HK SMEs more likely to switch to digital banks, fintech: EY
This signaled the growth in the digital transformation of SMEs in the city.
Small and medium-sized enterprises (SMEs) in Hong Kong are more likely to switch their main financial services business, compared to other markets across the globe, a survey found.
In a survey of SMEs, EY found that 48% of SMEs in Hong Kong are inclined to switch offerings, compared to the global rate of 36%.
The survey also found that there is a growing trend amongst businesses in Hong Kong to use financial technology and digital-only banks.
Top organisations SMEs in Hong Kong consider switching to include large corporation that traditionally provides non-financial products (45%), fintech company (39%), bank with branches (33%).
SMEs in Hong Kong hold an average of 4.1 business banking products against 3.5 global average and 4 in the Asia Pacific.
Some 45% of which receive services from a fintech or an Internet/telephone-only bank, with 26% saying their main financial institution is a fintech or an Internet-only bank.
EY also noted a significant gap between SMEs’ expectations and bank offerings when it comes to time-to-credit and other financial products
“These huge changes impacting SMEs since the onset of the global pandemic mean most companies are laser-focused now on accelerating their digital transformation to gain efficiency, cut costs, and pivot their business models, so banks also have to adjust to meet those needs, or they’ll be met by a fintech, big tech firm, or other competitors,” Andrew Gilder, EY Asia-Pacific Banking and Capital Markets Leader,” said.
“Competition is fierce, but there are many things banks can do to remain relevant to a fast-changing and increasingly demanding SME world. By focusing on areas like data analytics, for example, they can create new avenues for income, mitigate risks, and truly tap into the SME business banking opportunity.”