Standard Chartered Bank recently launched a product known as Smart Business Loan (SBL), a non- secured lending product, targeted at supporting the growth of SMEs. David Idoru, head, consumer, private and business banking, explains more in this interview with Hope Moses-Ashike. Excerpts:
Can you give us a brief description of this product?
IT is a Smart Business Loan (SBL) and is targeted at SMEs. It is a non- secured lending product.
For now, we do a lot of lending to small businesses, but they are secured lending products. We wanted to close a gap as most new clients don’t have security or collateral.
So, for a first loan, you should be able to take a business loan to finance your business operations up to N20 million without security.
If you want to borrow above N20 million, that’s when we’ll ask for collateral but below N 20million, we’ll check your ability to repay.
What we are really interested in is loans to support business growth because business plays a very big part in the economy. We want to support many more businesses to succeed as part of our support to the growth of the economy in Nigeria.
What factors influence the launch of this product at this time of Covid-19?
The influence is the desire to support businesses to grow. Our purpose as a Bank is driving commerce and prosperity. This is why we exist as a Bank. COVID has made it much more important to support businesses to succeed.
Standard Chartered Bank has been operating for 150 years through good and bad times. So, for us, we look at activities beyond just the instance of COVID-19. With or without COVID-19, we take a long-term view that is why we have decided to introduce SBL.
Aren’t you considering the current economic challenges and the ability to pay back?
During the COVID-19 pandemic, there are businesses that are doing extremely well, for example businesses that support telecommunications companies. Through good or bad times, there are businesses that actually do well.
We take a long-term view to supporting businesses. We don’t cut any product just because of a particular instance. We have also accelerated our investment in technology.
We encourage our clients to do a lot more using our digital channels.
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With Smart Business Loan, who is your target market?
Our target market is small businesses and must be those involved in trade. We are a bank that supports trade; these are companies that do trading or supplying of goods and services to other companies. We are keen on supporting them to do more.
In the last one year, how many loans has Standard Chartered bank granted to those in the SMEs?
Our lending to the SMEs business in the last year has increased by over 5 times. Lending to SMEs is one segment of our banking operations that is growing very fast in Nigeria.
Traditionally Standard Chartered Bank Nigeria focused on Corporate Banking. However, in 2019, the CEO and the Board in Nigeria decided we should do more in the Consumer and Business Banking side. In 2019 we introduced our digital Bank; this transformed the way customers interact with us.
From the time we launched the App, we have been able to have clients open accounts from all 36 states plus Abuja.
We are very happy with the progress the digital space has enabled. We are passing the benefit to clients through lower or no transaction charges.
Apart from excluding collateral in your Smart Business Loan, what other features do you offer customers?
Some of the benefits of banking with Standard Chartered Bank is that we do not charge account maintenance fees in Nigeria.
We do not have many branches and because a lot of our banking is done digitally, it means transactions can be done in a cheaper way. We at Standard Chartered believe in passing the benefit of digital banking to customers.
When you open an account, you should transact as much as possible digitally. We don’t charge for transfer of money within Nigeria and we have been able to achieve this because of the investments we have made in digital.
How many SMEs are you targeting on your Smart Business Loan in the next one year?
Our plan is to grant 5,000 loans in the first year. We shall consider that success because when you support a business, you not only support one person, you support the families of the employees as well.
In Nigeria, most of the companies we lend to tend to employ over 20 staff. If you employ 20 people in a business in Nigeria, you have supported more than 20 families.
Every family is an average of 5-6 persons. That way, it is a win-win situation for us, the business owners and the economy/families in Nigeria.
Do you hope to target SMEs where the bank does not have branches?
With digital, it is not necessary for us to have branches everywhere. Standard Chartered Bank operates physically in 3 cities: Lagos, Abuja and Port Harcourt. However, our clients are in all 36 states and FCT. This is the power of digital banking.
What are the challenges SMEs in Nigeria are facing?
One of the biggest challenges SMEs in Nigeria are facing has to do with collateral.
That is why we introduced Smart Business Loan. The other part is the perfection process. For example, if a client gives us security, sometimes, the registration process takes time.
How about the bank’s high-interest rate?
For us, since we are largely digital, by design, we can offer greater services via digital and transfer those benefits to the clients. As long as the client can transact digitally, they should get a better interest rate.
What value is Smart Business Loan offering to the bank in the next one year?
Business has to be a win-win situation for the clients, the bank, and the economy. The advantage this will give us is growth.
The consumer business part is the fastest-growing part of our bank. It is very important for us as a bank that has been in business for over 150 years, to do things that benefit all the key stakeholders; the country, bank, and client.
What makes Smart Business Loan stand out among the bank’s other initiatives tailored towards SMEs?
Smart Business Loan SBL fills the gap for us at Standard Chartered. At least, we have a way of beginning a relationship with a client. We can support a business at an early stage when they don’t have security/collateral. It gives us the opportunity to support businesses that are at early stages of growth.
How are you going to monitor loans granted under Smart Business Loan?
Our relationship managers are trained to support our clients. We have invested a lot in training our relationship Managers so that they can better support the growth aspiration of our clients. We also bring experts from different fields to support our clients.
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