Financial compliance is becoming more and more challenging in the Asia-Pacific (APAC) region. Regulators are putting increasing pressure on financial institutions to determine beneficial ownership and improve overall screening requirements, particularly in the wake of the 1MDB scandal. What is the true cost of AML compliance for financial institutions across the Southeast Asia?
Here are 5 practical lessons that have emerged from numerous banks that have successfully digitized the credit journey, with special emphasis on SME lending, the area that is currently getting the most attention and investment.
Top priority for banks around the world is prioritizing the digital transformation of end-to-end credit journeys, including the customer experience and supporting credit processes. This is because credit is at the heart of most customer relationships, and digitizing it offers significant advantages to banks and customers alike as successful transformations enhance revenue growth and achieve significant cost savings. For traditional banks, the average “time to decision” for small business and corporate lending is between four and five weeks. As financial technology advances, these times will soon seem as unacceptably antiquated as having to go to your branch to withdraw money from your account. A number of banks around the world have fully embraced the digital-lending revolution, some have even brought “time to yes” down to five minutes, and time to cash to less than 24 hours.
Although banks cannot prepare for every eventuality, initiatives can be implemented that will bring short-term business gains while helping build the essential components of a high-performing risk function over the next few years. Here are some examples of such risk management initiatives that can be launched immediately.
Banks have made dramatic changes to risk management in the past decade—and the pace of change shows no signs of slowing. It is estimated that by 2025, risk functions in banks will likely need to be fundamentally different than they are today and unless banks start to act now and prepare for these longer-term changes, they may be overwhelmed by the new requirements and demands they will face. Here are six trends that are shaping the role of the risk function of the future.
Here are 5 tactical ways professional industry associations can connect with members and stay relevant.
Strategic public procurement can have a significant impact on policy outcomes and in the development of SMEs.
When a major management change is underfoot—whether it be a new elected official, political appointee, or a new CEO—tensions often mount among the organization’s upper ranks. Will their jobs be safe, or will they be replaced by their new boss’ trusted advisor? Will that project they’ve been toiling away at for years be deprioritized? And what will become of the workplace culture?
While many large scale infrastructure and local government projects have traditionally required surety bonds to cover 100% of the contract value for large infrastructure projects, there is a growing trend in procurement to allow flexibility in reducing performance bonds primarily to encourage competition during the bidding process.
Understanding the financial risk of doing business with a supplier or vendor is vital to an organization’s long-term stability. A comprehensive financial condition analysis is a must in order to prequalify and assess the financial stability of every potential and current supplier, not just the big ones.
Updating the requirements to include a full financial condition analysis of a contractor or vendor would ensure that only those with appropriate and adequate financial capacity, proven financial performance and acceptable financial condition rating, as assessed against a qualification criteria, will have its bids and proposals progress into the next stage of evaluation.
The Philippine economy can expect to benefit from revived infrastructure spending in the latter half of this year. Given the importance of ensuring that planned infrastructure projects are not plagued by delays and cost overrun, it would be much appreciated to ensure that the bidding process is protected from one perennial reason for such problems: inappropriate and inadequate procurement.
Clearly, transformation is the new normal for organizations. Yet, for the many successes, there are failures. So why change at all? Here's a road map that you can use in your own change process.
Gone are the days when organizations push products based on their product goals. Today's consumer expects their primary financial institution to know then, look out for them, and reward them. This requires new sales tools and new sales strategies.
Who says change needs to be hard? In an inspiring TED Talk, organizational change expert Jim Hemerling outlines five imperatives, centered around putting people first, for turning company reorganization into an empowering, energizing task for all.
Here are 2 conversations you need to have in order to overcome resistance to positive change in your organization.
As a business owner of an SME, it is important that you are made aware of the most crucial elements in a business loan application. Check out the 5Cs of credit analysis for effective credit risk management process.
What is credit risk management and why is it important in your role as a business owner? Here’s what you need to know.
Micro, small, and medium businesses (MSMEs) are now on the receiving end of more support for growth - thanks to this year’s recent Association of Southeast Asian Nations (ASEAN) Summit! Not only will the ASEAN Business Advisory Council (otherwise known as ABAC) — be providing mentoring opportunities to MSMEs with their ASEAN Mentorship Entrepreneurship Network (AMEN), the nation’s very own President Rodrigo Duterte has also voiced his support for MSMEs.
When planning to apply for a business loan, there are several factors that should be considered before you are able to acquire the finances necessary for your business. These include components that lenders will be eyeing when evaluating your business loan application.
The Philippine construction industry is considered as one the most important sectors that contribute significantly to the country’s GDP; bring in huge amounts of investment and foreign exchange; and generate hundreds of thousands of jobs. Most importantly, the construction industry serves as a critical unit for the country’s domestic infrastructure development.
