Finance technology could be a remedy for small and medium enterprises (SMEs) devastated by the coronavirus, by providing solutions to help them achieve more with less in an environment of unprecedented uncertainty, say global financial experts at Hong Kong Fintech Week 2020.

SMEs, with relatively limited financial resources, are particularly vulnerable during the pandemic. Unlike large enterprises, small businesses lack resources and flexibility to respond quickly to market changes. 

In Hong Kong, 60% of companies that have seen turnover fall by half due to Covid-19 are SMEs, compared to 29% of big companies, according to the Hong Kong General Chamber of Commerce. 

Hong Kong has more than 340,000 SMEs constituting upwards of 98% of the business establishment. Employees in the segment make up about 45% of the workforce in the private sector of the city. 

Research conducted earlier this year by Visa shows that SMEs in Hong Kong are facing three main pain points: revenue generation, cash flow optimisation and employee wellbeing and productivity.

Chavi Jafa, Head of Visa Business Solution for Asia Pacific, sees the struggle of SMEs as a golden opportunity for the fintech community to provide the right tools to make it easier for them to harness the efficiency and agility of data-driven, digital business models. On a panel discussion titled ‘Business Opportunities for Fintechs in the SME Space’, she said,

“Small businesses are the core of every economy, and hence it's very critical for them to be able to transform their businesses, and for us as the community and the industry to be able to help them.”

A survey of 231 respondents conducted by the Hong Kong General Chamber of Commerce in August revealed that nearly half of SMEs and a quarter of large corporations fear they will not survive more than six months due to the coronavirus without further government support. 

Facing uncertain market conditions now and months ahead of time, Calvin Choi from the AMTD Group sees the pandemic as a “good moment of time” for fintech companies to find their position to support market growth, as he shared his insights at another conference on ‘Banking Will Never be the Same’. 

“Fintech can be very adaptive to the ever-changing environment. Fintech companies are simple, relatively more flexible, less regulated, but more innovative.”

One example of a fintech solution built for SMEs is Neat, a Hong Kong-based startup that offers more flexible banking options for SMEs, making it easier to open multi-currency business accounts online, and avoid the traditional fees of sending and receiving payments internationally. The company has also entered a strategic partnership with Visa to issue corporate credit cards targeted at cross-border SMEs.

More SMEs are starting to embrace technology to help them overcome the challenges presented by the pandemic. 

United Overseas Bank (UOB), Accenture and Dun & Bradstreet revealed in August that the majority of SMEs across Asean prioritise technology investments to grow their business under Covid-19. The report also discovered that the majority of small businesses in the region are planning to adopt more digital strategies to improve efficiency. 

“The shift in focus from improving the customer experience to adopting more digital strategies is an indication of SMEs’ realisation of the potential for digitalisation to improve business sustainability,” according to the report Asean SME Transformation Survey 2020.

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Written by Olivia Tam