Industry leaders came together to discuss the need for financial inclusion among micro, small, and medium enterprises (MSMEs) at the American Chamber of Commerce and Grab Philippines’ hybrid webinar Digital Innovation: Advancing Financial Inclusion for MSMEs, held last August 30.
Led by speakers Bernadette Romulo-Puyat, Deputy Governor of the Bangko Sentral ng Pilipinas (BSP), and Erwin Yamsuan, Head of Lending of Grab Financial Group Philippines, and panelists Kelvin Lester Lee, Commissioner of the Securities and Exchange Commission; Ellen Joyce Suficiencio, Director of the BSP; Floredeliza Leong, VP for Advocacy, Communications, and Special Concerns of PHILEXPORT; and Rose Ferrer, a business strategist, the webinar looked at opportunities for MSMEs to grow in a digitalizing world.
The opportunities are there, they just aren’t accessible
Romulo-Puyat kicked off the webinar, sharing the country’s progress on digital transactions. With e-accounts going beyond savings and credit to cover services like payment, insurance, and remittances, it was seen that 6 out of 10 Filipinos now regularly make online transactions.
“From just being a tool for saving and safekeeping, an account has become a tool for convenient transactions any Filipino can benefit from,” shared Romulo-Puyat.
This doesn’t always translate, however, to the financial support that businesses need as they continue to be constrained to financial access. Coming from Yamsuan’s talk, only 4.8 percent of Filipino MSMEs obtained loans from banks during the COVID-19 pandemic, resulting in as much as 79 percent of MSMEs cited a lack of working capital in post-COVID times.
Besides accessibility to loans, Yamsuan also identified key structural gaps that prevent institutions from effectively loaning:
|● Poor physical reach. Filipinos may not live in areas close to a bank that can provide them with the financial services they need.|
|● Lack of readily-available, comprehensive information. Because MSMEs are often unbanked or underbanked, they can be classified as higher-risk borrowers, resulting in them not being provided with a loan capital.|
As such, Yamsuan recognized how fintech can come in to support MSMEs through three advantages: enabling extensive accessibility or for consumers to use fintech services wherever they may be; creating ecosystem synergies between businesses, lowering their possibility of being seen as at-risk; and the growth of AI technology by leveraging on data to reduce credit risk and increase consumer value, allowing one to score higher approval rates.
“Fintech can be a powerful complementary force to traditional financial institutions for financing MSMEs. It has emerged in recent years with the promise to deliver value to customers and business through innovations,” he shared.
How Grab supports MSMEs in their growth
Given these opportunities, Yamsuan went on to share Grab’s efforts to address business owners’ through Quick Cash, the loan assistance program under Grab Financial Group.
Quick Cash utilizes Grab’s data to determine tailor-fit loan amounts to every merchant. “These loans are personalized to each GrabFood or GrabMart merchant so that we’re sure we don’t extend more than what they can actually afford, which we’re able to do as we have all information on-hand to assess them,” said Yamsuan.
Besides this, daily micro-deductions are also done to help merchants track their loan payments; loan disbursal is also markedly shortened, with merchants provided with capital within a week.
Success stories have since been seen from Quick Cash, like Anna Monteson of Takoyakiks; Jennifer del Rosario of Aling Tonang’s Palabok; and Dan Cris Camarino of Nadeem Bar & Resto, who’ve been able to stabilize their business after hitting low points during the pandemic.
Apart from citing Grab’s efforts, Yamsuan also cited recommendations for digital lending to be further seen as a viable financing solution. He stressed the importance of financial education programs as a key way to start.
Yamsuan also mentioned the opportunity for a regulatory sandbox to enable the development of digital financing products and regulations in a more controlled environment; as well as considering grants and incentives to further encourage the market to embrace digital financing.
“As regulators formulate and implement MSME financing policies, it is imperative there is close collaboration with the private sector to harness innovations while making sure risks are mitigated. At the end of the day, MSMEs are still the backbone of our economy, and it is imperative that all stakeholders ensure their strength and resilience,” concluded Yamsuan.
GrabFood and GrabMart merchants can easily apply for Quick Cash through Grab’s website. With no documentation required apart from merchant details, entrepreneurs can expect their loan capital transferred to them within a week to let them readily grow in their business.
Be updated on Quick Cash and Grab’s other financial services through Grab’s Facebook and Instagram, and check out https://www.grab.com/ph/merchant/finance/hub/products/.