BBVA experts recommend that SMEs should digitize, become more technified, and increase their training to adapt to the new times in order to get onboard the sustainability train and make progress in their recovery.
It is the first time since the Long Depression of 1873, which ravaged Europe and the United States, that several nations around the world have experienced a decline in per capita output at the same time. This situation, triggered by the coronavirus crisis, has caused the global economy to enter into its worst recession since World War II, dragging with it both large and small companies. It is the latter however, which accounts for 90 percent of the business fabric and 70 percent of global employment, according to UN data, which have been hit the hardest.
In this scenario, BBVA wanted to do its part in supporting this situation. "The outbreak of the pandemic has meant a before and an after. Some, unfortunately, have had to close for good. However, others have been able to reinvent themselves and successfully adapt to the new reality, or even find in it the key to their new business. This crisis has served to accelerate SMEs' access to digitalization in a trend that will not be slowed down and for which we are there to provide technology opportunities to our customers. Now is the time for SMEs to focus on this, bearing in mind that in most markets we are seeing signs of recovery," explains Gökhan Koca, Global SMEs Discipline Head.
To drive this transformation, "the bank has developed different plans in several countries to offer them a better value proposal, including better financing, more advice and cutting-edge digital solutions, among other aspects," notes Koca. On the occasion of the International Day of Small and Medium Enterprises, which is celebrated on June 27, we are reminded of how technology, open innovation, collaboration, and training are essential for SMEs at this point in history.
Training and support for SMEs around the world
Since the pandemic began, BBVA decided to back support measures for small and medium-sized enterprises in the countries where it operates, providing customized solutions and flexibility plans in a wide range of loan products for customers.
BBVA Peru, for example, was one of the first financial institutions to propose a support plan for its customers, which ended up taking the form of a special credit facility of 2.5 billion soles (525 million euros) aimed at SMEs. By December 2020, the institution had supported 55,595 companies.
“This new context has meant that many SMEs have had to change the way they interact with customers”
However, the emphasis was not only on economic aid, but also on training, understanding that the new times required new ways of relating to customers and users, and placing online sales and customer service as a fundamental pillar for growth.
"This new context has meant that many SMEs have had to change the way they interact with customers, and e-commerce is more important than ever, which is why we have organized several webinars," recalls Javier Balbín, Global Client Solutions Enterprise Head.
Digitization, technology and financial inclusion - for SMEs, too
Economic sectors have seen a transformation due to the emergence of large tech companies and their focus on providing support, capabilities and solutions to smaller companies through their services.
Solutions such as accounting tools, enterprise resource planning systems, invoice and expense management programs, and banking applications, all help to manage the work of SMEs. Technologies such as drones, sensorization, robotization and artificial intelligence, also help develop their operational segment.
“We all understood that digitization was not optional for SMEs. Like large companies, they need to have an online presence to manage their business and sales remotely and reach customers and non-customers through digital channels. That is why we make our solutions available through different channels that are adapted to our client's level of digital maturity, so we can help them be more efficient and competitive throughout their life cycle,” explains Pejman Yavarashayeri, Global Head of Mobile & Digital Banking Transformation for Enterprises.
“We work at identifying our clients’ needs to provide solutions regardless of their size and knowledge”
Added to this is the advantage that remote working offers through digitization, something that has also become essential in times of pandemic and to which small-sized startups have also had to adapt to.
In addition to technology and digitization, Yavarashayeri emphasizes financial inclusion for SMEs in order to gain economic resilience in times of uncertainty; in addition to this, he also backs digitization.
At BBVA, not only have we promoted mobility solutions for our sales network, but for our clients as well. An example of this is the BBVA Empresas app, which has impacted more than 200,000 customers, 70 percent of which use it on a daily basis to carry out their banking operations. It also allows them to operate and manage their accounts without having to have to go to a branch, so they can dedicate valuable time to their business instead.
In the specific case of Mexico, one year after its launch, the BBVA Empresas app has registered more than 195 thousand users, more than 1.2 million monthly transactions and at the end of April 2021, more than 14.5 billion pesos transacted.
