EXPERT FORECAST : BANKING AND FINANCE
DIGITAL LENDING OFFERS GCC BANKS EFFECTIVE INROADS INTO THE VITAL SME SEGMENT
Sara Hoteit , Regional Manager for the Middle East at Backbase , explores how digital lending is revolutionising GCC banks ’ engagement with the vital SME sector . By embracing digital solutions , banks are not only addressing the unique needs of modern entrepreneurs but also positioning themselves as essential partners in the growth and success of small and medium-sized enterprises .
The contribution of SMEs to nonpetrochemical GDP in GCC nations varies . In the United Arab Emirates ( UAE ), it hovers around 60 %; in Saudi Arabia it is around 30 %; in Qatar it is 16 %. And SME contribution to employment tends to be even greater . All these nations have their eyes on similar horizons – sustainable economic growth , knowledge-based societies , globally competitive industries – and they know that smaller businesses have a pivotal role in achieving these ambitions .
It follows that banks can do much to support these up-and-comers . However , long-term , meaningful relationships with successful SMEs requires matching their agility . Younger entrepreneurs are invariably digital natives who expect personalised solutions . Having done their research , they will likely know that businesses of their size are notoriously underbanked , so an institution that is willing to step up and help them secure their cashflow will quickly earn their favour and , over the long term , their trust and loyalty .
The rise of digital lending
None of these SME ventures are riskfree . Loans may underperform and there are always other lenders with which to compete , including BNPL start-ups , microfinanciers , incubators , VCs , and peer-topeer lending schemes . But over the long term , guided by due-diligence practices , GCC banks can become an integral cog in the engine of business growth , advising entrepreneurs on everything from the best path through lean times to techniques for cashflow management .
Surviving and thriving in this growing SME space calls for investment in digital solutions . Digital lending will be critical because SME customers are themselves mobile-first , meaning branch visits are not an option . Nor are long , drawnout application processes or extended approval cycles . The modern entrepreneur is not looking for complex consoles and complex tools to manage their finances ; they want fast , frictionless experiences .
The good news is that in catering to these exacting standards , regional banks enjoy a range of benefits beyond customer approval . Digital transformation in the www . intelligentfin . tech
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