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MAGAZNE MAGAZINE SMALL BUSINESS BANKING MAGAZINE

ISSUE 2 OKTOBER 2016

The future of SME Finance SEB’S OFFER FOR SME SEGMENT

MOVEN – BANK IN A POCKET

NON-FINANCIAL SERVICES FROM TEB

OCTOBER ’16 contents

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INSIGHTS CEE BANKING SECTOR REPORT 2016: THE “NEW NORMAL“ AND 10 PER CENT THRESHOLDS

WHAT’S NEW?

6 CEE SME BANKING

CONFERENCE 23-24 OCTOBER 2016 WARSAW, POLAND Mercure Warszawa Centrum

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NEW DIGITAL BANK FOR SMES GEARING UP FOR LAUNCH IN GERMANY COMMERZBANK LAUNCHES P2P SME LENDING PORTAL NEW MOBILE BANKING SERVICE FOR SMES GEARS UP FOR UK LAUNCH AND MORE

COVER STORY THE FUTURE OF SME FINANCE

INTERVIEW MOVEN – BANK IN A POCKET

INTERVIEW HOW TO BE SUCCESSFUL ON A LOCAL MARKET. BEST PRACTICE FROM LABORAL KUTXA

visit our site

http://events.smebanking.club

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INSIGHTS

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INSIGHTS SMALL BUSINESSES ‘UNSUPPORTED’ BY BANKS The research, further revealed small and medium sized companies are in the dark regarding the notice periods on their business overdrafts.

21 NEW CONCEPT BRANCHES – TBC BANK’S LATEST INNOVATION IN GEORGIAN BANK SECTOR The Business Georgia interviewed TBC Bank Chief Operating Officer, Vano Baliashvili, who explained the new concept branches in detail.

National Australia Bank (nab) together with Telstra (Australian Telco company) invested 50/50 into the online marketplace for SMEs called Proquo.

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NON-FINANCIAL SERVICES FROM TEB When launching #SME banking in 2005, TEB set out the goal of becoming one of the top names that would first come to the SME’s minds as for SME bank in #Turkey.

26 INNOVATIONS

24 DIGITAL SME MARKETPLACE

BY NAB AND TELSTRA

Lack of financing, difficulty managing cash flow and forced long payment terms from big business suppliers are high on the list of SME pain points, so how have fintech companies alleviated these while still driving innovation?

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With non-bank lenders popping up every month to fill the multi-million dollar gap in business financing, it’s hard to know where to start. So why do SMEs find it hard to get finance from banks?

WHY FINTECH IS DIFFERENT IN THE SME SPACE INSIGHTS

SIX REASONS WHY SMES FIND IT HARD TO GET FINANCE FROM BANKS

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CHAT-BOT FROM BANK TOCHKA Russian bank Tochka (Otkrytie group) has launched financial chat-bot for SME customers, the first bot of this kind in the world.

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OUR TEAM

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Editor Andrey Gidulyan Art director Eugenya Tsybulenko

Sales executive

Alexey Sayapin Andrey Gidulyan

Contact

The SBB Magazine (Small Business Banking Magazine) – your essential global briefing on business banking, small business and SME finance.

It is a free edition. We collect publications that can be interesting for you.

You can find it online: www.smebanking.club If you have any questions about one of our publications, please e-mail us at ceo@smebanking.club

CEE Banking Sector Report 2016: The “New Normal“ and 10 per cent thresholds Highlights

• Upside in CE/SEE banking materializes; EE faced serious headwinds • Foreign lenders prove resilience in Russia; Western banks return to more “boutique style” operations • NPL ratio increased to ~9 per cent in CEE, down to ~8 per cent in CE/SEE • Profitability: RoE in CEE below 5 per cent, in CE/SEE at 9.7 per cent • L/D ratio: substantial further improvement throughout the CEE region Summary “The so-called ‘New Normal’ with stricter capital requirements, a high degree of regulatory involvement and the ongoing ultra-low interest rate environment amidst a still shaky economy in Russia and Ukraine were clearly a burden on profitability in CEE banking. But even though 2015 was another difficult year for the banking industry in CEE, notable progress was made in CE/SEE, where profitability approached 10 per cent RoE. The progress in CE/SEE banking reflects improving or at least stabilizing asset quality, while balance sheet growth is also gradually picking up. For the first time, total CE/SEE banking assets even surpassed the EUR 1,000 bn threshold in 2015, reflecting the region’s growth potential. However, the recently introduced and/or discussed regulatory measures in CE/SEE banking, like mandatory FX loan conversions or additional capital requirements, make it more and more difficult to fully utilize the region’s potential and, at the same time, restrain the banking sector’s stimulus for further economic growth. Russia and Ukraine both

faced serious economic headwinds in 2015.

