KUALA LUMPUR, April 26 — Data analytics company FICO has posited that 57 per cent of small and medium enterprises (SMEs) are expected to take up new or alternative borrowing products in 2022.
Senior director of decision management solutions in Asia Pacific Aashish Sharma said Covid-19 put a sudden and massive burden on SMEs and they did not think banks did enough to help them.
“Malaysia’s SMEs have made it clear that they require financial support in 2022 but are less optimistic about getting it from their main banks.
“This is a potentially worrying trend for traditional banks, considering there are an estimated 1.15 million SMEs in Malaysia, employing about 48 per cent of the workforce and contributing just over 38 per cent of the gross domestic product,” he said in a statement, today.
Sharma said the research from RFI Global, which was prepared for FICO, also expounded early signs that traditional banks in Malaysia were at risk of losing SME business to non-traditional competitors.
He added that banks need to understand what is causing SMEs to consider alternative funding sources, and identified room for improvement across a range of funding-related factors, including access to credit, financial assistance and speed of response.
Besides, he said the top three drivers for SMEs choosing a loan provider or financial institution are competitive interest rates, ease and speed of application process, as well as flexibility in repayment options.
“Alternative lenders have the potential to gain ground based on the challenges identified by this research and by our own market observations.
“However, the opportunity is there for traditional banks to retain borrowers if they understand those key decisioning criteria alongside the challenges and funding support sentiments of SME and the themes that have emerged,” he added.
— Bernama
