A private-public partnership which was a boon to Small and Medium Enterprises (SMEs) has its second coming.
Meaning, SMEs have something to look forward to as they navigate a gauntlet of challenges arising from the Covid-19 pandemic.
This as First Circle and the Department of Trade and Industry (DTI) have renewed their partnership that yielded over Php4.5 billion loans for SMEs since it was forged in October 2018.
A public online event hosted by First Circle on November 16 went beyond the usual contract signing and expanded to a webinar titled The Future of SMEs and Fintech that included speakers presenting on the topic. In the roster of speakers are Securities and Exchange Commission (SEC) Commissioner Kelvin Lee, Bangko Sentral ng Pilipinas (BSP) Managing Director Vicente de Villa III, DTI Undersecretary Blesila Lantayona, and Managing Director of First Circle Moritz Gastl. DTI Secretary Ramon Lopez was also present with a pre-recorded video, which established the partnership renewal.
Inclusive Fintech 50
In attendance among esteemed guests from financial institutions, the media, and investors inc former SEC chairwoman, Teresita Herbosa.
First Circle has earned a singular distinction of being recently named as one of the Inclusive Fintech 50. It is the only homegrown local fintech to receive the prestigious fintech award that reflects the company’s impact to Filipino SMEs. Through this award, First Circle was able to show how it used game-changing strategies to help small businesses recover from the effects of the Covid-19 pandemic. As it was able to make use of technology to provide financing access to more underserved SMEs since it went public in 2016, it was able to swiftly make pivots to innovate its systems during the critical period in the pandemic.
With the growing technology capabilities through fintech and as the BSP and other financing institutions bolster efforts to serve the 70% unbanked adults, hosting a webinar to provide a snapshot of fintech’s roadmap for SME inclusion was apt.
SEC cracks down on illegal lenders
“The regulatory environment we have now has enabled technology such as mobile banking. The BSP will be pushing forward with technologies like the National QR Code or QRPh that promotes an interoperable transfer of funds from one entity to another. There are more to come in the pipeline, which we hope to see in effect,” says BSP Director Vicente de Villa.
The SEC also has initiatives to support the financing sector and SMEs that include the approval of distribution of retail treasury bonds using a blockchain-based app, crowdfunding intermediary, and direct market access among others. Additionally, the SEC has issued two memoranda, cease and desist orders (CDOs), and the like to address unethical practices in the financing and fintech industries and to protect borrowers from unfair lenders.
“In relation to the fact that there have been many complaints and in order to protect the integrities of legitimate lending and financing companies and the interest of borrowers as part of its investor protection mandate, the SEC has been pursuing its crackdown on informal and illegal lenders,” said Lee.
Micro, Small, and Medium Enterprises (MSMEs) also have much to look forward to beyond 2020 through the DTI’s programs and efforts.
“We continue to establish Negosyo Centers nationwide to facilitate MSME’s ease of access to our services,” said DTI Undersecretary Blesila Lantayona. This is apart from providing financial and lending services to MSMEs, especially those affected by the Covid-19 pandemic as well.
Teaching responsibility to borrowers
First Circle Managing Director Moritz Gastl explained how First Circle was able to build resilience in Business-to-Business (B2B) SMEs through its technology, specifically through its technology-driven business model that has pioneered online financing for B2B SMEs in the Philippines and its personal relationships with its customers. It is through their close interaction with customers that First Circle was able to launch the most competitive product in the B2B SME online lending landscape yet, its Amortizing Loans or ALP product.
DTI Secretary Ramon Lopez closed the presentations, detailing their efforts to increase financial literacy to boost the growth of MSMEs.
“By integrating financial literacy with our entrepreneurship programs, we can educate our MSMEs on the true cost of credit and help them become responsible borrowers as they enact sound financial decisions. This, in turn, will empower them as they address challenges of access to finance. As MSMEs grow they then create more jobs and employment that will benefit our countrymen,” said Lopez in his message.
As presented by the webinar’s speakers from the financing industry and fintech, the future is beaming with opportunities for SMEs. (✓)