In Russia, leading Western CEE banks – including RBI – adjusted their business models and focus now more on their core competences in premium niche markets. Investor confidence is again improving, although, given the political tensions in the region, the economic outlook remains dampened. But in spite of all these challenges, CEE remains a growth region for banking and the commitment to CEE continues to pay off,” said Karl Sevelda, CEO of #Raiffeisen Bank International AG (RBI).

His assessment is backed by the key findings of the latest edition of the annual CEE Banking Sector Report – a publication by RBI/Raiffeisen RESEARCH with contributions from RBI’s network units in CEE and Raiffeisen Centrobank AG. The report was presented at a press conference in Vienna on 9 June 2016.

The “New Normal“ and 10 per cent thresholds In the context of the “New Normal”, CEE banking has to master several 10 per cent thresholds. (1) The current environment calls

for at least 10 per cent market share in smaller and mid-sized CE/SEE banking markets. (2) Due to the current strategic refocusing, the average country presence of Western CEE lenders is reduced to nine. (3) Achieving at least 10 per cent RoE in CEE banking will likely remain an uphill battle in the years to come. Investors will demand a RoE premium of at least some 1.5 to 2 per cent for lenders with CEE exposure.

Within the current setting, this would translate into a cost of equity for Western CEE banks in the range of 11 to 13 per cent compared to some 9 to 10 per cent or even less for Western European lenders. (4) For CEE lenders with EE exposure it will remain a challenge to bring NPL ratios in the subregion below 10 per cent. (5) Another aspect of the “New Normal” in CEE banking is the shift of the subregions’ weightings in terms of total banking assets.

The decreasing focus on Russia and other EE markets implies that the share of Russia in exposures of leading Western CEE banks may inch down to or below the 10 per cent level in 2016.

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What’s new

DBS unveils tech solution matching platform for SMEs

DBS - together with Infocomm Investments (IIPL) and Intellectual Property Intermediary Singapore (IPI) - on Monday launched an initiative that will allow SMEs to submit a business problem online and be matched with a tech solution provider.

Joyce Tee, group head of DBS SME Banking, said:

Many SMEs are keen to adopt innovation projects but do not know where to start.

She added that the DBS partnership with IIPL and IPI will benefit SMEs, as IPI has a global network of tech partners, and IIPL a strong track record in helping businesses develop solution concepts.

That is to say, for SMEs looking for specific expertise, IPI will source these through its tech marketplace which features technologies from various industries, and facilitate a tech transfer or R&D co-operation. For SMEs with business problems that do not have ready tech fixes, IIPL will run hackathons to develop solutions.

New digital bank for SMEs gearing up for launch in Germany

Rabobank to build online P2P platform linking private banking customers with SMEs

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he Dutch bank is building an online platform (Rabo & Co) that brings together businesses and Private Banking customers. Businesses place their financing request on the platform and Private Banking customers state which loan they wish to co-finance. In the six-month trial phase, Rabobank will provide at least 50% of every loan.

To participate, investors must have freely investable assets of at least EUR1 million and take out a minimum share of EUR100,000 at any one business. The businesses taking part in the trial are all Rabobank customers in the growth phase and are seeking financing for expansion or refinancing.

Rien Nagel, member of the executive board of the bank, comments: “We were established in the past to link wealthy farmers to farmers needing money. What we are going to do now is similar: the money will now go directly from the high net worth individual to the business in need of funds. Rabobank will still manage the financing as the go-between and main participant, but without fully using its own balance sheet. If the platform is successful, we intend to open it to institutional investors as well.”

