As the country’s leader in digital financing, the Union Bank of the Philippines continues to educate and arm clients especially the micro, small and medium-sized enterprises with tools that will help them pivot and participate in the growing world of digital transactions.
UnionBank launched a program that supports MSMES into streamlining operations and financing across their supply chain ecosystems.
“Traditional and manual financing processes applied that have once been effective pre-pandemic now pose challenges to businesses as they restart their operations in the new normal. With the right financing technology, delays and errors they previously encountered can now be overcome and overall operational efficiency can be achieved,” said UnionBank executive vice president and head of transaction banking and platform development Ramon Duarte.
With the commitment of innovating the country’s business ecosystem, UnionBank developed its own integrated supply chain financing platform, allowing businesses to confidently operate no matter the economic landscape.
“Our blockchain-enabled supply chain financing platform supports businesses and their supply chain ecosystems through three crucial points, community-based approach, transparent transactions, and automated financing,” Duarte said.
Through the platform, local businesses enjoy easy cash flow management, real-time processing of payments and loans and clear visibility of receivables and payables in real time. Financing was also made easier for MSMEs through community-based approach which removes stringent documentation requirement.
As part of its local “tech up” approach, UnionBank has been innovating supply chain financing for businesses even before the pandemic demanded that operations migrate to digital.
Back in February and March 2020 when COVID-19 cases were on the rise, UnionBank piloted the Dealer Financing and Payable Discounting programs to reduce credit exposure to vulnerable industries and MSMEs. In January 2021, the bank started to commercialize the credit programs to help MSMEs get access to funds and capital as the economy started to pick up.
All these enhancements further improved the collection and disbursement flow of supply chain communities within the platform, Duarte said. The bank highlighted that digital invoice presentment, payment, loan processing, collections and reporting have now been minimized to two minutes, compared to manual processing which can take weeks.
UnionBank recently launched a new credit program for Payable Discounting to support MSMEs in increasing approvals of credit applications. Additionally, UnionBank launched an Application Programming Interface, a set of tools, protocols and definitions for combining application services and software, to allow system integration with the Supply Chain Finance platform to further optimize invoice processing.
UnionBank enhanced the digital experience of clients through the platform with new features such as deductions processing, automated tax compliance, self-service and real-time reports.
The bank also improved the platform through the inclusion of custom fields, file attachments, auto-debit arrangements, credit notes and debit notes acceptance and SMS and email notifications for ease of processing.
There is also a renewable line application for MSMEs without full credit assessment even amid COVID-19. Suppliers can also experience shorter collection cycles or Days Sales Outstanding while buyers can have longer payment cycles or Days Payable Outstanding. Othel V. Campos
Collection or disbursement processes across business counterparties were also synchronized along with improved access to collateral-free and renewable business loans without recourse to the community anchor.
“We also introduced a wholesale approach to MSME lending. As we started exploring blockchain use cases, we realized that its immutability and provenance can help mitigate risks for the bank when lending to MSMEs,” Duarte said.
UnionBank has facilitated more than P11 billion worth of invoices and provided almost P6 billion in loans for almost 19,000 invoices across 400 businesses in just a year of commercialization, exceeding targets.
The bank has more than 10,000 MSME leads from its current and target anchors which can bring in more than 4 billion new business lines and new deposit accounts.
With supply chain finance, UnionBank gets access to a robust lead generation mechanism that hits multiple businesses including deposits, cash management, loans and online and digital transactions.
“With the supply chain platform, UnionBank has introduced an effective wholesale lending strategy packaged with a retail account and online and app banking enrollment. The platform also allowed the bank to lend effectively to MSMEs and to the agriculture industry, which are required by the Philippine government amongst the local banks. UnionBank continues and will continue to develop new features and products on the platform to further deliver on its digitization and SME lending objectives,” Duarte said.