Can banks be more than fair-weather friends?
WE’VE all heard this before: banks may be a fairweather friend.
When all is pleasant and sunny, banks roundly support groups via good times. But whilst dark clouds accumulate, banks pull credit score strains had to get via a difficult length.
This criticism of banks and their so-dubbed mercenary tack does now not get away Janet Young, coping with director and head of institution channels and digitalization at UOB, who in March shepherded a busload of enterprise clients from markets such as Singapore, China, and Vietnam, to the yearly OurCrowd summit held in Jerusalem.
There, those small-and-medium organization (SME) clients from South-east Asia mingled with portfolio agencies of OurCrowd, a UOB-backed assignment capital set up in Israeli that would matchmake accredited investors to its portfolio companies via equity crowdfunding.
It’s an outdated view, says Ms. Young, that on a wet day, a bank takes an umbrella away. Instead, banks are an increasing number of trying to work with SME clients to ease them into restructuring for destiny. This is a destiny that includes no longer just making an investment in technology, but additionally in polishing their wondering to tackle miles large opportunity in an increasingly without boundaries world.
Behind closed doorways, banks with SME clients will say that even as headline numbers recommend that SME investment is missing, the reality that lenders warfare with is in getting SMEs to tackle approach.
As one mirrored image of this, UOB has an FDI (overseas direct funding) advisory unit that it uses to attract funding flows from SMEs inside the area trying to make investments, however that need steerage on a way to expand into new markets that may be greater difficult to navigate. The difficulties come given a cocktail of troubles starting from capital controls to the differing business conditions that show South-east Asia is whatever but homogeneous.
When UOB started running with OurCrowd in 2015, its place to begin became to bring together the investing wishes of its SME customers, and the leading-facet ideas from Israel – an area that offers deep-tech solutions and is one in all the most important hubs for artificial intelligence services globally.
“The genesis was in connecting smart thoughts and smart money,” Ms. Young tells The Business Times.
As time handed, the bank observed that clever money extended past making an investment for themselves to boom non-public wealth, but became also seeking out ways to future-evidence their businesses via integrating to be had technology from carriers along with tech startups.
Working with OurCrowd – wherein UOB has invested more than US$10 million immediately for an undisclosed fairness stake – the bank also discovered that the VCs’ due diligence checks can offer a get dressed practice session for SMEs trying to amplify its business into new markets.
UOB has referred a handful of SMEs, along with tech agencies under its tech incubator programs, to OurCrowd, for them to be taken into consideration as portfolio groups of OurCrowd.
In the present process predicted six-month scrutiny by means of a project capital investor, such SMEs are asked hard questions on whether or not their products and services are scalable, and whether or not the cutting-edge conventional business could be able to pivot into a new carrier that is ripe for the brand new financial system. “It offers a truth check,” says Ms. Young.
The financial institution itself is also converting – at its own pace – to evaluate SMEs past just looking at financials and revenue projections. In some cases, it is attempting to study client engagement metrics, to recognize if those virtual corporations are shooting purchaser engagement by using offering a superior purchaser enjoy compared to their peers.
By moving along the deeper wishes of its SME customers, UOB can move far away from a “commoditized” way of working with SMEs, going past providing a credit score facility, to grow with the customers seeking to scale for the brand new financial system.
“Businesses are so keen nowadays to discover and tap new reserves of ideas and innovation, that maybe their authentic groups can provide you with as properly… So in place of lending them (cash), this enables them to sharpen their addressable marketplace and audience,” Ms. Young says.
She adds that the message of attaining a miles larger market, past Singapore, is now sinking in among Singapore corporates. And to push SMEs to try, Israel’s enjoy gives a refreshingly forgiving mindset towards dangers and commercial enterprise mishaps – a lesson for Singapore SMEs that can be too hazard-averse to take that first step out.