Room for Improvement — Post-pandemic environment sees more than 62 percent of APAC SMEs less than satisfied with traditional banks across a range of categories
JAKARTA, Indonesia–(BUSINESS WIRE)–FICO (NYSE: FICO)
Highlights
Impact of COVID-19 on SMEs:
New insights from RFI Global (prepared for FICO based on research from the SME Banking Council) reveal early signs that traditional banks in Indonesia are at risk of losing small- and medium-sized enterprise (SME) business to non-traditional competitors.
Amidst strong interest in borrowing funds, between 62-70 percent of APAC SMEs are less than satisfied with their main banks level of support in response to the COVID-19 outbreak. Nearly 70 percent of Indonesias SMEs expect to take up new or alternative / non-traditional borrowing products in 2022.
More information: https://www.fico.com/en/latest-thinking/white-paper/what-do-smes-need-their-banking-providers-post-pandemic
The pandemic put a sudden, massive burden on SMEs, globally, and they didnt think banks did enough to help them, said Aashish Sharma, senior director of decision management solutions in Asia Pacific for FICO. Indonesias SMEs have made it clear that they require financial support in 2022 but are less optimistic about getting it from their main banks. This is a potentially worrying trend for traditional banks, considering there are over 62 million SMEs in Indonesia, which is one for every five Indonesians.
Verdict: Room for Improvement
Banks need to understand whats causing SMEs to consider alternative funding sources. Survey respondents across the Asia Pacific region pointed to frustrations with the typical funding process of traditional banks and identified room for improvement[1] in their Covid-19 response across a range of funding related factors including:
SMEs call for competitive rates, simplified processes
According to this latest research, when choosing a loan provider or financial institution, the top three drivers for Indonesian SMEs are:
Alternative lenders have the potential to gain ground based on the challenges identified by this research and by our own market observations, said Sharma. However, the opportunity is there for traditional banks to retain borrowers if they understand those key decisioning criteria alongside the challenges and funding support sentiments of SME and the themes that have emerged.
If traditional banks are to experience continued and sustainable business growth from the SME segment in the APAC region, they must simplify the application process and improve transparency, as well as customer experience, continued Sharma. From the banks risk management perspective, they can support these efforts with scalable, well-informed decisioning tools that can both speed up the process for all and minimize risk.
The results speak for themselves
One of Australias top-four banks wanted to boost sales and margins by cutting down decision-making time, whilst improving lending services and identified the SME segment as an area for growth. It invested in FICO Platform and analytic services to create an automated, machine learning-powered digital lending solution that utilized transaction data. Risk model performance improved by 10 percent, and the banks projections for annual lending to existing SME customers and incremental lending to new SME customers increased by AUD $6.5 billion and AUD $800 million, respectively.
The findings from RFI Global examined and analyzed two years worth of polls by the SME Banking Council, which gathers the thoughts and feelings of SME owners and operators with financial decision-making responsibility for businesses with an annual revenue of up to USD $10 million. The insights in this release represent the results from the SME Banking Councils 2019 and 2021 surveys to provide a before and after comparison of lending demand and business sentiment in the two time periods. Over 4,700 respondents from across the Asia and Oceania regions participated. SG: n=720; MY: n=1044; ID: n=737; IN: n=729; NZ: n=1036; AU: n=508
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, manufacturing, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.
Learn more at www.fico.com.
FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.
Contacts
Neil Mirano
RICE for FICO
+65 3157 5680
neil.mirano@ricecomms.com
Saxon Shirley
FICO
+65 9171 0965
saxonshirley@fico.com
REACH, Singapore and Reggio Children, Italy present Mosaic of Marks, Words, Material SINGAPORE - Media…
KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 8 November 2024 - Trading offers a…
SINGAPORE - Media OutReach Newswire - 8 November 2024 - Home Action Party (HAP) is…
SINGAPORE - Media OutReach Newswire - 8 November 2024 - The Asia Pacific Enterprise Awards…
An iterative process is highly effective in increasing the value of large items HONG KONG…
HOHHOT, CHINA - Media OutReach Newswire - 7 November 2024 - In Q4 2024, the…