Tech usage at SMEs limited to basics: HSBC

Indian small and medium enterprises (SMEs) are using technology for basic communication, but not as much for better managing their businesses or for business banking. The major barriers of using technology for business and banking is the perception of ?high cost? and ?low security? associated with it. This was revealed in a survey commissioned by

The Hongkong and Shanghai Banking Corporation Limited (HSBC), India.

The survey, conducted in October 2008 by The Nielsen Group, covered more than 300 small and medium-sized enterprises across six key metros of India: Mumbai, Delhi, Kolkata, Bangalore, Hyderabad and Chennai. Firms were examined on the basis of opportunities, challenges and difficulties associated with technology and questions were asked on three parameters: personal usage, business usage and technology used for banking.

On the personal usage of technology, it was found that while awareness and the comfort level about the internet was high amongst 90% of SMEs surveyed – the usage was primarily for checking a mail account. Financial transactions such as bill payments on the internet are not very popular. Of those surveyed, 78% use internet in office, 21% at home & 1% at cyber caf?s. Amongst all cities, Kolkata scored the lowest (78%) in the usage of internet and Delhi scored the highest usage (98%).

For usage of technology for business, the survey saw 97% SMEs use mobile phones, computers and telephones for communication, while 71% use the internet and 62% use the conference call facility. However, conference calls are used primarily only in Mumbai and Chennai. As for the computer, 86% of SMEs use an accounting software like Tally, 47% SMEs use the internet while only 28% use software for collections and payments.

For banking purpose, alternate delivery channels like phone, ATM and internet are widely used ? 88% SMEs use ATMs, 82% use phone and 79% use the internet.

On the usage of technology in banking it was found that the alternate delivery channels (ADCs) are used for basic transactions and in most cases do not include monetary transactions (except ATM for withdrawing cash). Monetary transactions are best avoided through ADCs, the key reason being the perception of these channels being ?non secure?. Also, when money is involved the customers prefer a ?face? for accountability.

As many as 93% of SMEs use ATM for withdrawing cash, 80% use it for account balance enquiry while 56% use it to find out details of recent transactions. Very few use it for statement requests, depositing cheques and cash, bill payments, transferring funds and requesting for cheque books.

Phone banking is used more for enquiry or requests. Transactions performed via phone are limited. Sixty-one per cent use it for account statements while 58% use it for balance enquiry. At least 51% SMEs use the phone to request for a cheque book while 47% stop payment through their phones. Very few use it for bill payment, transferring funds, credit card payments, making fixed deposits, the survey found.

According to the survey, internet is primarily used for checking transaction details by users. There is low usage of any kind of monetary transaction. Approximately 82% of SMEs use the internet for checking account transaction details while 55% make bill payments through the internet. Significantly low numbers of SMEs use the internet to request for a new cheque book, transfer funds, makes FDs, order demand drafts, make bulk payments like salary and others.

Puneet Chaddha, managing director and head of commercial banking for HSBC in India, commented: ?This survey was commissioned by us in order to better understand the needs of the SME sector in India. The results show that the usage of technology is high amongst SMEs, even though it is more for personal use than official.?