KUALA LUMPUR: Banks should move beyond traditional lending and support SMEs to retain workers through accessible financial protection and employee benefits.
Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong said financial institutions can help close the country’s protection gap by integrating insurance and takaful products into banking solutions, not only for employees but also for entrepreneurs and business owners.
“This is one of the aspects that needs to be done, which is to tie in their products, perhaps working together with the insurance sector, to offer insurance products not only to workers, maybe also in the future to entrepreneurs, business owners and so on,“ he told a media briefing after the launch of CIMB Bank Bhd’s CIMB Salary Account under its CIMB@Work programme today.
Sim said the initiative is relevant because SMEs are not only dealing with rising business costs but also the challenge of retaining workers at a time when employees increasingly value benefits, protection and workplace culture alongside salaries.
Employers often assume that retaining workers depends mainly on offering higher pay, but surveys have shown that many Malaysians place strong importance on work-life balance and a positive workplace culture, he added.
“For smaller companies, it becomes even harder because in terms of salary, in terms of many things, it is difficult for them to compete.
“So with the existence of facilities offering, for example, insurance, takaful and so on, then it helps to some extent SME companies retain workers by offering better facilities and also helps SMEs reduce operating costs.”
Sim said the challenge of retaining skilled workers is a real issue on the ground, especially for smaller businesses that may not be able to match the compensation packages offered by larger companies or multinational corporations.
He added that while businesses cannot control external pressures such as oil prices and global cost movements, they can manage ground-level operating costs and improve their employee value proposition through better benefits and support.
Sim met with the Association of Banks in Malaysia last month, with CIMB also present, to discuss how the banking and financial institution sector can work with the government, particularly the Entrepreneur Development and Cooperatives Ministry, to better support SMEs.
He said he outlined 10 areas of cooperation, which can be summarised under the “Three As” – accessibility, affordability, and advanceability.
“The first must be accessibility for your products, for SME products, in terms of speed. Quickly. Loan approvals should not take too long. Loan sharks approve in 24 hours, come to a bank, three months, four months. So it must be fast.”
Banks also need to ensure that SME credit assessment and price discovery are more flexible, as smaller businesses should not necessarily be subjected to the same standards as large corporations.
“Secondly, in terms of accessibility, they must ensure that in terms of credit rating, price discovery, maybe SMEs should not be subjected to standards as high as large companies,” Sim said.
Banks must ensure that financing for SMEs is affordable and does not impose excessive pressure on operating costs.
“Don’t give loan shark-level rates. Approval is not as fast as that of loan sharks, but interest rates are more favourable than those of loan sharks. So, affordability, it must be affordable, especially to SMEs,“ Sim said.
The third element, which he described as “advanceability”, means banks should not only provide capital but also help entrepreneurs develop capacity, improve their businesses and expand.
“It must also be tied with how we can help not only by giving money, capital injections, but also by helping our enterprises and entrepreneurs in terms of capacity development, progress and business expansion,“ he said.
CIMB Bank launched a salary account with complimentary takaful coverage under its CIMB@Work programme, as part of efforts to strengthen financial protection among salaried workers.
The CIMB Salary Account, underwritten by Sun Life Malaysia Takaful Bhd, provides takaful protection of up to RM200,000 covering 36 critical illnesses, including cancer, heart attack, Alzheimer’s disease, stroke and kidney failure. The coverage includes death and total and permanent disability.
No health screening or health declaration is required, except for exclusions involving pre-existing conditions. Account holders are not required to make contribution payments for the takaful coverage.
To qualify, account holders must maintain a monthly average balance of at least RM2,500 to initiate protection and keep their balance at or above the threshold to remain protected. They must also be between 18 and 69 years old and have their salary credited into the account.
CIMB Group Consumer Banking CEO Haniz Nazlan said the product simplifies access to protection by embedding takaful coverage directly into salary accounts. “With the CIMB Salary Account, we are simplifying access to protection for account holders by embedding Takaful coverage directly into their salary accounts.”
Haniz said the product enables Malaysian employees to build structured financial protection through their salary accounts in a simple, affordable and transparent way.
Eligible customers will also receive CIMB@Work benefits, including lower entry requirements for selected credit cards and lower financing rates for personal financing, home financing and Term Financing-i secured by an Amanah Saham Bhd certificate.
Malaysia’s workforce remains underserved in insurance and protection, with only an estimated 40% to 50% of Malaysians having life protection, while many remain inadequately covered against serious illness, death and other life shocks.
As part of the launch, CIMB will offer eligible customers additional complimentary critical illness coverage from May to July, doubling their takaful coverage for one year, subject to terms and conditions.
Account holders may purchase up to RM300,000 in additional critical illness and death coverage directly from Sun Life Malaysia Takaful Bhd.
The online-only offer will be available from July to December and requires no medical underwriting, subject to exclusions for pre-existing conditions and other terms.