Consistent in its goal of empowering the country’s micro, small and medium enterprises (MSMEs), Union Bank of the Philippines (UnionBank) recently introduced the country’s very first mass retail banking hub, as part of the bank’s goal of enabling inclusive prosperity amid the current global health crisis.
Manuel G. Santiago Jr, UnionBank Chief Mass Market and Financial Inclusion Executive, recently told the media that the hub is an amalgamation of all entrepreneur-centric solutions offered by the bank that will provide a one-stop center for resources that MSMEs might need in order to support their businesses regardless of size—such as financing, logistics, and buyer-seller network, to name a few—all made accessible to mass market customers.
With around 99 percent of registered businesses in the country belonging to the MSME category, it is important for both the government and the private sector to help them to boost economic inclusivity.
In UnionBank’s recently-held E-Talk Tales, Santiago zeroed in on how the bank addresses the typical challenges being faced by entrepreneurs, especially during the pandemic. Santiago opened the discussion by explaining the hub’s target market, which he defined as “the middle-middle income level going down” which is also a mix of banked, underbanked, unbanked customers. “I think the definition for SMEs is much more defined where we’re really looking at micro, small and medium enterprises. So, these are your businesses with—for micro—P3 million in capital, and then you have P15 million for small, and for medium, it’s about a hundred million in capital,” Santiago explained.
According to Santiago, UnionBank calculates that this market at about 50 million customers, with the majority belonging to the lower income segments.
Moreover, the bank said about 60 percent of this customer market classify themselves as self-employed entrepreneurs. “It’s a large market and we think this is a segment that needs attention at this time, and we’re putting our efforts into that.”
Santiago pointed out that a big number of the current entrepreneurs are quite cautious about their business matters, caused by the uncertainties brought about by the current health crisis. This “wait and see” mindset is evident even in those who have immediate access to financing. “We’ve seen that in the way they apply for loans. You would think that because you have loans available, people are going to flock and apply,” Santiago said.
“In fact, even those existing loans that we have that have reached the renewal stage, MSMEs would even say, ‘Can you renew that at half the amount only, and I will just come back to you when things are better?’” Santiago said.
“It’s a good thing because it shows a sign of maturity, and you know in this time, you can’t be very aggressive. You really need to think about your next steps to be able to survive this crisis. By being the leader in empowering SMEs through digital initiatives, Santiago stressed that UnionBank has already rolled a lot of ground work even before the pandemic to address SME challenges. “It is a natural for us to push digitalization for the SMEs. They would have to adapt to digitalization as part of the changing landscape. It would be difficult for SMEs to survive if they rely on the brick-and-mortar model,” he said. One of the bank’s programs for this segment is the UnionBank Business Loan via UBX SeekCap, an online Loan Marketplace where business owners and SMEs may easily browse short-term business loan products and apply digitally.
SeekCap allows SMEs to get approval within hours. Furthermore, the bank has also established the SME Business Banking App, an online platform that enables SMES to manage their financial transactions by streamlining all business payments with the most comprehensive list of government and utility billers, transferring funds to both local and international banks, customizing complex business approval flows, enrolling all companies and subsidiaries in a single login setup, and opening and managing payroll accounts for their employees, among others.
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