Union Bank boosts digital platform for SME expansion

MANILA, Philippines – The Union Bank of the Philippines has co-launched a “digital revolution” focused on increasing the opportunities of the country’s small and medium enterprises (SME).

UnionBank executive vice president Genaro Lapez said the SME market accounts for 98 percent of all registered business or roughly 50,000 establishments and employs 50 million Filipinos.

However, high operating costs limit its expansion and competitiveness domestically and in the regional and global market. Operating costs include sourcing and acquiring raw materials to production, and then the logistical and marketing aspects.

On the other hand, a large portion of operating costs could be reduced if the SME had a platform to connect with the entire supply chain.

UnionBank partnered with PLDT Smart SME Nation, Shopinas.com, Air21, AMTI, and the Department of Trade and Industry (DTI) to create an e-commerce platform to facilitate the growth of SME while reducing the cost of doing business.

Japez noted that an estimated 60 million Filipinos are online, either through laptops, tablets or smartphones. It is estimated that by the end of 2015, there would be 26 million smartphone owners.

However, only one percent of SMEs have websites.

“By introducing the so-called consortium or the partnership of financial institutions, financial technology (fintech) firms, logistics experts, telecommunications companies (telcos), businesses can take advantage of the opportunities and in fact, reduce costs,” the bank official said.

Air 21 chairman and president Rudy G. Fulo said by partnering with the “consortium,” business can get special rates for logistic operations such as moving the products, storage or air freight.

Dragonpay becomes the payment platform in collaboration with UnionBank, while the PLDT Smart group will lend its expertise having been dealing with both SME and the supply chain utilizing e-commerce.

Japez explained that forming partnerships offers more opportunities for financial institutions instead of resisting the expansion of the digital environment.

Globally, banks and fintechs are forming partnerships that become platforms for business, especially the huge SME market.

UnionBank SME loan portfolio accounts for more than half of the bank’s consumer lending portfolio, which includes mortgage, auto and salary loans.