Only 46% of MSMEs fully separate their business and personal finances, OCBC simplifies the process for entrepreneurs to open a business checking account 100% digital

OCBC Business Fitness Index 2024: This year, the financial health score of MSMEs has risen to 48.0 compared to the previous year’s 43.8, yet it remains in the ‘caution’ category. MSMEs in Indonesia have shown good understanding of financial management systems with a score of 60, indicating improvements in financial recording and management. However, only 46% of MSMEs have completely separated their business and personal finances. OCBC is the first bank in Indonesia to launch an innovation for opening business checking account 100% digital, which can be completed in just a few hours.

JAKARTA, Indonesia, Sept. 6, 2024 /PRNewswire/ — PT Bank OCBC NISP Tbk (OCBC), in collaboration with NielsenIQ (NIQ) Indonesia for the second time, has launched the OCBC Business Fitness Index (BFI), research aimed at providing insights about the financial behavior of MSMEs in Indonesia. This research reveals that MSMEs in Indonesia have a good understanding of financial management systems with a score of 60, meaning they have improved in financial recording and management, including regular profit and loss recording and review, and maintaining capital needs. However, despite improvements from the previous year, only 46% of MSMEs have fully separated their business and personal finances, which could impact cash flow and business sustainability.

Furthermore, the research indicates that MSMEs registered as business entities tend to have a better understanding of financial management systems and business risk planning. This results in a healthier financial score of 60.2, compared to those without an entity, who score 47.4. This is attributed to having clearer and measurable business plans, targeted business strategies, and proper, regular, and orderly financial recording, which can serve as an accurate basis and benchmark for business continuity.

The government has eased the process for micro and small businesses to establish a business entity in the form of a Single Shareholder Limited Company (PT Perorangan), as officialized in the Job Creation Law No. 11 of 2020, allowing the establishment of a Limited Liability Company (PT) by a single individual acting as both shareholder and director. This speeds up the process for MSMEs that aspire to advance to the next level.

“Research results show that 80% of MSMEs are not registered as business entities, and only 3% of Indonesian MSMEs are registered as Single Shareholder Limited Companies. Among those registered, Small Enterprises are the majority, while Micro Enterprises are significantly lower. These results indicate a need for improvement to elevate MSMEs to the next level,” stated Inggit Primadevi, Director of Consumer Insights at NIQ Indonesia.

Addressing this, Sari Kartika, SME Proposition Division Head at OCBC, said, “Separating business and personal income is an essential first step for MSMEs to advance to the next level, especially by utilizing a business entity identity. However, many entrepreneurs face challenges in opening business accounts, mostly related to processing time and documentation requirements.”

“To address this challenge, OCBC introduces an innovative solution that simplifies the process for entrepreneurs to open a business checking account through 100% digital, which can be accomplished in just a few hours. This innovation can be utilized by MSMEs, especially business entities, to create their specialized business accounts more easily and quickly, using only a gadget without having to visit the bank. OCBC is the first bank in Indonesia to offer this innovation,” she continued.

With separate business accounts, financial record-keeping can become more organized and well-documented. The good news is, the awareness amongst MSMEs in Indonesia regarding meticulous financial record-keeping has increased, evidenced by 77% of MSME operators who have already conducted financial accounting or bookkeeping. However, of those who have done financial record-keeping, 77% still perform it manually.

Further on the findings of the OCBC Business Fitness Index 2024, MSMEs in Indonesia are improving in financial management as seen from the increase in scores for maintaining cash reserves, influenced by higher income compared to expenditure. Hence, generally, this year the financial health score of MSMEs has increased to 48 compared to last year’s 43.8. Although there has been an increase, this score is still in the ‘caution’ category and far from the ideal score of 75.

MSMEs have also begun to harness digitalization in their marketing efforts. Up to 81% of MSMEs already have social media accounts, yet only 35% understand and maximize its features. Regarding the intensity of usage, 46% of MSMEs with social media accounts are not active enough in their use. The utilization of e-commerce/online platforms is also not optimal, with only 17% of MSMEs using this platform. This means MSMEs must be more proactive in exploring digital platforms that can connect them with customers and potentially expand their business scope.

MSMEs Dare for a More Inclusive Economy Welcoming Indonesian Independence Day celebration, as well as celebrating National MSME Day this year, OCBC continues to support MSMEs as economic drivers of the country with various products and solutions. The goal is not only to strengthen the economic foundation but also to build a more self-reliant and inclusive society, especially to support female entrepreneurs and empower individuals with disabilities.