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Penta Bank is a new digital banking player in Germany working towards a spring 2017 launch. Penta’s initial target market will be German and French SMEs

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enta’s customers will be able to bank on the phone, tablet/ smartphone and web. There will be no physical branches.

“Our members will be able to open an account online in ten minutes and receive the physical card in two days,” Ivicev says. The initial product will be free for 12 months, after which a flat monthly fee will be applied.

Domestic and international transfers, bulk transfers and transactions at any volume will be included in that flat fee. “No hidden costs or penalties,” Ivicev states.

Members will also be able to upload their historical financial data

from their previous bank so that they don’t start at zero.

Ivicev promises Penta’s customers “the most intuitive and easiest overview of financials synced in real-time across all devices” and the capability to do business banking 24×7.

As mentioned earlier, there are also plans to integrate value-add applications, e.g. for payroll handling and budgeting.

Penta will not offer deposits functionality or loans (at least to begin with).

WHAT’S NEW

BNP Paribas launches a unique initiative to help finance the ambitious projects of the SMEs

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he FINANCIAL -- BNP Paribas is now offering an innovative financing solution designed to help Small and “This first-ever loan fund for SMEs provides Medium-Sized Enterprises (SMEs) and growth-oriented Midcaps institutional investors with a really innovative with turnover totalling €10 - 250 million to carry out their key longway to diversify their credit exposure. This term projects. The solution consists of a combination of a bank loan new offering complements our already broad and a loan provided through a new European SME debt fund. range of investment solutions based on the The new fund, managed by BNP Paribas Investment Partners disintermediation of corporate financing.”

(BNPP IP), which comes under the ELTIF1 category, will be supported by a number of European institutional investors including the BNP Paribas Group. The aim is to attain a size David Bouchoucha of between €300 and €500 million. The European Investment Head of the Institutional Investors Section at BNP Paribas Investment Partners Fund (EIF), part of the European Investment Bank (EIB) Group, has helped to design and set the parameters of the fund, whose objectives include stimulating new opportunities for innovation, growth and job creation in Europe.

New mobile banking service for SMEs gears up for UK launch

UK-based Tide will offer a “nimble small business current account”, with a swift set-up and no monthly frees. It claims to be among the “world’s first” mobile-first banking services for SMEs.

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ide’s CEO George Bevis says the company will open its virtual doors for business in autumn this year. Tide is currently in the “private alpha testing” stage, he tells Banking Technology.

Tide promises a fully featured current account and business MasterCard “in just three minutes”.

There will be no monthly frees, but Tide will charge 20p for Faster Payments transactions.

Other perks include access to a broad range of finance apps and sending/ receiving messages with Tide’s community.

Tide also promises to make accounting easy, with auto-categorisation of transactions, attachment of invoices and receipts, and export to accounting software.

Deposits will be segregated, staff with have access permissions and two-factor authentication. There will be controls on staff spend, with mobile authentication on all bank payments, Tide says.

Funds are regulated by the Financial Conduct Authority’s e-money licence (not part of the Financial Services Compensation Scheme).

“Barclays is our clearing bank,” Bevis tells Banking Technology, “while payments are performed by our banking services partner, Prepay Solutions”.

Insurance against fraud and hacking is provided by Hiscox.

In terms of tech, “all technology is proprietary”, Bevis says. “Server-side tech is mainly written in Java; mobile clients are native iOS and Android.”

Commerzbank Launches P2P SME Lending Portal

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ermany’s Commerzbank is entering the marketplace lending space. The FI announced on Tuesday (June 21) that it will launch a peerto-peer small business lending platform that acts as a matchmaking service between SMEs and institutional clients looking to provide investments.

Businesses can borrow up to $11.3 million, Commerzbank said.

Reports pointed to the financial institution’s move as a sign that the bank wants to collaborate with, not compete against, the alternative and marketplace lending space.

Reuters said it has become Germany’s first major financial institution to offer such a service.

According to reports, Commerzbank Manager Michael Kotzbauer denied that its P2P lending platform would negatively impact its own lending operations.

The bank will earn commission for loans lent through its platform and will supervise activity to ensure fair prices for both sides.

