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As SMEs expect better digital services, banks woo them with improved online banking and multichannel offerings

Back in 2012, when Jon Richards first searched for a banking partner for his start-up, the market was a lot different.

Very few banks offered online banking options to small to medium-sized business customers like him. Some even wanted huge deposits.

“The first bank we walked into wanted a Dh1million deposit,” says Richards, Co-founder and Chief Executive of the now significantly larger, but still SME, finance comparison website “At that time we were in pre-funding stage. We maybe had Dh10,000 in our pockets.”

Times have changed and banks are waking up to the opportunity the SME segment offers.

SMEs are the backbone of the UAE economy. They contribute about 60 per cent of the GDP and 86 per cent of employment. The UAE wants to grow the share of GDP contributed by SMEs to 70 per cent in the next few years.

- Rohit Garg, Head of Business Banking at Mashreq

Becoming the first choice

Friends and family are usually the most important financial sources for a start-up, but experts say it is important for an SME to go into partnership with a bank that they think will be able to support their journey throughout. “Over their life cycle, the needs of the SMEs change,” says Garg.

Every SME should have a bank from the outset, even if they have no immediate plans to seek financing. “A lot of business payments, a lot of the salaries and a lot of how you will operate your business will go through a bank,” says Rami Shaar, CEO and Co-founder of mobile-based laundry start-up Washmen.

So what should a start-up look for in a bank?

“Opening a business can be time-consuming,” says Shaar. “It is important for the banks to not hinder that process, but to be able to support the business in the start-up phase and to get the company on its feet. Then, later on, other requirements such as financing will be needed from the banks.”

Rachel McArthur, Founder and Managing Editor of Digital Ink Media, suggests considering how supportive banks are at the beginning because it will give an indication of how helpful they will be in the future.

McArthur found her bank, Mashreq, to be helpful and understanding from the outset. As a start-up she did not have a large deposit available when she opened her SME account. “They didn’t ask for a crazy amount from me for a deposit. I had the minimum SME bank account and that worked fine for me. And they were very supportive in terms of the process of setting up. It didn’t take a long time, which was good as well.”

Digital services

Online banking and multichannel offerings such as on smartphones and tablets that provide high levels of personalisation are also important, entrepreneurs say.

Having a good multichannel web offering is essential, say SMEs Image Credit: Supplied

“The ability to check balances from your mobile is critical because most of the time you’re not at your desk,” says Richards. “You are running around and want to be able to do things on the move. Having a good web offering is absolutely essential.”

Mashreq, which is celebrating its 50th anniversary this year, has built an SME banking platform, complete with multiple channels, including an app called SnappBiz catering to small businesses. SnappBiz enables SMEs to transfer funds, check balances, apply for cheque books, pay bills and obtain special foreign exchange deals while on the move.

But McArthur believes good offline support is as important as online facilities even in the digital age. “The one thing I think would be good to have is a person-to-person experience when you really need it. I am personally not a fan of AI technology right now. I don’t like to talk to a robot to eventually get to a person.”

For that, Mashreq has specialists and subject matter experts who take care of its sizeable segment of SME customers, who currently constitute about 13 per cent of the market.

Every step of the way

“At Mashreq we aim to be the trusted partner of SMEs,” says Garg. “For every stage of the life cycle of the business, we have a product and a solution.”

So when is a good time to apply for financing? “It’s the million-dollar question,” says Garg. “It’s important to understand that you should take financing only when you require it. Having too much is as bad as having too little because there’s a cost attached to it.”

As banks take on an advisory role, expand their digital offering and include non-traditional services such as accounting tips and match-making with suppliers and buyers, both SMEs and financial institutions stand to gain, resulting in increased customer satisfaction as well as retention.

“It is not about trying to do only financing or only one part of the business,” says Garg. “The bank takes care of all your requirements and advises you on your needs at every stage. We see it as a win-win, long-term partnership.”

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