MSMEs look to banks for capital needs

Small and medium businesses focus on digitalisation to boost productivity for further growth: Alliance Bank report

The Alliance Bank MSME Business Outlook Report 2024 Malaysia revealed a resilient landscape for micro, small, and medium enterprises as business sectors are starting to experience a return to prepandemic revenue figures over the past year.

To grow and expand their business in 2024 onwards, Malaysian MSMEs will look to banks for their capital needs as they ramp up sales and marketing efforts with increasing focus on digitalisation tools to boost productivity for further growth.

On the digital front, the report highlighted that MSMEs’ digital ambitions are high on their priority list and, over the next 12 months, this segment is planning to adopt various digital tools to enhance business productivity and ease dayto-day administrative tasks – 19.7% plan to implement cash flow management, 15.9% aim for social media management platforms and 14.6% look to adopt accounting-related tools.

“We are accelerating efforts to support MSMEs at every stage of their business journey by providing them with timely and differentiated solutions to meet their dynamic needs. This focus outlined in our Acceler8 strategy introduced in January 2023 has enabled the bank to maintain a robust momentum in the business banking segment,” said Raymond Chui (pic), group chief SME & commercial banking officer of Alliance Bank.

The biggest concern for MSMEs when it comes to growing their businesses is insufficient cash flow. They are looking into bridging the cash flow gap primarily through bank loans (49.7%), investor funding (22%) and peer-to-peer (P2P) financing solutions (13.2%). Due to the nature of their business or market segment, MSMEs are mostly looking for banks to offer faster loan application processing, simpler documentation requirements and low interest rates. While MSMEs require financial support from banks to grow their businesses, they also look for non-financial assistance such as business/networking events (17.4%), coaching/upskilling sessions (12%), and digitalising their enterprises (12%).

“The MSME segment, who are important contributors to the economy and for the creation of job opportunities, face unique challenges accessing financing as they typically lack adequate collateral and credit history. To help them in their growth journey, we continue to refine and enhance our credit approach and come up with inclusive solutions to meet their needs and support their earliest growth journey. As part of our journey in becoming our customers’ lifelong partner, we also look at supporting them beyond their financial needs to accelerate their growth journey,” Chui said, adding that one such example is Alliance Bank’s BizSmart Solution, a digital business ecosystem that helps MSMEs to access a broad suite of solutions and services at preferential rates, reach out to new customers and access a range of online resources.

As a bank that believes environmental, social and governance (ESG) practices can give businesses a competitive edge, Alliance Bank strives to build relevant and personalised solutions that can help its business customers embark on their own ESG roadmap to become sustainable-trade ready and build business resiliency, in line with the bank’s sustainability purpose.

It also collaborates with regulatory bodies, higher learning institutions and subject-matter experts to build practical programmes and tools to help SMEs’ journey towards becoming ESG-centric.

The Alliance Bank MSME Business Outlook Report 2024 Malaysia is derived from insights gathered from a survey of more than 200 MSMEs, offering a sectoral view of the goals, challenges, and needs of MSMEs in Malaysia. Following the bank’s brand purpose to be “The Bank For Life”, this commitment extends through the entire MSME business lifecycle, ensuring that businesses receive the support to grow further and achieve long term success through our innovative solutions.

Alliance Bank recently expanded its fully digital financing solution, aiming to help new companies as young as six months capitalise on their early growth opportunities. The Alliance Digital SME Startup Financing, a scheme launched in collaboration with CGC Digital, provides simplified access to working capital from RM20,000 to RM100,000 without the need for collateral.