This article first appeared in The Edge Financial Daily on May 3, 2018

KUALA LUMPUR: RHB Bank Bhd is set to collaborate with SME Corp Malaysia to advance cashless payments for small and medium enterprises (SMEs) as it strives to increase its exposure in the segment.

Both parties signed a memorandum of understanding (MoU) yesterday that will see RHB appointed the first strategic partner of JomPAY, Malaysia’s national bill payment scheme established and operated by Payments Network Malaysia Sdn Bhd (PayNet).

“Together with SME Corp, we are ready to assist SMEs in simplifying and digitalising transactions using RHB Bank’s REFLEX Online Cash Management system, JomPAY and other available solutions,” said RHB Bank group managing director Datuk Khairussaleh Ramli at the signing of the MoU.

The signing of the MoU between RHB Bank and SME Corp is also an initiative towards Bank Negara Malaysia’s aim to reduce the use of cheques in Malaysia from 207 million to 100 million per year, added Jeffrey Ng Eow Oo, head of RHB group business and transaction banking.

SMEs will have direct access to various cashless options via SME Corp’s website, which will be updated regularly by both RHB Bank and PayNet.

According to SME Corp chief executive officer Datuk Hafsah Hashim, SMEs will benefit from going cashless as it will improve their operational efficiency, reduce administrative costs and enable them to enjoy faster access to collection proceeds.

The collaboration is also expected to accelerate SME Corp’s target of getting 100,000 SMEs to adopt cashless transactions this year. The organisation has so far seen some 7,000 merchants adopt Axiata Group Bhd’s Boost application, of which SME Corp is a partner, said Hafsah.

“As at May, nearly 3,000 SMEs are on the Digital Free Trade Zone,” she said.

SME Corp and RHB Bank will also be working with PayNet, the national premier payments network and central infrastructure for financial markets that controls the Malaysian Electronic Payment System Sdn Bhd (MEPS) and MEPS Currency Management Sdn Bhd (MCM).

Separately, Khairussaleh said that RHB Bank aims to grow its SME loans by 9.6% this year and raise its SME market share to 9.2% from 9% currently.

To date, SME loans comprise 16.8% of the group’s total loans, he shared, and are expected to grow at a rate of 10% this year.

Although the partnership with SME Corp to advance cashless transactions is not provided to boost loan growth directly, Khairussaleh said nonetheless a focus would be to grow and maintain liquidity and deposits.

Ng said RHB Bank has 74,000 customers on the REFLEX platform, of which some 80% are SMEs.

“SMEs need to realise that there are a lot of hidden costs in the traditional way of transacting today. Time and resources are consumed when it comes to the management and transaction of cash, and there is exposure to pilferage.”

Incorporated in the platform are a financial accounting software, as well as the ability to view accounts, transaction history and authorise payment transactions through a mobile banking app.

As such, SMEs could use RHB’s REFLEX to manage their cash flow more efficiently.