Another piece of good news, research shows that currently, both female and male entrepreneurs are increasingly optimistic about their business capabilities. Interestingly, 23% of male entrepreneurs agree that female entrepreneurs are better at managing business finances and securing business capital, compared to 10% who stated males are better. Meanwhile, male entrepreneurs are considered more capable in critical aspects, such as making business decisions, facing business challenges, and allocating more time for business.

Nicky Clara, a disability womanpreneur and founder of Setara Berdaya Group, expressed, “We are currently witnessing an increasing economic contribution from women, as indicated by the rising labor force participation rate among women. Similar to the aspiration of achieving a more inclusive economy for individuals with disabilities. Through collaboration from various parties, we can support individuals with disabilities by providing education, training, and adequate access, empowering them to advance together.”

As a banking solution provider, OCBC continually reaffirms its commitment to fostering empowerment and inclusivity of MSMEs. Through Nyala Bisnis, an innovative financial solution targeting SMEs, OCBC offers various benefits such as business health checks and free access to business skill modules, as well as community classes with business experts through RuangMenyala.com.

Specifically, to support female entrepreneurs, OCBC has the TAYTB Women Warrior Berani Cuantik program, which offers comprehensive solutions to support female entrepreneurs through business coaching packaged with integrated SME solutions, various beyond banking services, and a community for personal development. Additionally, to support more inclusive MSMEs, OCBC has a CSR programed named OCBC Preneurship ‘UMKM Disabilitas Melaju Jauh’, which empowers business owners with disability through financial and business training, and makes the Ruang Menyala platform more accessible for individuals with disabilities through the Semua Bisa #FinanciallyFit movement. Added Sari Kartika.

The BFI Research was conducted by measuring the financial health of micro, small, and medium enterprises from 620 respondents in Jakarta, Medan, Bandung, and Surabaya, who serve as Owners, Directors, or Financial Management Executives within a business. The research was conducted quantitatively, with measurement tools comprising three main pillars: Manage, Plan, and Capital, supported by two elements: Entrepreneurial Behavior and Entrepreneurial Agility.

About OCBC Business Fitness Index
OCBC Business Fitness Index is a research initiative designed to assess the financial health of Micro, Small, and Medium Enterprises (MSMEs) by examining and understanding financial behavior in business operations. The OCBC Business Fitness Index measurement tool consists of three main pillars: Manage, Plan, and Capital, supported by two elements: Entrepreneurial Behavior and Entrepreneurial Agility. These five measurement components are then evaluated based on 19 attributes representing various financial behaviors of Indonesian MSMEs in their daily operations. These indicators are measured through a survey of 620 respondents from Jakarta, Medan, and Surabaya who hold roles as owners, directors, managers, or financial management executors.

About Nyala Bisnis by OCBC
Nyala Bisnis service is a banking solution for OCBC customers who own individual businesses or corporate entities, offering various conveniences in banking transactions and extra facilities to support business needs. Customers gain access and special offers to various services/products from business-supporting digital platform partners collaborating with OCBC.

About OCBC
PT Bank OCBC NISP Tbk ‘OCBC’ was established in Bandung in 1941 under the name Nederlandsch Indische Spaar en Deposito Bank. Over its 83 years of journey, the Bank has undergone several name changes, from ‘Bank NISP’ to ‘Bank OCBC NISP’, and ‘OCBC’ on November 14. 2023. As of June 30. 2024. OCBC serves customers through 200 office networks in 54 cities in Indonesia. Furthermore, customers could conduct transaction through the Bank’s 492 ATM, more than 90.000 ATM networks in Indonesia, and connected to more than 580 OCBC Group ATM networks in Singapore and Malaysia. OCBC also serves customers through various digital channels, including mobile banking and internet banking – both for individuals and corporations. OCBC is one of the banks with the highest credit ratings in Indonesia, namely AAA(idn)/stable from PT Fitch Ratings Indonesia.

About NIQ
NIQ is a world-leading global company specializing in consumer intelligence, delivering the most comprehensive insights into consumer behavior and offering new ways to thrive. In 2023, NIQ joined forces with GfK, merging two industry leaders with an expanded global coverage. Currently, NIQ operates in over 95 countries, covering 97% of the Gross Domestic Product (GDP). With holistic retail data analysis, comprehensive consumer insights, and state-of-the-art analytics through a leading platform—NIQ presents the Full View™.

For more information, visit nielseniq.com.

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SOURCE PT. Bank OCBC NISP, Tbk