Securing bank financing poses challenges for small and medium enterprises (SMEs) in the UAE, primarily due to brief credit histories, collateral difficulties, interest rates, and bureaucratic obstacles, according to a study. The SME Megatrends report by Visa reveals that while UAE banks have made considerable efforts to streamline the account opening process for SMEs, it remains arduous and costly. The report highlights how banks can capitalize on the needs and obstacles faced by businesses to create new revenue streams, gain a competitive advantage, and impact SME growth and scalability. Regulatory frameworks, funding, and digital transformation efforts are reshaping the local business environment, opening new avenues for UAE businesses. In this dynamic setting, SMEs are rapidly adopting digital strategies by enhancing their online visibility to attract new customers, embracing contactless and digital payments to remain competitive, and utilizing digital tools to optimize operations. The swift digitalization of the region’s SME sector offers abundant new revenue opportunities for banks. By providing access to crucial financial products and services, banks can exploit this potential, leading to a broader customer base, higher transaction volumes, and increased revenue possibilities. Collaborating with Visa, banks can offer customized financial products that cater to the specific needs of SMEs, promoting inclusive economic growth. Salima Gutieva, Visa’s vice president and country manager for the UAE, emphasized the vital role of SMEs in driving economic growth, innovation, and employment. She noted the importance of banks understanding SME needs and developing targeted solutions. Visa is confident that the SME Megatrends report will assist banks in adapting their offerings to better serve the SME market. By identifying ways for banks to supply SMEs with essential financial products and services, Visa aims to foster economic growth collaboratively, benefiting SME development and contributing to new avenues of prosperity for the broader economy.
Additional trends identified in the report include: SMEs increasingly using social media and e-commerce platforms to enhance their marketing and tap into the digital economy. Contactless payments are becoming a significant investment area for 49% of UAE SMEs, reflecting the growth of mobile payments and digital wallets in line with changing consumer behaviors. The UAE has seen a substantial rise in digital payments, with over 90% penetration of in-store digital contactless transactions. Despite the common use of checks, SMEs are shifting towards low-cost and faster digital payment methods, showing a demand for solutions like Tap to Phone and Visa Direct for cross-border transactions. Investment in SME digitalization tools is on the rise, with SMEs increasingly adopting invoicing and expense management platforms and digital accounting software, although 74% still rely on manual processes and basic communication tools. There is a growing interest among businesses in providing better employee benefits, with 86% willing to offer additional benefits if they were more affordable to attract and retain talent. Digital payment technology is seen as crucial for business growth, with 95% of SMEs finding the value received from digital payment setups to be equal to or greater than the cost, and over 70% of merchants considering such investments as business-critical. Visa has digitally enabled nearly 67 million SMBs globally, surpassing its three-year goal of digitally enabling 50 million SMBs worldwide by leveraging its expertise and partner network.
