UnionBank bats for financial inclusion of MSMEs

BUSINESS
July 25, 2019

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With the rapid growth of technology in recent years, more and more businesses are slowly digitizing their operations and business models to adapt to the shift in the global marketplace. Here in the Philippines, local micro, small and medium enterprises (MSMEs) are also making that shift to broaden their network and cater to a bigger and more diverse market. A lot of Filipinos have proven that while this is no easy feat, it is attainable and all it takes is support.
    
Many MSMEs now thrive locally and they continue to grow by the number every year. UnionBank recently sat down with the Bangko Sentral ng Pilipinas (BSP) to discuss the different challenges that MSMEs are facing and how they can collaborate in bridging the information gap, and ease the business climate to be more financially inclusive.
    
Pia Roman-Tayag, managing director of the Center for Learning and Inclusion Advocacy (CLIA) of the BSP said that one of the biggest challenges to the growth and development of MSMEs is the limited access to credit. MSMEs are often reluctant to approach banks due to the difficulty – whether real or perceived – to meet bank loan requirements. Banks on the other hand are unable to appropriately gauge the capacity of borrowers due to a lack of formal credit histories and reliable financial statements.
    
Another factor is MSMEs’ limited knowledge on alternative modes of financing. They mostly rely on their internal funds to finance their investments. A World Bank report also showed that about 81.2% of Philippine enterprises rely mostly on internal funds to finance their investments and only 10.1% use bank financing, which is seen to inherently limit the prospect of growth. Ms. Tayag notes that this is where technology can play a crucial role in bridging the information gap and unlocking the potential of MSME finance.
    
UnionBank of the Philippines aims to bridge this information gap and provide MSMEs with the appropriate financial products and services they need to scale up their businesses. One of their solutions is UnionBank GlobalLinker (UBGL), an innovative and free online digital platform where entrepreneurs can access financial assistance, connect with other businesses and potential clients, and even create their own free online store.
    
Through UnionBank GlobalLinker, MSMEs can also save with pre-negotiated deals and offers from the platform’s partner fintech institutions like Taxumo, a tax filing platform that automates the computation, filing, and payment of business taxes; Paynamics for secure e-commerce transactions for merchants and their acquiring banks; Acudeen for invoice financing that helps MSMEs finance their receivables ahead of time; SeedIn, Southeast Asia’s leading business financing platform that connects MSMEs with potential investors for short-term financing and; Esquire Financing which provides tailor-made business loans for additional working capital and business expansion. As of date, the GlobalLinker network consists of 250,000 users worldwide, and 15% of which (or 38,000) are Filipino MSMEs.
    
UnionBank has also made it easier for business owners to open and maintain their own bank account. This is via the Biz Starter Account, which allows entrepreneurs to open a UnionBank checking account for a minimum deposit of P5,000. A business checking account helps MSMEs gain more credibility with investors, customers and other businesses and keep their accounting records accurate and organized.
    
Making these products and connections available on UBGL is consistent with UnionBank’s push for digitization as a financial institution. Beyond providing financial products and services, UnionBank wants to help MSMEs address the constraints to their growth, especially their limited access and knowledge on digitization. In the process, they are also enabling a community of businesses to help each other grow and succeed.
    
“Our goal is to help MSMEs access the resources that would best suit their needs,” UnionBank’s Program Manager and Lead Advocate for UBGL, Mourese Soriano said. “We want the platform’s users to have flexible choices that will address their restraints on capital and other sources of funding.”
    
MSMEs make up 99.5% of the total establishments in the Philippines, and contribute to 62.9% of employment and 35% of gross value added (GVA) (as reported by the Department of Trade and Industry). With added support for MSMEs from both the public and private sectors, the Philippines can achieve a more inclusive yet globally competitive economy.


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