Awards for Excellence 2019
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Across the world, small and medium-sized enterprises have historically struggled to get financing for efficient solutions for trade operations. Addressing this need is at the top of many SMEs’ concerns.
This year, HSBC was central to one of the most innovative plans to tackle this issue: we.trade. The blockchain-based trade-finance platform completed its first round of transactions in July, executed via HSBC and three other banks.
The trades were typically for less than £50,000 and were made by unidentified European companies from the manufacturing, food, components and residential building sectors. Three HSBC clients were among the first to use the platform.
This initiative follows on from the ground-breaking Cargill trade executed last year by HSBC and ING on the R3 Corda blockchain platform, and it brings distributed-ledger technology (DLT) to smaller business clients.
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Juan Marotta |
HSBC was also one of seven original banks involved in the development of eTrade Connect, together with the Hong Kong Monetary Authority, which has drastically cut the time taken to approve trade loan applications in Hong Kong.
“Through pioneering DLT in trade, we have cut average transaction times from 15 days to around six hours,” says Natalie Blyth, global head of trade and receivables at HSBC. “This releases working capital for SMEs, supporting their day-to-day business requirements.”
Increasing the speed and efficiency of its SME offering has been central to HSBC’s activities over the last year.
Juan Marotta, global head of business banking for HSBC Commercial Banking, emphasises the importance of providing excellent transaction services to SMEs while also being able to connect them to opportunities, whether they operate domestically or internationally.
“We do this by fostering lasting relationships through a combination of face-to-face, phone and digital propositions,” he tells Euromoney. “In the past year, we redoubled our efforts to understand what really matters to SMEs – how they want to manage their businesses and what they need from us to support their ambitions. Through making it easier to bank with us, we’re making it easier for businesses to grow.”
One country where this is bearing fruit is Mexico, where HSBC lost market share in the SME segment between 2012 and 2015. HSBC Fusion was launched in the fourth quarter of 2017 to deliver a tailored combination of differentiated products and services with a specialised relationship model.
It was the result of a detailed study made in eight different countries. Fusion has produced 20% growth in HSBC’s SME customer base in Mexico between February 2018 and February 2019, with performing loan balances up by 30% year on year and non-performing loans down from 9.8% to 7.9%.
In the UK in September 2018, HSBC launched a £12 billion lending fund for SME businesses, bringing the total committed by the bank to UK SMEs over the last five years to £46 billion.
Given the complexities that some SMEs face when managing cash flow, we have increasingly seen customers using our corporate cards as a working capital line of credit – Diane Reyes
One user of the SME fund is Scottish distiller Pickering’s Gin. The business secured a seven-figure funding package that enabled it both to scale production to meet a rise in demand and to lease its first warehousing facility.
“HSBC UK has provided us with essential banking facilities that allow us to sustain growth as we respond to continually increasing demand for our products within the UK and overseas,” says a co-founder of the business.
The UK SME fund includes £1 billion that is ring-fenced for international-facing businesses. It has, for example, provided a finance package to Saggiomo Luxury Food to invest in new exporting opportunities to China and New Zealand; funded WooHa Brewing Company to enable it to increase exports to the US; and provided a finance package for Scottish manufacturing and retail company Hawico to export its products to Europe, North America and Asia.
The bank also runs pop-up weeks in the UK, where SMEs can showcase their businesses in HSBC branches. In March 2019, it ran its biggest ever, with 526 SMEs taking part across 85 locations.
In France, the bank will provide €500 million in funding to SMEs in partnership with the European Investment Bank. This will include €100 million for green projects. In addition, the bank will contribute to a €400 million European investment fund for European SMEs developing innovative projects.
“Through our re-tooled digital business platform, our business banking – middle market/SME – customers can now receive a decision in principle for loans of up to £30,000 in under two minutes,” says Diane Reyes, global head of global liquidity and cash management at HSBC.
HSBC’s cards business can be the differentiator for small businesses that have uneven cash flow.
“Given the complexities that some SMEs face when managing cash flow, we have increasingly seen customers using our corporate cards as a working capital line of credit,” says Reyes. “This allows smaller businesses to pay their suppliers promptly without having to worry about additional borrowing requirements during their seasonal cycle. This also means that they can analyse spend to negotiate better rates, set cardholder spend limits and even block certain types of transactions if needed.
“With the use of cards as a payment tool, smaller businesses also benefit from the protection that card payments offer in the event of non-fulfilment from a supplier or a fraudulent transaction.”