No one can deny the significant contributions of the construction industry in the establishment and development of the socio-economic structure of the Philippines. Over the period, building projects are largely becoming more complex and clients demand the highest standards of quality. Therefore, adoption of management quality system has now become more of a necessity and not merely a option for construction companies.
A REIT or Real-Estate Investment Trust is an independently registered company, acting as a trust, that owns an income-producing real estate asset. This asset provides returns to the investors, leading to dividends and capital gains as a benefit to shareholders of the REIT company. REITs have a capital structure similar to that of a mutual fund while having a legal form of a trust. It has relaxed taxation liabilities, making it an attractive investment. How is this industry doing in the Philippines?
The Philippine financial economy has grown at a sizzling pace of 6.5% in the second quarter of the year 2017 and has broken the records of the first quarter. What does this mean for SMEs?
Small and medium enterprises (or usually known as SMEs) often play an important role in the growth of developing economies. But what contributions do they make and what challenges are encountered along the way?
Foreign investors and international companies have been employing Philippine’s labor resources for quite some time. These foreign entities have been flourishing and making huge profits by using Philippine manpower; while paying them very low wages. Thus, in order to avoid brain-drain and employ these labors within the country, the government of Philippine has encouraged the creation and development of SMEs by passing Republic Act (RA) 6977 - the Magna Carta for Small Enterprises.
Corporate Finance is a field of finance that deals with the capital structure of entities and sources of funding, in order to maximize Shareholders’ value. The main objective of corporate finance is to understand how to enhance company's value by making better decisions about three factors; financing, investment and dividend. How should a business acquire its financial resources – either through equity or debt? How should the business allocate its scarce financial resources among different projects/investments in order to optimize its returns? These and more are covered in this article.
What do Return on Investment metrics do? How do they matter to you and your business? In this article, we outline the basics for your benefit.
Small- and Medium-Scale Enterprises (or SMEs, in short) are often considered as an important source of economic growth and employment; mainly because of their ability to adapt to market changes and their capacity to grow. However, in many developing countries including the Philippines, these SMEs make up a large segment of registered businesses, but relatively a much smaller share of national GDP.
The Philippine banking industry has always played a substantial role in sustaining the pace of growth of the country’s economy. Presented here is a summary of the Philippine banking sector.
Many SMEs and startup businesses rely heavily on traditional bank loans in order to fulfill their cash flow and investment needs. However, there are many ways or techniques of getting external finances other than straight debt.
In recent months, Philippines has seen improvements in its infrastructure development and has had immense economic growth. Its external payments position has improved significantly and efforts are being undertaken for tax reforms - all of this is happening under the Duterte administration.
There’s no denying that most micro-, small-, and medium-sized business owners today are skilled in multitasking. They can do almost everything about their business and wear a lot of hats. Being a business owner comes with different stresses and challenges that are sometimes unforeseen and sudden. According to a study made in 2010 by Grant Thorn International, more than 50 percent of business owners feel that their stress level has increased over the past years. Some of the most common sources of stress are unpredictable cash flows, inaccessible business support mechanisms, and limited work-life balance.
There’s no doubt, small- and medium-sized businesses in the Philippines are now having better access to capital compared to a few years ago. However, this figure is still small compared to what other developing nations are enjoying.
“Knowledge is power.” In business, this old saying is definitely true. With the right knowledge, you can bring your business to a whole new level of success. That’s why the Department of Trade and Industry (DTI) launched a program they call, “The Mentor ME.”
Are you thinking of upgrading, expanding, or improving your business? If yes, you better obtain the financial support that you need. One of the most common ways to acquire enough money for your business expansion is by getting bank loans.
The Philippine construction industry was among the largest economic powerhouses in 2011, and it is forecasted that it will remain to be so in the following years. From 2009 to 2013, the compound annual growth rate (CAGR) of the construction industry reached 12.01% due to robust public investments in the infrastructure and residential markets. Experts reported that the same public investments would be the main growth drivers in 2014-2018, which is equivalent to 9.90% CAGR. Construction of more residential properties, bridges, roads, offices, and power plants will contribute to the growth of the construction industry.
The current Duterte administration is set to commence the “golden age of Philippine infrastructure” with its ‘Build, Build, Build’ program. In an effort to keep up with the demands of one of the fastest growing economies in Asia and improve the performance of the Philippine currency, the government plans to spend $180 billion over the course of six years.
The Philippine construction industry is projected to remain strong as experts predict that it will sustain a 50% growth by 2020. According to a report published by the London-based Timetric’s Construction Intelligence Center (CIC), the country’s construction industry “is seen to grow to $47 billion by 2020 from $30.2 billion last year on a compound annual growth rate of 9.22 percent.” The report added that the current favorable government policies in expanding infrastructure both in the national and local level will further improve the industry’s growth.
Last April 18, 2017, during the “Dutertenomics” forum held in Pasay City, the Duterte administration revealed a plan to boost the overall infrastructure of the country. Known as the three-year rolling infrastructure program (TRIP), the current administration plans to pour in 3.6 trillion pesos to commence the golden age of infrastructure in the Philippines.
