(Small and Medium Enterprises) SME financing challenges have only been exacerbated by the current slowdown in the domestic economy. Last year, the Monetary Authority of Singapore (MAS) said it was working with local and foreign banks to explore a shared services platform for doing corporate Know-Your-Customer (KYC).
KYC was to have been a system by which banks obtain their clients’ information to better address SME financing challenges.
Many small and medium companies cannot access bank loans mainly because they do not have sufficient credit history. The KYC was supposed to have addressed this particular SME financing platform.
However, while they were able to “harmonise” various banking KYC systems, the cost of implementing this cross-border system was too high, so that project has now been put on hold. MAS and Gov Tech were to have used this platform to extract trusted data from government sources on the business and key individuals associated with the SMEs to build a more informed credit assessment.
But yesterday MAS said that it will “take a pause” on its KYC utility experiment due to the unexpected high costs of the project. MAS managing director Ravi Menon said: “The economics did not work out: our proposed solution was going to cost more than the savings that banks would be going to get out of it.” Speaking at the Singapore FinTech Festival 2018 he said that the corporate KYC verification which was to have enabled better access for SME financing is far more complex than that for personal KYC verification.
The MAS is now working to facilitate financial institutions’ credit assessment of SME financing using trusted government data.
MAS said that it will also work with other government authorities to create a cross-border innovation platform for SMEs. To be known as Business sans Borders, it will enable SMEs to connect a global services marketplace.
The Business sans Borders – A collaborative AI-driven global solutions hub to foster SME digitalisation – is mooted by MAS and Infocomm Media Development Authority (IMDA). The platform is to be rolled out in partnership with six private sector partners to create a Proof of Concept (“POC”) hybrid business data and digital solutions hub. The initiative will leverage on Artificial Intelligence (AI) to facilitate the internationalisation and digitalisation of SME. The private sector partners are GlobalLinker1, Mastercard, SAP, Yellow Pages and 99%SME (DBS Bank and SingTel).
- Known as Business sans Borders, this initiative aims to:
Provide a wide set of digital services and connections to enhance domestic and international trade opportunities for SMEs;
- Promote interoperability between SME ecosystems2;
- Facilitate quick and intuitive access in the provision of digital services (such as financial and professional services) with seamless integration; and
- Provide a sandbox environment to accelerate testing and delivery of new services for SMEs.
The following features will be developed and tested during the POC stage, by first quarter of 2019:
- Multi-ecosystem sandbox, containing anonymised SME data, which can be used to initiate new trading opportunities or services through digital discovery;
- Services App Store for the promotion of new and relevant services to SME ecosystems and SMEs; and
- Smart AI Engine for the seamless matching of demand and supply of services and products between SMEs across various SME ecosystems.
MAS said that its partners recognise that while SMEs are the core pillars of most economies, SMEs face considerable friction and challenges in achieving quick and seamless access to cross-border trade opportunities and financial services. Concurrently, solution providers with innovative and relevant SME solutions – ranging from logistics, professional services, SME financing or payments – face challenges in reaching out to these SMEs. The POC aims to provide a platform to address these challenges and bridge the gaps.
The POC will also seek further involvement from interested startups as well as established industry players in developing technical frameworks and potential governance structures for the exchange of anonymised SME data.
Sopnendu Mohanty, Chief FinTech Officer, MAS said “SMEs are an under-tapped source for considerable economic growth in many countries. Business sans Borders aims to ignite a sea change in the way SMEs around the world can easily connect digitally with each other. This pioneering hybrid data and solutions hub will be supported by innovative and relevant financial services and powered with self-learning artificial intelligence. We are confident that Business sans Borders will positively transform economies and propagate financial inclusion through ASEAN and beyond.”
by: Hitesh Shah / Contributor iCompareLoan
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