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A study by Visa unveils that 68% of Malaysian SMEs interested in digital banking

A study by the world’s leader in digital payments, Visa, unveiled that 68% of Malaysian small and medium enterprises (SMEs) reported being interested in digital banking.

In its report entitled “Going Digital: The Banking Revolution”, Visa said industries that showed the most interest in using services offered by digital banks include financial services (76%), manufacturing and construction (71%) and professional services sector (69%).

“Only 8% of SMEs are not interested to use services from digital banks, citing data security and credibility as their top concerns,” it said.

Visa said Muslim SMEs who bank with an Islamic main bank also reported a much higher interest in using digital banking (83%), compared to Muslim SMEs who use non-Islamic main banks.

“The stark difference in perception is worth exploring further to ensure non-Islamic banks can develop offerings that truly address their customers’ needs,” it said.

It said digital banks seen to solve SMEs’ banking challenges with physical safety and convenience, drive interest in digital banking.

The top reason for interest in digital banking was less risk of infections (44%), faster and more convenience (35%), saves the time taken to visit bank (32%), banking available 24 hours (31%), lower fees (30%), innovative (29%), as well as less risk of robbery (26%).

Meanwhile, it said digital banking would be the top financing solutions preferred by SMEs where the majority (44%) indicated a preference for a loan duration of three- to six months, if given the chance to customise their loans offered by a digital bank.

“42% are more interested to take up a loan longer than six months, while 14% want a loan duration of less than three months.

“63% of Malaysian small and medium businesses also prefer reduced interest rates, while 37% choose to go with a fixed fee,” it said.

In terms of loan type, Visa said the majority of SMEs prefer micro-loans (33%), followed by cash advances (26%), Buy Now Pay Later (18%), working capital loan (16%) and invoice financing (7%).

  • The Edge Markets