As a new revenue stream, Commerzbank’s P2P lending platform relieves some pressure that it and all banks face from competing alternative lending companies.

Commerzbank has made efforts to become more progressive in its financial services.

Last January, the bank was part of a group of financial institutions that signed onto SWIFT’s global payments innovation initiative, an effort to streamline cross-border payments via the SWIFT payments messaging network.

The initiative aims for same-day payments, payments transaction and cross-payment data collection, according to reports, and focuses on B2B payments.

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COVER STORY

The future of SME finance

For SMEs, P2P can offer quick and easy finance to purchase assets, obtain working capital or fund expansion.

Freeing up access to support the productive economy was one of the main reasons why P2P platform Lending Crowd opened for business late last year with a focus on business loans up to NZ$200,000.

“Both SME and vehicle financing needed a shake-up and the technology behind P2P has made this possible,” Croad continues.

“SMEs are often frustrated by the complexity of getting finance quickly and easily. Many find bureaucracy and high interest rates from existing funding sources, including banks, limit their financial elbow room and ability to grow.

“As a new option P2P makes business finance easier and cheaper, so it doesn’t become a ball and chain. It also gives people an opportunity to invest in the productive economy with balanced risk and returns. For many this is an alternative asset class.

“This matching of needs between SME borrowers and investors is good for business, jobs and the economy,” he says.

“As a new option P2P makes business finance easier and cheaper, so it doesn’t become a ball and chain.“ Managing director Wayne Croad says the company’s genuine aim is to give SMEs an easier and lower cost option to borrow.

“P2P is an innovative finance option to support New Zealand businesses,” he says.

With around 460,000 businesses of less than 20 people, employing about 900,000 and generating about a third of GDP, the SME sector continues to be the engine room of the economy, so there is always room for more finance options.

What’s the difference?

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f the current five P2P companies operating in New Zealand, Lending Crowd is different in that it offers a higher loan limit to those who meet criteria as prime bank grade borrowers.

Digital SME Lending — 5 trends which could shape the industry

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igital lending, simply defined, is sourcing, assessing and servicing loans through digital means and data points. Digital lending, in theIndian context, aims at using digital surrogates to circumvent lack of proper documentation of income statement, balance sheet, etc.

Digital lending in India has begun to show signs of prominence and has caught the

Business finance remains one of the biggest hurdles to SME growth and an often discussed topic amongst owners and managers. P2P lending is a disruptive new option.

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n the past six months P2P, or peer-to-peer lending, has become an option as an alternative source of capital and promises business owners easier access to funds without the sometimes complicated bureaucracy of other lenders.

Put simply, P2P is an online process where people who want to borrow are matched with those who want to invest or lend. It bypasses banks, avoids overheads and provides better interest rates for borrowers and lenders.

The technology behind P2P brings people together directly online.

With no middle-man investors or lenders can earn higher returns, explaining its popularity when interest rates are low and other investments are unattractive.

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attention of traditional lenders and startups alike. MSME lending in India is the most complex of these segments and is highly complicated due to underreported income and poor accounting practices; lacklustre performance and distressed status of theIndian manufacturing and commodity sector; and the hyper growth experienced by the e-commerce segment.

Bottom-of-pyramid approach

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igital lending is often used in context of young entrepreneurs and businesses with low exposure to banking products. Herein lies the biggest risk, as most businesses fail in the early stages, which is why traditional lenders either stay away from them or demand high collaterals. The ignorance meted out to these businesses makes this an untapped market.

Such businesses often engage with large suppliers and have complex, undefined payment cycles. Using the ecosystem, in terms of supplier data, securing repayment through suppliers and routing repayments, is the key. Lending to suppliers of a large corporate, relying on their purchase data, and routing the payments through the corporate reduces the risk, yet maintains the core of digital lending.

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All loans are secured by a registered vehicle or vehicles, a second security of residential or commercial property, or a combination of both.

A1 grade borrowers are able to obtain a market-leading loan rate of around 8.95 percent for a business loan and 7.90 percent for vehicle loans. There are four ‘buckets’ of borrower loan risk ranging from 7.90 to 19.75 percent.