Financial institutions are not excluded from the challenges of marketing and keeping a constant flow of customers coming in to seek their services. They have found that one of the most effective sources of new customers is through current customers of the bank.
Do not be surprised if your customer asks for an extension to repay their debt. That is the current trend in the financial world. A recent survey on working capital found that extended repayment terms are on the rise. A request for an extended repayment period may be a sign of trouble. It could also be a sign of a "new way of managing cash flow," regardless of the ability to repay a debt or cash flow status of the business.
We continue with highlights of the McKinsey article “Strategic choices for banks in the digital age” while relating it to features in the copyrighted CreditBPO Rating Report®.
In their article “Strategic choices for banks in the digital age”, Henk Broeders and Somesh Khanna of management consulting firm McKinsey & Company, enumerate compelling actions that banks will have to undertake if they are to survive.
The United Nations has set the 2030 Agenda for Sustainable Development of achieving 17 sustainable development goals globally by 2030. The goals listed range from promoting sustainable use of natural ecosystems to the ending of poverty. Due to the ambitious scope of these goals, efficient application of Science, Technology and Innovation (STI) is required on multiple levels from the municipal to the international. Thus a clarion call for innovations was made through the U.N.’s partners that spans an expansive global network. This Call to Action culminated in the 1st Multi-stakeholder STI Forum for SDGs (Sustainable Development Goals). The Vision: Ensure that no one is left behind.
Unlike their contemporaries in developed nations, Small Medium Enterprises (SMEs) in developing countries are at a disadvantage due to, among other things, a lack of access to a centralized credit bureau to maintain and compile credit worthiness scores. This limits communication about credit worthiness in the greater market and this hampers the SMEs overall access to credit.
Event: “Rural Banks: Transforming Risk Management Initiatives into a Competitive Advantage” (Confederation of Central Luzon Rural Bankers: Annual Management Conference)
Event: “Bridging the Gap- An Open Forum” (Confederation of Southern Tagalog Rural Bankers: Annual Management Conference)
Anyone professionally involved with Small Medium Enterprises (SMEs), government entities or multilateral organizations has probably heard the news that all innovation-ready SMEs now have access to a number of significant financial services that were previously only offered to major corporations.
Tourism is an industry that has historically been tied to ever growing Globalization trends. In the 21st Century, the tourism industry is larger than ever before – employing 1 out of every 12 people and contributing 5% of global GDP. While the tourism growth rate for first world countries is steady to low, with the U.S. being almost constant and Europe seeing a steady estimated 3% a year, on average it is the emerging economies that benefit the most from this industry.
You’re not the only one facing these problems when you run a small business. Naturally you focus on your core functionality, so you don’t put credit or debit on your list of priorities. After all, staying operationally organized isn’t your strength. While this is true, ignoring certain aspects may lead to accounting problems that will ruin your success, so you must be diligent to follow through with your business in its entirety.
SMEs are often at a disadvantage when it comes to financing. They don't have the resources available to larger companies, having limited assistance and knowledge to help them grow their business. Access to financing is more than essential for most SMEs – given the intense competitiveness these days, it means survival.
We at CreditBPO Tech Inc. were honored to be invited to the Asia-Pacific Economic Cooperation (APEC) SME Summit, the overarching theme of which was the Empowerment of the SME sector.
CreditBPO was honored to be a co-sponsor for the Chamber of Thrift Banks’ General Membership Meeting
On the morning of September 22, high level participants-- from policy makers and industry heavyweights to NGO and development agency leaders of all kinds -- converged at DSDS 2015 to discuss the topics of digital inclusion (younger generations in particular), women as part of growing industries and SME development for the Asia-Pacific region and beyond.
We were invited to The Philippine Innovation Summit: Synergy 2015 last Sep 21-22, 2015 at the Crowne Plaza Galleria. Synergy 2015 was the inaugural conference on science and technology innovation convened by the United States Agency for International Development (USAID) under their Science, Technology, Research and Innovation for Development (STRIDE) program with the Department of Science and Technology (DOST).
Credit risk is the lender’s probability of loss due to the borrower’s failure to meet obligations or make payments on any type of debt in accordance with agreed terms. It is the largest source of risk that most, if not all banking institutions face.
Congratulations on running your SME Business. It takes tenacity and thorough planning to get to where you are. However, as you know, owning and managing a business is an eventful journey, and every milestone should make your business entity more sustainable and profitable, and most importantly, enhance your credit rating to enable you access to loans. This list gives you 5 benefits of keeping accurate financial records for your business, and tips on how to implement financial management to spur the growth of your business.
If you find that it is time for starting your own business, expanding a current business, increasing your working capital, purchasing equipment or buying some business properties, you may find it necessary to get a business loan. You’ll need to be prepared, so here are a few tips for any SME owner about to meet with their bank and apply for a loan: