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Transcript of Successes and failures of SME banking in Ukraine over the last 10 years by Robert Kossmann, Deputy...
Successes and Failures of SME Banking in Ukraine over the Past 10 Years
Robert Kossmann20 October 2016
Ukrainian Banking Forum 2016
Raiffeisen Bank Aval today:
§ #1 in SME lending in Ukraine *§ 220 000+ SMEs** or 20% market share ***§ 570+ branches across all regions
* Source: SME Banking Club based on bank supplied data** companies and entrepreneurs *** acc. to GfK research on legal companies
РБ А
валь
SME loan portfolio
31.12.2015
РБ А
валь
Банк 1 Банк 2 Банк 3 Банк 4 Банк 5 Банк 6 Банк 7 Банк 8 Банк 9 Банк 10
SME clients
Failures in SME Banking in Ukraine
1. Good PR (everyone is #1) but no real priority:§ Not enough organization level capacity§ No long term strategy§ No SME culture
2. Know How:§ No HQ staff with adequate competence§ No SME dedicated risk management => no risk tools§ No SME dedicated staff
3. Inadequate risk appetite (focus on big tickets mainly)4. No transparent reporting (Corporate/Retail only)5. Lack of investments in marketing, IT/OPS, Staff
Failed: Just 5% in SME Lending
5
10
10
23
25
34
0 5 10 15 20 25 30 35 40
УКРАИНА
РОССИЯ
КАЗАХСТАН
ГРУЗИЯ
БЕЛАРУСЬ
АРМЕНИЯ
Удельный вес, %
5%WHY???
95% of business loans in Ukraine provided to Corporates
Failed: Voice of the Customer
Branches Digital
The future of Retail Banking is SME
85%employees work at SME companies and entrepreneurs
Personal cards
Salary projects
Personal deposits
Be Unique: Мій бізнес, Академія бізнесу
SME needs marketing investments
A Successful SME Bank is:
1. Be in your TOP 5 priority list2. SME Culture and Leaders. At least B-1 position (for
large banks) or Board Member (for small banks)3. SME Risk Management (People and Tools)4. Well-trained SME managers5. SME is not just loans => internet-banking, daily
business banking, deposits, non-financial services
A Financially Successful SME Bank is:
1. RORAC: 25-30%2. 30,000+ SME customers*3. CIR: 40-45%4. Risk to income: 10-15%5. Loan NII /GI: 35-50%
Keyprofitdriversaretypicallydepositsandtransactionbanking,representingbetween50-60%oftotalSMEbusinessprofitability
* Including Micro and entrepreneurs
5 Recommendations
1. Invest in digital but don’t forget about branch network2. Build branch network based on long-term relationship
with SME customer3. The future of Retail Banking is based on your SME
Banking strategy4. SME is different. Find your market niche5. Be Unique. Find your value proposition