The world’s best bank for SMEs 2021: UOB
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The world’s best bank for SMEs 2021: UOB

The Singapore-based lender has established a new benchmark for SME banking

Most international banks have traditionally regarded the small and medium-sized enterprise (SME) space as a feeder pipeline for future large corporate business. But creating credible SME banking services has become easier in recent years, as digital offerings created to win large corporate and multinational business can be leveraged relatively easily and cheaply to serve smaller clients.

Singapore’s UOB is different. The SME segment has long been a large driver of the bank’s revenues and profits, accounting for around 20% today. Those SMEs – an outsized driver of the entire Singaporean economy – have also been atypically focused on international growth. A relatively small domestic market forces them to look elsewhere for expansion.


  • Riyad Bank
  • Santander
  • The results are impressive. UOB offers a range of services for even the smallest of companies within the SME segment that would give some large corporates at other banks pause for thought.

    For example, take UOB’s BizMerchant. Small startup companies that need small ticket loans to keep early phase operations online generally struggle with traditional credit procedures. They don’t have audited financial records and therefore traditional banks have a hard time approving their applications. UOB has radically changed its underwriting engine by applying new alternative data metrics to their risk analytics, leading to quicker approvals; and a new pre-qualified programme has also been introduced to reduce the turnaround time even further.

    Eric Tham and Lawrence Loh_960.jpg
    Eric Tham and Lawrence Loh

    The bank has now successfully rolled out the programme beyond its home market in Singapore. For example, in Vietnam in 2020, UOB financed more than 550 SMEs through BizMerchant, with a total loan portfolio of D100 billion ($4.39 million) and now has a 30% market penetration of e-ecommerce.

    “Most traditional banks lend to SMEs only after three years in business because they’re financially more stable, but today if we don’t go and help those with fewer than three years in business, a lot of these companies will actually be killed off before they even reach two years,” says Lawrence Loh, managing director and head of group business banking and group retail.

    And UOB doesn’t just provide innovative digital service to help these small companies financially, it has also developed BizSmart – an account with bundled accounting, payroll and other HR functionality to enable startups to manage the logistical side of operations. Internal UOB research shows that those SMEs that use BizSmart grow at a compound annual growth rate of between 15% and 30% more than other clients.

    For SME clients that aren’t naturally tech ventures, UOB has partnered with Google to develop an online Leadership Academy to help traditional business models thrive in the digital landscape. The bank has even extended robo-advising, through UOBAM Invest, to SMEs to help them sweep cash balances automatically into investment portfolios. Take-up has been strong, with a 183% increase in companies using the service, and assets under management grew by 373% in 2020.

    When we saw Covid-19 looming on the horizon, we were the first bank to respond with a customized approach to each client’s individual cash flow and liabilities
    Eric Tham

    As well as digital innovation, UOB has proved itself in more traditional banking support across the SME sector during the Covid pandemic. It was the first in Singapore to announce relief assistance, worth S$3 billion ($2.2 billion), for its SME clients and that came ahead of the announcement of the government’s financial support programme. It was also the first bank to have a dedicated restructuring task force, which proactively worked with clients to restructure financing and access immediate working capital. In total the bank extended S$27 billion to more than 20,000 SMEs throughout Asia.

    “SMEs are particularly sensitive to the business cycle,” says Eric Tham, managing director and head of group commercial banking and group wholesale banking. “We’ve learned a lot about this from the pain that SMEs went through in the ASEAN crises and the global financial crisis. But we learned from these crises and we have institutionalized how we handle SME business over the years; and so when we saw Covid-19 looming on the horizon, we were the first bank to respond with a customized approach to each client’s individual cash flow and liabilities.”

    UOB has also been working with clients on sustainability: something that poses specific questions for SMEs. Smaller companies typically lack the capacity to spend time on the growing environmental, social and governance compliance issues that are becoming mandatory in order to do business in many industries. UOB delivers a suite of digital tools that help SMEs meet these increasingly onerous operational and reporting requirements, without adding significant costs to their operations.

    Elsewhere, Santander had another strong year in its SME business – the bank’s growing portfolio of SME clients now stands at more than four million worldwide with a total loan portfolio worth €287 billion – up 2.5% in 2021. Riyad Bank is also pouring resources into developing its capabilities for companies in this segment to help Saudi Arabia’s government meet its ambitious Vision 2030 plans; the success of which depends on a economic diversification that will be driven by smaller companies across a number of industrial sectors.

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