“We looked extremely hard at what really matters to borrowers and investors and built an online process to drive down the cost of borrowing,” says Croad.

“The flip side is investors know all borrowers have skin in the game, or security of an asset, that’s baked into all loans at inception.

We also promise 100 percent transparency around fees,” he says.

The P2P process has also enabled Lending Crowd to take a different approach to vehicle financing, another common need for SMEs. Cutting out intermediaries and their commissions means better interest rates.

Lending Crowd has evolved out of Finance Direct, a well-known independent national Non-Bank Deposit Taker (NBDT) with a 16 year history. Its P2P approach is based on years of experience in the offline management of borrowing and private lending.

Digital data as a surrogates for financial data

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igital lenders are increasingly farming data points such as bank transactions, bureau performance, transactions available on accounting/CRM system, transactions with suppliers and e-commerce platforms.

These data points, in various combinations, can be used to assess the top line and size of business; but using them to arrive at profitability is an entirely different matter.

While underwriting, segmenting customers based on their

profitability rather than the perceived value is important.

For this, relevant customer profitability parameters such as current product usage levels, industry margins, potential future earnings, and risk parameters (such as probability of default) should be considered. Overlapping customers’ digital data with their financial data and traditional ratios will prove to be critical. In short, lenders’ ability to overlay profitability matrices over the transaction data will define the winners.

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Operating model reorientation to position for digital transformation

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ost large banks, in their attempts to go digital, often mistake digital lending for just changing credit policies and underwriting methods. Success in digital lending is about transforming the customer experience as well, and requires more agile operating models. According to a study#1, customers submit only 14 percent of loan applications through digital channels and most traditional financial institutions lack digital cross selling expertise. Some of the critical changes that will define success for lenders are:

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Agile ‘thinkon-feet’ risk management

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rganisations with proactive and defensive risk management practices are likely to see through the flux when the dust settles on digital lending. The classic mistake of limiting risk management only to credit risk should be avoided and an overall approach which includes assessing macro-economic, regulatory and compliance changes, the advent of e-commerce business and increased competition, should be adopted.

• Take a mobile-first design approach (keeping in mind the ascent of mobile banking), which imposes a useful reductionary discipline to the User Experience (UX) design • Executedigital strategies consistently across channels • Develop modular products that can be assembled like LEGO bricks, enabling faster time to market, a high degree of personalisation for customers and reusability through common processes and systems • Generate real-time offers for straight-through processing using algorithms, as against using them as advisory tools

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Big data and analytics

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nalytics being at the core of decision making and marketing is a big cultural shock for Indian lenders. The task ahead for data scientists is to prove their worth by constantly restructuring the models, tracking defaults on a real-time basis and helping lenders invest in early warning systems. It will be critical for decision makers to let go of the ‘human expertise is the key to credit’ approach and constantly let analytics take a ‘test and grow’ approach.

This means that there will be no more thorough underwriting in the form of human intervention, and hence potentially no more thorough understanding of the risks embedded in the transactions (because not all risk factors of a transaction can be translated into a risk

model or be collected through big data).

However, a balance needs to be struck here with the spread of risk modelling and big data analytics; any lender aiming at meeting its regulatory requirements (as well as risk policy covenants) should be able to do so by merely creating a committee that ‘signs off ’ a high risk transaction, ensuring that all the checkboxes were ticked, as delivered by the risk software.

Fintech companies around the world are creating newer models to make lending decisions and service loans. In the US, fintech companies such as ZestFinance have moved beyond traditional risk assessment to use new sources of data in underwriting, such as whether an applicant keeps a consistent phone number or has made delayed bill payments.

Increase in Global Lending of MSMEs to Drive the Global P2P Lending Market Until 2020 Technavio analysts highlight the following three factors that are contributing to the growth of the global P2P lending market: 1. Increase in global lending of MSMEs

may create more such products in the future.

Global peer-to-peer (P2P) lending market to grow at a CAGR exceeding during the period 2016-2020.

