Bank of the Philippines, said in an interview with the Daily Tribune's digital show Business Sense.

"The Covid-19 pandemic has accelerated this trend, with businesses across the globe, regardless of size, rapidly adopting digitalization to survive and thrive in the so-called new normal," he added.

UnionBank ceded it could not take the whole task by itself. It needed to partner with stakeholders to address the enormity of the challenge. Foremost in the task is the geography of the Philippines with 7,641 islands which are broadly categorized in three main geographical divisions from north to south.

Some of these islands are off-grid, which requires powering up first before they can be connected digitally and served by traditional financing facilities, like UnionBank.

"We also do understand and accept the fact that we cannot do it alone. For us at UnionBank, it's very important to work with partners and we do have partners both in the technology space and in the brick-and-mortar space that allow us to expand or reach even further. Going beyond the 80 percent of the population that are connected and reach the other 20 percent off-grid," Velasco added.

Looking at the Philippine financial landscape, the fintech space has evolved, with telcos, power providers and distributors,  money business services, logistics, and others, who are present in off-grid communities as part of the whole-of-nation approach to achieving financial inclusion.

Velasco went on, "We continue to partner with these vital stakeholders so that we can provide and extend our financial services to the markets in those areas."

GlobalLinker

The greatest hurdles to the successful adoption of digital technology among MSME is overcoming the lack of expertise and good practices, and the associated costs.

For a broader uptake of digital tools for these sectors, there needs to be more widely available standardized and even ready templates that the MSMEs can use like a plug-and-play setup.

These ready templates would help avoid the appearance of costly and complicated tools and potentially enhance the opportunities for MSMEs to achieve sustainability.

"That has always been the challenge for technology, not just for banking, but a lot of industries. How do we educate the more senior segment of the population," Velasco replied when queried on how to educate MSMEs to embrace digital tools to advance sustainability.

Velasco added: "What works is to educate the influencers for that more senior population of the segment. A lot of the small businesses today have in the past, involved other members of the family in running their businesses and they become part of educating those who are trying to use technology for the first time.  We noticed that we can adapt that strategy by involving these family members who influence the other members, especially those who are already digitally savvy."

In addition, UnionBank has launched the Global Linker, an online platform designed for e-Commerce that allows users or MSMEs to create their website, while also offering them the opportunity to manage their inventories and link up with other merchants, suppliers, and even resellers.

The UnionBank GlobalLinker is a digital SME online platform that aims to digitize SMEs in the country.

To create trade fairs and online marketplaces for Filipinos all over the country, we are dedicated to the digital education of all Filipino SMEs.

Velasco explained that after creating their website through GlobalLinker, the merchants are now accessible to potential clients "wherever there may be, here or outside the Philippines."

"Imagine if you are an exporter from the Philippines and you have a potential client from India. Because of GlobalLinker, you can communicate with each other and ensure that the goods and services can be ordered and delivered to your client overseas. More importantly, this e-Commerce site is equipped with the necessary tools in ways by which customers can settle or pay digitally," he said.

Velasco continued, "And if you are using our MSME Business Banking app, you can transact overseas and pay someone using Swift (code). Basically, the GlobalLinker is business networking for MSMEs and startups."

Mobile app introduced

In the age of a growing demand for digital presence, Velasco said it goes unsaid that UnionBank sees the need for digital technology as a critical tool for MSMEs that want to grow or expand.

"What we're focusing on is to feature our MSME Mobile Business Banking App that we developed to answer the needs of our customers from beginning to end," Velasco said.

"Meaning end-to-end from the time a small business owner needs to apply for an account to the time when they need to manage their businesses. Using the app right solely instead of going to other channels where they need to get out of their offices and go to the branch."

The UnionBank mobile app aims to educate its users to allow the app to let "everything happen while they're using the app or the platform." The app also aims to create solutions for the users, like the QR code feature to allow merchants to accept payments from their customers.

"It is really an end-to-end feature from account opening to transferring funds, to paying suppliers to accept payments from their customers and up to even applying for a loan facility," Velasco added.

The mobile app is something UnionBank wants to make available in the hands of its customers by simply accessing the mobile banking app for MSMEs.

Necessary journey

It is no longer a choice for MSMEs. Digitalization is now a necessary journey that all MSMEs must embrace to survive and succeed. Using digital technology may save significant costs for the MSMEs, while at the same time enhancing their operations, sales, marketing, and presence. A digitized MSME may also see increased productivity and efficiency, and improved customer service.

But digitalization also comes with several challenges, including technological know-how, funding, and even data security. UnionBank of the Philippines is offering several platforms to solve these challenges.

All you have to do is click and download their digital platform offerings. UnionBank is committed to helping MSMEs achieve their digital transformation goals, with their expertise and cost-effective solutions.