Bringing SMEs beyond Covid-19

From left: AmBank Group Business Banking managing director Christopher Yap, AMMB Holdings Berhad chairman Tan Sri Azman Hashim, AmBank BizRACE Season 2 Champions PTT Outdoor operations head Sammy Lee and PTT Outdoor founder Mike Chu and AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir.

AS most businesses around the world grapple to stay open and survive amidst the pandemic, some have thrived beyond expectations despite the impact of Covid-19.

To bring SMEs forward, AmBank’s Business Banking managing director Christopher Yap elaborates on the bank’s plans to boost the SME scene.

Approaching SMEs the right way

How we approach the SME business is based on segmentation as we believe it is important for us, to accurately segment our customers based on their needs.

If you see the SME segment, many banks approach SMEs as just one segment.

However, it can be divided into a few segments - four segments, to be precise.

The first segment that we actually look at is sole proprietor and partnerships – companies run by individual owners and they behave similar to our individual retail customers.

The second one is the small SMEs – it can be a start-up or they could be in business for a few years.

Small SMEs generate RM5mil to RM6mil in sales a year, whereas medium SMEs generate RM15mil to RM20mil while large SMEs generate RM50mil or more in sales a year.

At AmBank, every segment of SMEs has dedicated teams, processes and programmes.

For example, if we provide a large SME programme to a small SME or a sole proprietor, we are actually giving them too much for them to run their business. And too much of anything is not good, including loans.

There is a tendency to invest in something that will not be compatible with their core business and they will risk a higher failure rate.

But if we provide a sole proprietor or small SME programme to a large SME, the company will not have enough working capital or enough loans to actually thrive and expand.

Hence, we segment SMEs so that we are not giving them too much and also not give them too little when it comes to lending.

The needs of these segments are also very different.

For example, a small SME may just need a current account, small overdrafts but larger SMEs may require trade facilities, foreign exchange, collection account or virtual accounts.

So, the solutions we provide for different segments of SMEs are also very different.

The SME business is driven across the bank, not just within business banking, so the smaller SMEs, the sole proprietor and partnerships are taken care of through our 170 retail branches as these SMEs are scattered more across the country compared to the bigger SMEs which are usually clustered around the major cities or towns.

As for medium and large SMEs, they are handled at the business banking level. There are also some of the larger SMEs that are managed at the commercial or the mid-corporate level, so that is how we distribute the go-to market strategy for the SME business.

AmBank BizCONFERENCEs were held virtually this year.AmBank BizCONFERENCEs were held virtually this year.

Standing out from the rest

Building processes, sales and products are fundamental but any and every bank can do that.

At AmBank, we also want to build a platform, besides having the right people, the programme and segmentation.

Understanding the needs of SMEs, apart from loans, deposits and lending programmes, SME needs are very different versus corporate customer needs.

For example, listed companies have the expertise and dedicated teams that handle dedicated and structured functions.

For SMEs, we know that the team is small, it is not dedicated, and most of the functions are quite grey.

On many occasions, the owner and a small core team will end up doing everything, which includes finance, human resources, production, among other functions.

You can have a finance person taking care of human resources, certain elements of branding as well as marketing.

Most of the time, the owners themselves are involved in all aspects of the business, and we know that the owners are very busy people. They have to make sure their production is ongoing, quality control is there, and payments are coming in, among a slew of other considerations.

Hence, what we aim to do is to create a platform to help these business owners and SMEs, to guide them in upscaling and in paying attention to the areas that they often miss.

So, we created this platform called AmBank BizCLUB to help businesses upscale, provide branding exposure and even to a certain extent assign mentorship to these SMEs so that they can learn from successful businesses.

AmBank has engaged with over 10,000 SMEs across Malaysia through its AmBank BizCONFERENCEs, AmBank BizRACE and CEO Chat Sessions.AmBank has engaged with over 10,000 SMEs across Malaysia through its AmBank BizCONFERENCEs, AmBank BizRACE and CEO Chat Sessions.

Focusing on business sustainability

While there are many successful businesses, we also see multiple SMEs that are forced to close down and many of these may not be on the radar. They just quietly fade away because nobody wants to talk so much about failure.

Statistics show that out of more than RM300bil in SME loans provided nationwide, there are about 3% that fail, which comes up to a staggering amount of about RM100mil.

Which is why we want to use the AmBank BizCLUB platform to help businesses navigate this journey and under AmBank BizCLUB, we have AmBank BizRACE and AmBank BizCONFERENCE.

The platform which has been running for the third year has engaged more than 10,000 participants.

Many of them are really hungry for knowledge, education and want to get the banks to help them embark on a journey to utilise new technology to drive efficiency in terms of digitalisation.

That said, this year we launched the third season of AmBank BizCLUB whereby we focused on three main tracks.

