BAFT

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SMEs Trends Payments Challenges in Asia Neo
Bock Cheng Head Group Transaction Banking
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SMEs - Trends

• Going Places
• Increasing SMEs penetrating into regional and
  international marketplaces which represent good
  opportunity for them to compete. They drive the
  growth in these marketplaces.
• Global economy allows these smaller entities to
  move quickly to exploit changing business needs.
• Emerging markets ie. China and India two
  countries that cannot be ignored by SMEs.
• Cash Management
• Growing trend for usage of cash management tools
  to effectively manage their financial operations,
  cashflow and working capital.

Note SMEs - Small medium-sized enterprises
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SMEs Payments Challenges in Asia1

• Regulatory Environment
• - complex non-standardized regulatory
  landscape, FX controls and non-convertible
  currencies

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SMEs Payments Challenges in Asia2

• Clearing and Payment Systems
• - Non-homogenous - Turnaround
  time/predictability
• - Large geography with multiple clearing zones -
  Cost (multiple hand-offs)

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SMEs Payments Challenges in Asia3

• Timeliness and Assurance of Payments
• No standardized cut-off times across the region
• Straight through process challenge for Banks to
  automate process and offer faster turnaround time
• Use of non-SWIFT standard payment messages eg.
  MT199 instead of MT103
• Country specific requirements eg. All TTs to
  Thailand require purpose of payments from
  applicant
• Charges
• Upfront bank fees varies
• Agent fees between agent bank and beneficiary
  bank unknown if it will be charged and when

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SMEs Payments Challenges in Asia4

• Reconciliation
• Insufficient details from applicant or limited
  by banks processing system
• Agent bank fees creates unnecessary time
  efforts for investigation between Banks and
  client
• USD Local Clearing
• Limited capabilities within Asia
• USD local payments clearing only Hong Kong
  provides such service during Asian business hours
• USD local cheques clearing only available in
  Singapore and Hong Kong
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