Making Life Easy
HSBC is aggressively pursuing the under served small and medium enterprise (SME) sector in Oman with its newly formed Business Banking Unit (BBU), says Qamar Saleem, Senior Manager-BBU, HSBC Bank Middle East Limited, in a talk with OER. Excerpts:

How do you define SME in Omani context?
Definitions of what constitutes a small and medium enterprise vary considerably in Oman’s financial sector. We have used a customer segmentation model to develop our SME services and proposition in Oman. There are two distinct business segments within our Business Banking Unit. “Business Finance Solutions” segment caters to our customers’ borrowing needs with credit facilities up to RO500,000. “Direct Financial Services” segment caters to transaction banking needs of our non-borrowing customer base. Customers outside the above SME definition scope are handled by other units within our corporate banking department.

What is the size of SME sector in Oman?
In the absence of published data, we conducted our own in-house assessment which suggested that there are only in fact 15,000-20,000 of SMEs in Oman generating 10-20 per cent of employment.

In Oman, SMEs finance comprises only 2-5 per cent of the portfolios of local banks. Estimates from the World Bank indicate that SMEs have contributed over 55 per cent of GDP in OECD countries and between 60-70 per cent of GDP in middle-income and low-income countries generating 60-70 per cent of employment. Thus there is a significant potential for the SME segment in Oman to grow in terms of contribution to GDP and creation of employment.

What is the importance of SME segment in HSBC’s overall business strategy in Oman?
At HSBC, we aspire to be the best SME bank not only in Oman but across the 82 countries where we operate. Our solutions for SMEs have evolved from our experience of handling 2 million SME businesses across the globe. We aim to deliver seamless services to SMEs and to partner with key stakeholders to further stimulate the SME sector. In France, we partnered with UBIFRANCE to help firms develop their business in foreign markets. We have also entered an agreement with Austrade Australia to assist Australian businesses in their international growth. We signed a cooperation agreement in Brazil with SEBRAE, a government agency, to further support SME businesses. In Oman we would also work with key stake holders to help develop the SME sector.

Next year, HSBC will be celebrating 60 years of operations in Oman. We have been serving the interests of SMEs all these decades and in order to move alongside the government’s vision for the SME segment we have launched our dedicated proposition with a renewed focus on this segment, earlier this year. I am pleased to say that Oman was the leading country in the region where HSBC set up its Business Banking Unit. Across the Middle East, we have now established successful Business Banking teams in Oman, Jordan, Qatar, Lebanon, Bahrain, Dubai and Abu Dhabi.

What are the most striking features of the SME market in Oman that caught your attention?
There are essentially three distinctive features. Firstly the SME sector in Oman is relatively young in terms of its life cycle as compared to other similar markets, through the potential for growth is tremendous. Secondly, in terms of access to finance, financial institutions in Oman are yet to match the varying needs of SME customers in terms of products and services. And lastly, use of electronic banking channels like Internet Banking is relatively lower in Oman.

Talking of technology platforms, do you think SMEs are scared of e-banking due to security related issues?
Absolutely. In a market research conducted recently we found that the level of concern for using Internet Banking, with respect to security, was rated at 3.7 (on a scale of 1-4). However I feel that the market needs to be educated in terms of internet usage and security as these are highly efficient banking channels, widely used across the world. The benefits to the SME businesses is also far reaching in terms of cost control, 24 hour access to information and ability to transact remotely.

We at HSBC offer two technology-driven products namely Business Internet Banking and HSBCnet. To address the security concern of our clients we have a two-factor authentication process which includes both the traditional password based security (PIN number) and a Security Device or smart card, which represents a significant enhancement over the traditional processes. We also ensure that requisite training is conducted for usage of these products

What is the primary focus of your SME model?
The SME proposition in Oman is built around our understanding of three key needs of SMEs which are access to efficient banking services and channels; access to finance with quick turnaround time; and access to advisory and training services.

How many layers are there in HSBC in the complete credit sanction and disbursal process?
We have established a framework to provide quick turnaround to our clients. For credit upto RO50,000, we have adopted a credit scoring approach through our “Business Express Credit” service, which assesses the company’s business strength and relies less on the collateral being offered. Through Business Express Credit, customers can receive their offer within 24-hours after submitting their applications. Though credit scoring has been around in consumer markets in North America and Europe for more than two decades, it is relatively new to this region.

For higher amounts of facilities, the credit approval process has been reduced to one or two steps depending on nature and size of the customer’s request. We have a dedicated team of experienced relationship managers and credit analysts to ensure a swift approval process

What are your major products and services for SMEs?
In order to provide our clients with efficient banking channels and services we have products like Business Select, Business ATM, Business Internet Banking, Telephone Banking and HSBCnet. Apart from this, we have a dedicated Business Banking website, a call center and a customer services unit. We do facilitate customer needs wherever we operate and our International Banking Center (IBC) in Oman has been recently set up to ensure that all of their requirements are met.

To provide convenient access to finance, we offer a full array of lending and trade facilities for SMEs in Oman. Apart from traditional lending facilities like overdrafts, term loans & asset finance, we have a strong base of trade products and services in the areas of import, export and guarantees. We also offer factoring services in Oman which combines sales-linked finance, bad debt protection, payment collection and transaction services that help SMEs to compete on equal trading terms.

At HSBC, we have the advantage of our international network and product knowledge spanning over 82 countries and territories. We can call upon our experts to share best practice through our organised training services. Some of the recently organized events included trade and factoring seminars, UCP 600 orientation sessions and presentations on theChanging Nature of the Dollar & Gulf economic outlook 2008. We also recently sponsored an SME training event “Heartbeat Oman” in association with the Centre for Management Excellence and Oman Chamber of Commerce. I would like to highlight that HSBC is one of the most active banks in catering to the specific needs of the SME segment across the world and we aim to make use of our global experience and expertise in order to support the government’s initiatives in development of the SME
sector in Oman.

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