53%

maintain accurate inventory After the financial crisis, the 2.Enhancement of counts, and ensure suppliers adhere banking and financial institutions are inventory management to their commitments during the trying to deleverage the off-balance The inventory management has sheet items to meet the penal capital improved in the last five years and has forecast period. It will also lead to improvement in the vendor-managed adequacy requirements. This has led enhanced the cash flow and the way to the reduction of loan finance for working capital is managed. Inventory inventory techniques and aid in building up the value chain in the supply small and medium-sized businesses is crucial to any company’s balance chain management.

(SME) and individual borrowers as sheet. For instance, if a company they are considered to be risky. The needs to prevent loss then it has to 3.Borrowers having faster P2P sector has successfully filled a ensure that it has enough inventory to access to credit massive unmet need. The innovameet the demands. Any difference in Looking at the current market tions in technology have expanded the inventory and demand can affect scenario, the P2P lending platform the ease of access to working capital company’s cash flow i.e., in the case provides credit to the marginalized for micro, small and medium enterof a deficit, more investments will be borrowers like small and medium prises (MSMEs). The boundaries of required. Therefore, organizations scale enterprises that are unable to technological services are sometimes must focus on maintaining optimal obtain huge funds from the other fluid, but there are five key products inventory levels by setting up a system banking and financial institutions. required for funding small businesses. that uses various internal processes The small and the medium enterprises These include marketplace (P2P) to track accurately and maintain lack high-quality collateral and long lending, merchant and e-commerce inventory. Such a system will enable a credit histories and are associated finance, invoice financing, supply company to manage the vendors and with higher risks. This is because the chain financing, and trade financing. customers, monitor demand patbanks are unable to meet the shortThese lead to a belief that technology terns, track inventory performance, term funding needs of these small

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and medium scale enterprises. The traditional banking institutions are trying their best to address the specific needs of the potential clients so that they can reduce the huge funding gap between the large corporate and the small and medium enterprises. For instance, small regulated financial firms are licensed to encourage credit access for small and rural borrowers in China. This will bring in liquidity into the system, thereby bringing in credit transformation. “The P2P lending institutions offer risks, along with scenario analytics for different products and services with real-time pricing and capital management of multi-asset portfolios. This unique tool would provide a transparent and detailed solution to clients to buy the products and services from the online platform,” elaborates Amit.

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Interview

Interview

Moven – Bank in a Pocket

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Jay de Groot, Vice President EMEA at Moven

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Freelancers in the Gig Economy” together with Wharton Fintech, in which we studied that “freelancing comes with a significant and recurring opportunity cost that is unlikely to disappear anytime soon – especially since a full 70% of the freelancers we surveyed view freelancing as a long-term career. But freelancers can recoup this opportunity cost using flexible,

by largest banks. It’s hard to predict whether it’ll be blockchain or other technology, but technology is unstoppable.

OH: Which topic will you highlight at SME Banking Conference in Warsaw, 23-24 Oct 2016?

JG: Moven is a mobile version of the bank.

Bank in a pocket as we say. I’ll tell how we in the US explore awareness on how people spend money and how mobile banking can become better. In this sense, freelancers are unique.

If compare a freelancer to the traditional employee, a freelancer doesn’t have medical or disability insurance. So, freelancers should cover these costs by themselves. This is the highest priority savings category. Then freelancers don’t have a retirement plan and do not save for retirements. The next gap is that freelancers have irregular cash-flows. 70% of freelancers state that their income is not predictable. This can spell trouble for their checking accounts,

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It’s one person business. Now such small businesses have to go to the banks because banks don’t provide services online. But small businesses should have their bank on smartphone or tablet. Banks treat such small businesses as future corporates with heavy corporate processes.

efficient, technology-driven, and mobile tools designed for individuals who are also businesses. As a starting point, freelancers need a new approach to personal financial management that is grounded in financial technology.

FinTech enables freelancers to become smarter spenders, savers, investors, and users of credit – all while reducing costs and saving time.”

OH: Today there is a buzz around blockchain technology. Do you believe that this will make business banking paperless? We know that already this technology is being tested by global banks in payments and letter of credit transactions. How do you see this?

JG: Well, blockchain is what already happened in core banking. High technology is there. And I’m happy that now everybody started discussing it. Cause main part of banks are using pre- millennium core systems.