To know more, SMEs can go to and wait to be contacted by AmBank to attend a series of conferences and sign up for BizRACE if they are keen.

“To date, we have approved RM1bil in funding for more than 1,500 SMEs,” said AmBank’s Business Banking managing director Christopher Yap.“To date, we have approved RM1bil in funding for more than 1,500 SMEs,” said AmBank’s Business Banking managing director Christopher Yap.

Prioritising key trends

The first track is Industrial Revolution 4.0 (IR 4.0).

Geared more towards manufacturing or manufacturing-related activities, we realised that many SMEs overlook driving efficiency in their production lines.

We also realise that a lot of times, machines or entire production lines can break down, and this results in significant downtime that impacts their business.

So how do we help them embark on IR 4.0? It can be as simple as putting sensors into their production line, to help them prevent downtime which results in less production, which means less sales and less collection.

IR 4.0 is very important for manufacturing-related services to really drive their productivity and increase their efficiency.

The misconception among SMEs is that IR 4.0 is a very expensive plan and that is why as a bank we really aim to go beyond financing.

We look into how we can aid them in accurately applying for the readily available government grants. We also guide these SMEs towards applying for their readiness assessment in adopting IR 4.0, so that they can actually have a chance to obtain the grant from the Ministry of International Trade and Industry (MITI) to embark on this IR 4.0 journey in order to then drive efficiency and increase production.

The second track is digitalisation.

Given the pandemic and the MCO period that we went through, we noticed many businesses out there were unable to execute sales unless they provide essential services or items, such as food delivery.

However, there are many segments that are considered non-essential, such as household items, mattresses, bedsheets, kitchen appliances, or even to a certain extent, construction services.

The only way is to move towards e-commerce and digitalisation.

So, to help businesses embark on an e-commerce journey, we partnered with MITI in IR 4.0 and for digitalisation, we partnered with Malaysia Digital Economy Corporation (MDEC) to help businesses move into the e-commerce space.

Companies do not need to stop the brick and mortar aspect of their businesses and e-commerce will give them an additional revenue stream, while allowing them to reach out to customers globally.

With e-commerce, there are no boundaries virtually. You can get orders from overseas and ship it to them.

Through this initiative, we hope to assist the SMEs to obtain grants from MDEC ranging from RM5,000 to RM200,000 to embark on their e-commerce journey.

The third and final track is the halal quest.

There are misconceptions out there, where it is assumed that the halal sector is only in relation to food items, but if you look closely, it covers a wide range of products and services, including the likes of transportation services.

As a bank, we try to aid businesses in obtaining a halal certification by partnering with Jakim, Halal Development Corporation and Malaysia External Trade Development Corporation (Matrade).

This track aims to assist businesses in obtaining their halal certification, so that they can participate in the halal segment, which is growing by the day.

The whole idea is for us to go beyond financing and sales, to provide a platform to help businesses out there to achieve efficiency, drive new business and of course, explore the halal segment.

In addition to the government ministries and agencies we are partnering with for this year’s BizRACE for all three tracks, we are also working with partners like Microsoft Malaysia, Maxis and Bosch Rexroth for IR 4.0 and digitalisation.

Boosting SME capacity

So far, we’ve had 18 BizDIALOGUE webinars in the past month which are smaller scale webinars allowing for two-way interaction. The seminar provides a more intimate Q&A session with the speakers, who are successful business personalities.

We have also organised digital BizCONFERENCEs across Malaysia. These sessions have been undertaken virtually and featured different government agencies and industry leaders.

AmBank BizRACE 2019 top 30 participants.AmBank BizRACE 2019 top 30 participants.

Championing continuous SME growth

We understand that funding is extremely important and to date, we have approved RM1bil in funding for more than 1,500 SMEs.

Under the guidance of Bank Negara Malaysia, we also embarked on a targeted repayment system that works for customers especially in the vulnerable sector.

SMEs can also reach out to their relationship managers or to the bank, and we will come in to see how we can help you in your facilities, loans or restructuring.

As far as AmBank is concerned, we have spent close to RM4mil for all three BizRACEs. More importantly, this opportunity is offered to all SMEs and you don’t even need to be an existing AmBank customer.

We are here for our customers from their infancy phase, right up to when they are ready to list. We call it cradle to IPO.

Since 2017 until now, the bank has grown substantially and of course, we’re very honoured to be recognised by the market with a few awards, for example, the Asian Banking and Finance Institute of SME Bank, or SME Bank of the Year for two consecutive years (2019 and 2020), same goes to Alpha Southeast Asia – Best SME Bank in Malaysia (2019 and 2020), and for Global Banking and Finance – Best SME Bank Malaysia for three consecutive years (2018 to 2020).

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