The number of COVID-19 cases in Singapore has been on the rise. As of 6 April 2020, there have been over 1,300 cases, with 25 of the patients in critical condition. Singapore’s economy has contracted by 2.2% in Q1 as a result of the virus, with the construction and services sectors being severely hit. This is the worst contraction since the global financial crisis more than a decade ago in 2009.
In order to contain the spread of the virus and flatten the curve, the government has tightened the nation’s stay home and safe distancing measures.
The gravity of personal hygiene in a time like this has manifested into a practice of an eight-step hand washing technique to the crafting of homemade hand sanitisers. In a time when social distancing is crucial, relooking at how activities are typically done is important. How we work, eat, spend our leisure time, and run errands have all changed. In line with that, traditional financing is one such errand to reconsider.
An hour of waiting at the bank is not only inconvenient, but also brings an individual in close proximity with possibly 30 other people at any time. It is hence unsurprising that the Monetary Authority of Singapore (MAS) has issued an advisory to all financial institutions in Singapore to implement safe distancing measures in all aspects of their business operations, particularly at customer touch points.
Traffic curbing measures in customer-facing locations such as bank branches and customer service centres have been mandated. Visitor sign-ins at physical banks are also necessary to facilitate contact tracing efforts.
While these efforts are a step in the right direction, the most effective way to minimise human contact is to eliminate it altogether, at least for mundane routine activities.
Digital financing platforms offer us the freedom to continue with financial errands in spite of physical restrictions as well as the convenience of doing it all from the comfort of our homes. Contactless loan applications, for instance, require minimal to zero face-to-face interaction or physical contact from the moment of application to the disbursal of funds.
The entire application and submission of documents is seamless; it can be completed paperlessly on a website or on a mobile app. As with most digital services, providers answer consumers’ questions on the platform or over email, making the experience exclusively online.
Digital financing alleviates the pressure on SME owners who are already heavily impacted by the shutdown of supply chains and loss in revenue. On top of these business disruptions, SME owners also have to handle manpower matters due to the evolving border restrictions, as well as stay up to date with various regulatory changes across industries. For an open economy like Singapore’s, global shocks due to COVID-19 will also deeply impact local firms. SMEs across various industries are already facing a liquidity crunch. Some firms are facing order cancellations, while others are experiencing a loss in revenue, leaving them unable to pay their employees. Hawkers also see businesses plunge by 50%.
These SME owners need to access funds to tide them through this period, but queuing up at a physical bank to apply for financing not only puts their health and safety at risk, but their family’s and loved ones’ as well. In addition, the time spent queuing at the bank can be better dedicated to solving business difficulties during this time of crisis, or planning ahead to cope with a forecasted reduction in demand or fluctuation in supply.
The merits of digital financing have never been felt more acutely than during a time like this. With businesses already facing a downturn, digital financing platforms need to be ever more ready to offer help to small business owners facing problems with their cashflow.
With the evolving fintech landscape in Singapore, digital financing is poised to level the playing field for both traditional and digital banks alike, and has the power to liven up the nation’s e-payment roadmap.
COVID-19 is a global pandemic that is likely to stay for the foreseeable future, and the Singapore government has stepped up its provision of aid for its people.
Together with the S$6.4 billion announced in Budget 2020, Singapore has set aside another S$48b in its COVID-19 Resilience Budget to help workers and businesses with cash flow, cost, and credit. More targeted help is also in place for those hardest hit by the virus. Close to S$55 billion has been dedicated to these efforts, which amounts to 11 per cent of the country’s Gross Domestic Product (GDP).
COVID-19 has evolved from being first reported to the World Health Organisation Country Office as a pneumonia of unknown cause in Wuhan, China, on 31 December 2019, to becoming a global pandemic today. While physical distancing and isolation is fast becoming the new normal, it seems there still lies a silver lining in our attempts to manage our finances as per usual.
As the virus catapults the adoption of contactless services, digital financing platforms rise up as the tool to help us be socially responsible while retaining a sense of normalcy. Innovations in financing and lending have proven to be both productive and convenient, quickly becoming the go-to method of financing regardless of our DORSCON status.
Funding Societies provides business financing to small and medium-sized enterprises (SMEs), which is funded by individual and institutional investors.
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