Report Shows MSMEs Continue To Depend On Banks For Financial Support

The Alliance Bank in its MSME Business Outlook Report 2024 Malaysia revealed that the landscape is resilient for Micro, Small, and Medium Enterprises as business sectors are starting to experience a return to pre-pandemic revenue figures over the past year.

In noted to further grow and expand their business in 2024 onwards, MSMEs will look to banks for their capital needs as they ramp up sales and marketing efforts with increasing focus on digitalisation tools to boost productivity for further growth. On the digital front, the report highlighted that MSMEs’ digital ambitions are high on their priority list and over the next 12 months, this segment is planning to adopt various digital tools to enhance business productivity and ease day-to-day administrative tasks where 19.7% plan to implement cash flow management, 15.9% aim for social media management platforms and 14.6% look to adopt accounting-related tools.

Given MSMEs’ appetite for digital tools and funding, the banking sector plays a pivotal role in supporting their growth aspirations and digitalisation plans, helping them to spur the next phase of growth. “We are accelerating efforts to support MSMEs at every stage of their business journey by providing them with timely and differentiated solutions to meet their dynamic needs. This focus outlined in our Acceler8 strategy introduced in January 2023 has enabled the Bank to maintain a
robust momentum in the business banking segment,” said Raymond Chui, Group Chief SME & Commercial Banking Officer of Alliance Bank.

The biggest concern for MSMEs when it comes to growing their businesses is insufficient cash flow. They are looking into bridging the cash flow gap primarily through bank loans (49.7%), investor funding (22.0%) and peer-to-peer (P2P) financing solutions (13.2%). Due to the nature of their business or market segment, MSMEs are mostly looking for banks to offer faster loan application processing, simpler documentation requirements and low interest rates. While MSMEs require
financial support from banks to grow their businesses, they also look for non-financial assistance such as business/networking events (17.4%), coaching/upskilling sessions (12.0%), and digitalising their enterprises (12.0%).

“The MSME segment, who are important contributors to the economy and for the creation of job opportunities, face unique challenges accessing financing as they typically lack adequate collateral and credit history. To help them in their growth journey, we continue to refine and enhance our credit approach and come up with inclusive solutions to meet their needs and support their earliest growth journey. As part of our journey in becoming our customers’ lifelong partner, we also look at supporting them beyond their financial needs to accelerate their growth journey,” Chui added. “One such example is the Alliance Bank’s BizSmart ® Solution, a digital business ecosystem that helps MSMEs to access a broad suite of solutions and services at preferential rates, reach out to new customers and access a range of online resources.”

The Alliance Bank MSME Business Outlook Report 2024 Malaysia was derived from insights gathered from a survey of over 200 MSMEs, offering a sectoral view of the goals, challenges, and needs of MSMEs in Malaysia.

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