Banking on SME Business: Aria Putera Ismail

The Malaysian business world is built on a sturdy foundation of small-to-medium enterprises. In a country where large business is literally the 1% (SMEs make up almost 99% of Malaysian business establishments), they drive economic growth and bolster employment levels.

In a clear-cut case of ‘size doesn’t matter’, SMEs in Malaysia are grouped across three categories: micro, small and medium, with micro-enterprises comprising a whopping 76.5% of the country’s SMEs. And the sector itself has grown exponentially across the nation.

In late 2019, SME Magazine’s SME100 survey found SMEs had defied expectations to enjoy a 103.4% revenue boost and 125.5% growth in profit. The majority of these companies fall within the services sector, with only 10.8% of Malaysia’s SMEs in the manufacturing, construction, agriculture and mining industries.

Despite this, SMEs are a significant contributor to the nation’s exports and gross domestic product. With SMEs playing such a prominent role in the economy, it stands to reason that they should have a bank that’s tailored to the specific needs of small business.

In 2005, SME Bank was established as a dedicated financial service centre for SMEs. Over the years, it has both expanded and refined its operations to become the go-to financial provider for SMEs, whether for general banking, financing or business advice.

In particular, it has focused on digitalisation, which has become increasingly important to SME businesses in Malaysia. And it was in this spirit of refinement and evolution that Aria Putera Ismail joined SME Bank as Group President and CEO in late 2018.

A veteran of the banking and investment industry, his passion for fintech and experience as President Director and CEO of Maybank Syariah Indonesia, as well as Director of Global Markets at Maybank Islamic (the largest Islamic bank in the Asia–Pacific region) made him the ideal leader to increase SME Bank’s value to Malaysia’s SMEs. Immediately after taking charge, Aria outlined his vision for the future of SME Bank.

While it already catered specifically to the sizeable SME community, he has refocused the bank’s operations to help it become the national leader in SME ecosystem value creation beyond financial services, while ensuring it remains at the forefront of SME development.

The continuation of SME Bank’s digital transformation has been at the heart of Aria’s approach. "It’s crucial that SMEs have easy access to funding and finance, so we’ve developed digital solutions to make that possible," he says.

In accordance with the National SME Digital Agenda, in late 2019, the Centre for Entrepreneur Development & Research (CEDAR), a wholly owned subsidiary of SME Bank, launched ScoreXcess, an AI-powered application built to streamline the financing process for SMEs.

In less than a year, ScoreXcess received more than 1,000 applications. Also in 2019, SME Bank launched ODELA, a business-to-business ecommerce platform designed to enable entrepreneurs to make transactions, facilitate exchange and foster innovation and partnership across vast ecosystems.

Backed by Malaysia’s development financial institutions, it has also enjoyed much success: 4,162 merchants have registered for the service thus far. Both ScoreXcess and ODELA are driven by CEDAR, established in 2013 with the objective of providing development programs to SMEs.

To date, CEDAR has trained and coached more than 43,000 participants in various development programs. Despite the changes, Aria has also stressed a strategic approach to ensure SME Bank’s sustainability and relevance while improving business productivity. To achieve this, the bank’s core values have been overhauled.

"The development of wholesome human capital is a worthy investment," he shares. "After all, our values really set us apart from the competition."

Those values are embedded in SME Bank’s new SMILE system: strong teamwork and integrity; managing stakeholders; innovation and technology; leadership and growth; efficiency and productivity.

Internal processes and policies have been improved, upskilling courses have been made available to staff, particularly surrounding the rapidly changing Industry 4.0, and efficiency has been optimised via a campaign of digitalisation and innovation.

It’s crucial that SMEs have easy access to funding and finance, so we’ve developed digital solutions to make that possible.

"We’ve also redefined our talent management strategy," Aria reveals. The three pillars – Attract, Develop and Retain – remain the same, but their focus has been shifted to meet the future business, economic and workforce climate.

And it’s this kind of forward thinking that has kept SME Bank moving during the COVID-19 crisis. Malaysia has been hit hard by the global pandemic; in late September, cases began to spike after months of inactivity. Lockdowns have taken a toll on SMEs, with the SME Association of Malaysia estimating up to a quarter could close for good.

"This is why it’s more important than ever that we’re as present as possible for what is the backbone of Malaysia’s economy," Aria says. During the pandemic, SME Bank has offered a special relief program worth MYR$503 million (US$123.9 million) and waived fees for tenants at the 26 nationwide locations of its entrepreneur premises complex.

SME Bank has a mandate: to provide financing and advisory services to Malaysia’s SMEs. In light of the current pandemic, SME Bank has been actively providing support to assist SMEs through the government’s various initiatives, which include the PRIHATIN and PENJANA efforts.

Since its establishment in 2005, the Bank has made this kind of assistance possible to more than 17,000 companies to the tune of MYR$32 billion (US$7.9 billion). It also continues to offer advice and business acumen to help propel SMEs to the next level of success.

SME Bank’s TITAN Project exists to discover the leading industry players of tomorrow – to date, it has onboarded 11 companies to work towards a compounded annual revenue growth rate of 500% in five years. Concurrently, the bank’s upward migration program is assisting 355 companies improve their profits, teams, technology and exports.

As the digitalisation of Malaysian SMEs becomes increasingly crucial to survival in a post-pandemic world, SME Bank is there. "Basically, I want SME Bank to be the bank of choice for SMEs in Malaysia," Aria says. "Financing SMEs in the digital era is our future, and our new direction will ensure we all get there comfortably."

Proudly supported by: