This article first appeared in Digital Edge, The Edge Malaysia Weekly on September 26, 2022 - October 2, 2022

The Covid-19 pandemic has been a catalyst for businesses to adopt digitalisation. However, small and medium enterprises (SMEs) continue to face roadblocks in their digitalisation journey. 

While Malaysia’s e-commerce value soared by 33% to RM896 billion in 2020 from RM675 billion in 2019, SME Corp — the agency tasked with drawing up policies and strategies for SMEs — found that the overall rate of digital adoption by Malaysian businesses “has not been really encouraging”.

Even though SMEs form 97.2% of the total number of business establishments in the country, only 53.9% were represented online in 2019, stated the agency. 

One of the major pain points for SMEs in the digitalisation game is the lack of access to funding, says Shayan Hazir, chief digital officer for Asean at HSBC. 

“It’s the way the banking [institution] has been set up. [Banks] consider [SMEs] high risk. When the market conditions are challenging, they will be impacted the most.”

Shayan’s answer to this conundrum is subscription-based digitalisation services for SMEs that promote transparency with no hidden charges, as well as offer better productivity and greater efficiency as the businesses can access all the services on a single platform. 

Speaking from his experience as head of global liquidity and cash management at HSBC Malaysia, Shayan says that in addition to making SME-focused commercialised products and solutions simpler and easy to use, education and training play important roles in getting SMEs to adopt digitalisation. 

As most SMEs have limited finances, they may find it difficult to digitalise their entire business ecosystem at one go. He recommends that they prioritise digitalising the customer experience to start with.

“Unless the customers are able to experience that change [through digitalisation], the value-added service, SMEs are not going to see benefits for their business on a long-term basis,” Shayan says.

Recognising these gaps, HSBC has come up with a series of products and services that enable SMEs to not just digitalise their operations but also expand their market reach globally. 

“One of the positive outcomes that HSBC has experienced, especially in Malaysia, is that the pandemic has given us the confidence to try and test new things. I think that [innovation] is becoming quite normal within the industry now,” Shayan observes. 

The pandemic has inspired more financial institutions including HSBC to shift from being exclusively a financial partner to their clients, to a digital consultant by providing solutions for digitalising their day-to-day business. 

As soon as a small business goes online on an e-commerce platform or creates its own official business social media account, it has entered a cross-border market and is accessible worldwide.

To enable SMEs to conduct fast and affordable cross-border transactions, the bank introduced the HSBC Global Wallet in January. With this product, users can send and receive money locally within the same day or on the next day. In addition, SMEs can receive payments in 10 currencies, including the US dollar, the euro and the pound sterling.

“We want to enable SMEs to trade internationally more seamlessly. I think that’s one of the first main areas [where] the bank finds key added value that we want to bring through digitalisation,” says Shayan.

This is not the bank’s first product for digitalising the business process. Last year, HSBC promoted omnichannel payment through its Omni Collect platform. 

Available for both e-commerce and over-the-counter transactions, Omni Collect supports multiple cards and e-wallets, FPX bank transfers and QR Scan and Pay for a swift payment experience for businesses and customers. 

By implementing Omni Collect in their businesses, SMEs will be able to accept all forms of payments through a single point-of-sale (POS) system instead of having multiple POS terminals on their counters. 

Additionally, the platform gives consumers the option of using any payment gateway they prefer with any POS system, Shayan says. 

Apart from managing their daily business operations, SMEs are also often required to sign many documents pertaining to their financial transactions, but strict physical distancing protocols imposed at the height of the coronavirus pandemic prevented them from visiting bank branches physically.

To create a seamless and safe experience while ensuring their clients’ businesses continued to run smoothly, HSBC introduced the Live Sign feature — a cloud-based solution that allows its customers to sign agreements electronically from any device or location. 

Shayan says that the Live Sign feature is embedded with industry-standard security encryptions, giving HSBC the confidence that all information is transmitted via secure channels. 

“Generally, it’s a mindset shift [to accept that digital signatures are as safe as physical ones]. Although the bank can provide services on the best, most secure channels, it’s really the customers themselves that have to accept the change.”

Shayan adds that the bank is cognisant of the fact that collaborations are crucial for HSBC to continue to innovate. This can be seen in its product offerings where the bank often has partnerships with fintech companies that are experts in the specific areas. 

“Let’s be honest, we’re not going to be the best at everything. It’s better to give people who are experts in their specific fields the opportunity to access a global customer base [through HSBC] rather than us trying to create another company to deliver that specific solution,” he explains.

Shayan has similar views about digital banks. Rather than regarding the newly approved financial institutions as competition, he sees their presence as an opportunity for digital and traditional banks to work closely together.

He says that digital and traditional banks are likely to eventually offer similar products as both are working towards digitalisation, but what sets international banks such as HSBC apart is their ability to act as a launch pad for businesses to reach global markets. 

“SMEs will come to a point in their lifecycle where they would want to expand overseas. As they grow, their needs will change from offering micro services into more complex management solutions including shared services, structured trade and foreign exchange and hedging capabilities. These kinds of complexities will be where we come into the picture as a trusted adviser to help them grow into mature corporate customers,” Shayan says. 

To further improve its offerings to SMEs, HSBC is actively looking into commercialising the application of blockchain in trade finance transactions across all its markets. 

Shayan also recognises the importance of banking as a service (BaaS). HSBC has already practised BaaS in the US by leveraging cloud platforms such as Oracle and NetSuite to offer financial products, and is looking to deploy it in the Asian region next with a localised strategy. 

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