Visa: SMEs an Untapped Segment for Digital Banks

Visa: SMEs an Untapped Segment for Digital Banks

The majority of  SMEs in Singapore have a positive view of digital banks, and 88 percent of them in Singapore would consider switching some services to digital banks, Visa said.

The untapped small and medium enterprise (SME) segment presents a viable opportunity for digital banks as SMEs want greater convenience, value and the ability to track payments and manage cashflow, Visa said in its latest study on digital banking and SMEs in Singapore.

Respondents to the survey cited unsatisfactory terms on corporate products and a lack of control over their banking experiences among their current banking challenges. They also see 24/7 availability of digital banks (58 percent), ease of making digital payments and transfers (56 percent), and efficiency of money transfers when receiving payments for goods and services (55 percent) as reasons to make the switch.

The Monetary Authority of Singapore (MAS) is expected to issue three wholesale digital banking licenses as part of its digital banking regime later this year. 

Digital Adoption to Grow

SMEs are already using digital solutions for other services such as accounting (49 percent), payroll (48 percent), invoicing (47 percent) and claims processing (46 percent).

Respondents said they are likely to use a mix of services from traditional and digital banks, particularly for loan applications (60 percent) and business insurance applications (58 percent). However, they are most likely to switch to digital banks for services such as transferring money to another international account (39 percent) and foreign exchange services (35 percent).

«With traditional banks looking to become more digitally focused and new neobank challengers introducing innovative solutions to serve this segment, we believe more SMEs will embark on their digital transformation journey adopting digital banking services or embedding digital solutions into their day-to-day business processes,» Kunal Chatterjee, Visa country manager for Singapore and Brunei, said.