PT Bank HSBC Indonesia: Capturing the opportunities of the digital economy

By: The Digital Banker

The global digital economy has been on a path of exponential growth in recent times and even more so in the South-East Asia region which has seen its market size increased by USD $200 billion in 2022. A principal driver of this expansion has been digital platforms transformation and connecting to the SME businesses in utilising, interacting and conducting commercial transactions in the ecosystem which also connects vertically with e-commerce, e-logistics and ridesharing etc.

Certainly, digital platforms have transformed the traditional business models to new ways of how buyers and sellers connect and interact. Fundamentally, the growth of the digital economy contributed to refined customer experience from engagement to interaction between market participants, and expanding the reach and opportunities of SME players driven by commercial objectives.

HSBC Fusion – a global HSBC brand for SME segment, introduced a breakthrough – The Digital Ecosystem Financing solution to leverage the growth of digital platforms and connect the SME businesses with big corporations to maximise the opportunities arises from the ecosystem within HSBC Indonesia offering working capital and liquidity management.

Reimagining financing for the new economy players

Effectively, HSBC Fusion – Digital Ecosystem Financing has a precise framework in place to utilise the receivables from the platform’s buyers as collateral. The Bank deftly applies its analytics capabilities to assess the creditworthiness of consumers based on their transactions with HSBC Fusion and/or relies on assessing internal data if the buyers have an existing relationship with HSBC across segments.

Consider how the improved payment terms for receivables financing and/or additional credit options for consumers can provide buyers with the requisite flexibility needed for procurement. Furthermore, there is a halo effect in place where consumers that organically emerge from HSBC networks, stand to benefit the most in utilising the unique solutions the digital platform has to offer. On the supply side, the digital platform provides early payment options to producers by utilising HSBC’s credit facility upon the receivable from consumers. This value-add can help SMEs in accelerating their cash conversion cycle, improving their working capital position and providing additional benefits to their ecosystem partners along the value chain.

Integrated financial solutions for digital platform businesses: e-logistics client case study

HSBC Fusion – Digital Ecosystem Financing makes an end-to-end integrated financial solution for digital platform businesses possible by embedded financing solutions at every stage while helping to minimise value chain risk.

A case in point is the example of an e-logistics platform (client) in Indonesia and the role played in generating the most value across its ecosystem.

Indeed, the client was grappling with competing challenges including how to maintain strong and stable cash flow given the need for partial upfront payment for transport services and a 60-90 shipper payment period that was in place. HSBC Fusion was able to resolve this by extending a revolving credit facility, with the added flexibility of unlimited withdrawals within the credit line.

HSBC Fusion enabled a faster cash conversion cycle possible for the client, while significantly enhancing its working capital position.

Long-term value creation for digital economy participants

As PT Bank HSBC Indonesia continues to realise digital economy-based opportunities, it remains well placed to increase SME market share in Indonesia prudently leveraging platform’s user base and connecting SMEs with financing facilities. Validating its institutional achievements over the past year, The Digital Banker awarded PT Bank HSBC Indonesia for “Best SME Product Innovation of the Year” at the recently concluded Global SME Banking Innovation Awards 2023 program.