Helping SMEs access finance

KINA Bank chief executive officer Greg Pawson says the bank is being fairly ruthless in taking banking back to basics to assist those involved in the Small-Medium Enterprise (SME) sector in having easy access to finance.
Pawson said, when the bank recently announced its K50 million concessional loan facility for SMEs that with the loan product, that the bank was removing additional fees which the bank saw as a hindrance to accessing finance.
Upfront application fees, documentation fees, cheque processing fees, inspection fees, draw-down fees and settlement fees have all been removed as part of the banks new loan product, according to Pawson.
“It is consistent with underlying philosophy of removing unnecessary fees and charges across our banking businesses and bring our customers and taking banking back to basics which is at the centre of our core believes,” he said.
“We believe banking should be very simple to access and be transparent at the same time.
“A dedicated team and a simplified process has been put in place to make sure that we handle enquires and applications efficiently and effectively and this will help support the SME sector by improving access to financing for small to medium social enterprises.”
Key features of the concessional loan facility includes:
l ONLY for wholly-owned PNG SMEs in operation for a minimum of two years with a minimum turnover of K5 million per annum; and,
l FOUR per cent interest with maximum K500,000 for secured loans with repayment term of 15 years and maximum K100,000 for unsecured loans with a repayment term of seven years.
“The way we have designed this is that, we have set up a dedicated team of small business managers that will be available to talk to customers and take enquiries, applications and we have a fast track application process and approval process for that reason,” he said.
“One of the big criticisms through the Government’s sponsored scheme is the time it takes for applications to be processed and that the process to access the governments sponsored scheme is a little bit clunky.
“So we are trying to learn from that and make sure that ours is as streamlined as possible as can be and that’s important.”
In terms of concerns around delinquency rates, Pawson said there was no fear as it was factored into the bank’s normal credit criteria.
“We will obviously lend to business that can afford to pay us back, that’s going to be important and that’s part of the assessment criteria,” he said.
Pawson said the bank had done a lot of work identifying how many SMEs were in the market.
“We estimate it is something around 50,000 to 75,000 across PNG,” he said.
“It’s challenging getting all the data because one of the biggest issues here is that a lot of them are in what’s called the ‘informal sector’.
“So they are actually not registered businesses so that will be hopefully one of the things that this product will help achieve is bring a lot of those businesses into the formal sector which is actually good for the economy because in that the cash is circulating through legitimate financial systems which is one of the things government is also focusing on.”
Pawson said following the announcement of the new loan facility that it was a “reflection of our commitment to PNG”.
“We are very proud to be a Papua New Guinean-based bank, second biggest bank, dual listed and publicly listed on the ASX (Australian Securities Exchange) and PNGX (PMG Stock Exchange),” he said. “We are very excited about the future, we have a firm strategy for Kina Bank to be the go-to bank for businesses.”
The bank has also, in recent times, completed the design and build another market solution, the Kina Everyday account.
“Our first transaction account with no monthly fees, it also comes with modest transaction fees compared with equivalent competitor products,” Pawson said.
“It supports our drive to increase competition, give customers greater choice and lower banking cost.”
The bank in a previous response to queries from The National said that they had also removed Eftpos fees so that it was free when customers use a Kina Bank Eftpos terminal.
“The new product ensures customers can manage the amount of fees they incur,” it said.
“Simply by choosing how to transact – whether to use an ATM (automated teller machine), Eftpos, internet banking or Kina Konnect – and how often, customers can manage how much they are charged.
“The easiest way to keep fees to a minimum is to use Kina Bank’s state-of-the-art digital channels – all of which come with low transaction fees.”
The key features of the new account include:

• NO monthly charges;
• NO Eftpos fees when using Kina Bank Eftpos terminals; and,
• MINIMUM opening balance of K10.

The bank said its existing customers could apply for a “Kina everyday account” via internet banking and visit their home branch to collect their card.
“ANZ access everyday customers will be automatically transferred across to Kina everyday (account),” the bank said.
“Customers do not need to do anything – their cards will continue to work normally.”
“Access to financial services for many is restricted, and growth of the MSME sector is restrained by a lack of investment and education.
“Our strategic partnership with MiBank, our financial inclusion partner, created a solid platform for us to reach further into the community and deploy our capabilities and assets – and create mutual value
exchange across both organisations.
“We successfully completed our first ‘bank as a service’ business innovation project to provide MiBank with cards issuing, central bank clearance and POS.
“Together, we were able to bring more than 130,000 new customers into the formal financial services sector, by helping them open bank accounts and providing them with financial education.
“We also created a customer referral pathway between the two organisations to give customer access to the appropriate products and services depending on their needs. We supported this pillar of our strategy with a series of thought leadership programmes for the business community.
“Launched at the Prime Minister’s back to business breakfast last January, we delivered a series of workshops, talks and presentations focusing on financial literacy and education, business development and outreach”.