In addition, Clara García Benedito points out that accompanying SMEs that are operating in different countries, or that are thinking of expanding into new markets, is also key. For this “BBVA Pivot brings together a set of solutions to accompany companies in their international activity, facilitating more efficient management in their daily activities.”
“We work at identifying our clients' needs to provide solutions regardless of their size and knowledge. It is key that we all contribute in helping them. If we build a network to help them do so, we will be successful, both SMEs and BBVA,” says Gökhan Koca.
Open Banking as an innovation resource for SMEs
In addition to technology, collaboration and open innovation, another term that covers everything should be added: open banking. This is the practice of sharing financial information digitally, securely and under the conditions that the customer approves. This digital trend is one of the pillars of the modern financial sector and, for BBVA, one of the axes on which SMEs must rely.
Carmela Gómez Castelao, Global Head of Open Banking at BBVA, summarizes the advantages of this practice in three points:
- Improves automation, and therefore the efficiency and speed of processes via API connections which facilitate integration without the need for a sophisticated development team.
- Allows for the creation of alliances between companies and the bank, in order to offer financial products to each company's clients, increasing their sales.
- Offers bank utilities that go beyond finances in order to improve the customer's experience (for example, using the bank's identity system to provide personal data or to access a website safely).
In this context, Gómez Castelao explains that, “the possibilities are almost endless, since co-creation processes allow for product design that improves the experience of both clients and SMEs.”
One example of how banks and SMEs can innovate with open banking is Plataforma 10, an Argentine company whose mission is to make purchasing bus tickets, train tickets and hotel reservations more accessible and faster. Thanks to an open banking collaboration with BIND Banco Industrial, the payment and traceability process to suppliers has been optimized.
Open innovation, support from corporations
The case above is also an example of how small businesses can collaborate with large corporations and gain mutual benefits. BBVA Open Innovation is guided by this premise to offer its support to emerging SMEs through its open innovation programs.
For one, BBVA Open Innovation establishes contact with startups in their different phases and within various local ecosystems where the bank is present. Its aim is finding innovative solutions that can both improve the service to the bank's clients and transform internal processes. To do this, BBVA's Open Marketplace platform locates the company's needs and connects these companies with the bank's business lines. Afterwards, the connection between the startup and the bank is established, and if it qualifies, the entrepreneurial company becomes part of the Fast Track program, a methodology that defines and carries out concept tests or pilots in a very swift way. This agility is necessary in these times of technological speed and changing markets.
In this last year, several external initiatives have also been promoted, such as the Madrid local authority’s El Despertador acceleration program for SMEs and freelancers, the World Competition of Startups for the UNWTO's Sustainable Development Goals, and the Wakalua innovation hub.
In order for startups to have more visibility, the InnovaHome Festival backs emerging SMEs that collaborate with the bank by allowing them to demonstrate their talent and knowledge through a series of events. In addition, BBVA Open Talks are spaces where experts from the financial sector can inspire both startups and SMEs to commit to innovation.
Sustainability is also a part of SMEs
Aside from digitization, modernization and open innovation, BBVA is clear that in this current transformation towards the future, all business actions by large to small and medium-sized enterprises must go through a much-needed filter: sustainability.
This is why the bank's aim is to accompany and help all its clients, particularly SMEs, to move towards a more sustainable world with a dual focus. First through climate action, by promoting energy efficiency, a circular economy, and the economy's decarbonization; and second, through inclusive growth, by mobilizing investments towards inclusive infrastructures that support financial inclusion and entrepreneurship.
“We have a decade ahead of us to make a transformation as a society and banking plays a key role”
The UN Sustainable Development Goals are not simply an add-on, but a necessity for all economic actors. This is what BBVA believes and last year, it placed sustainability among its strategic priorities with the aim of achieving net-zero emissions from its customers by 2050.
As BBVA experts say: "We have a decade ahead of us to make a transformation as a society and banking plays a key role in helping people, companies and institutions undertake this transition to a more sustainable and inclusive world."