Blockchain 5.0 in 5 years will be implemented

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Jay de Groot, Moven: We see in small business firstly freelancers. And this is first segment Moven will move to next year. Because freelancers are in between Small and Retail banking. For example, we in Moven still don’t have a Legal entity in Europe, I’m working as subcontractor to Moven and consider myself an employee. Freelancers work for themselves.

OH: So as you said you will be focusing on small business from next year. But what Moven is doing now in terms of business banking? In which fields you can cooperate with banks and can you? What is your opinion on cooperation between banks and fintech companies. Are they friends or enemies?

JG: Friends! Fintech firms like us we don’t have a banking license. We tend to go towards cooperation with banks. In the US we cooperate with Freelancers Association on how these people can be better served both by banks and fintechs and to help banks get faster towards digitalization. We released the white paper “Closing the gap: How Fintech Empowers

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Olena Hrynyuk, SME Banking Club: Everybody knows Moven, I hope :) You were nominated as #1 Digital Banking Provider. Congratulations on this! So how do you see the future of the digital banking especially in terms of business banking?

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unpaid and overdue invoices. They need a new approach to personal financial management and traditional methods in financial technology don’t work anymore. Freelancers require flexible solutions for individuals who is a business at the same time. They require cheap and fast solutions. By embracing Fintech, and mobile technology in particular, freelancers can recoup their opportunity costs, save time and participate in a user-friendly, technology-oriented personal financial management experience.

SEB’s Offer for SME segment

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am representing SEB Bank. It is a Extensive PR work was done. Our senior level Scandinavian bank with the headquarter managers were asked to join the visits to our in Stockholm. smallest customers and they supported our The group serves 140 thousand SME cusefforts during the campaign. tomers and 1.8 million private customers in During those visits, our client executives Baltic region. conducted the survey and asked customers five Our purpose on the SME market is to be questions. It was about: much close to entrepreneurs and their minds, and the companies with innovative intentions in order to 1. their growth ambitions, really support their aspirations 2. the export markets ambitions, if they plan to enter and their growth ambitions. to the next markets, I will tell you how we 3. if they plan to increase the number ofemployees, developed an offer for SME 4. what they take as a next innovation step, segment.

5. sort of investments they are planning for next year HOW DID WE START? In 2011, after several years of recession and financial crises on our Baltic home markets, we were at the stage when the self-confidence of the organizaSo they gave the answers related to the next tion was pretty low. We were not very proactive, year. especially when it came to small and medium As a result we found out the fact that our size businesses recently suffered from economic customers were not aware of innovation topics. downturn. Then in 2011 we really made our Items related to incremental product innovamind and decided to turn our face towards our tions were easier to connect with, but the customers again. business model innovation as almost a separate So we introduced the Advisory Campaign. discipline or new skills of employees, new We rented ten Smart cars. The intention of ways of working or in-house innovation – this using Smart cars was to show visually and was really the field without strong expertise. communicate single clear message – we really Concluding the survey, we understood how the wanted to give our customers smart advice, and companies focused on growth and export while we decided to be cost efficient ourselves using operating in extremely small Baltic markets, tiny economical cars. and importance of export as almost only option We went with these cars very close to the for growth. As an example, Estonian export rural, to the smallest customers to show that we is 80% of GDP. So export-driven growth was are aiming to support a local business. At that already recognized quite a lot, but the comtime the common stereotype was that SME’s panies were lagging behind in understanding would typically expect to meet a banker in the how to add value to their products and services bank’s office. So, running the campaign, our using innovation techniques. We took the own employees needed to leave the comfort innovation focus and we started to talk about zone and visit small companies at their sites, innovations. which definitely helped us to get more insights We decided that we could improve the on how everyday life in those companies look situation and we launched Innovation Lab for like. our customers, running the events in Tallinn, Within Advisory campaign, we visited Vilnius, and Riga. vast amount of customers in a short period.

Andra Altoa Head of Segments at SEB Baltic

Thousand customers took part of the events during those three days. We invited European innovation experts to be the speakers. It was kind of events our customers have never experienced, especially when you are small and medium size and not able to visit conferences worldwide. We hoped the events to be seen as add-on to our SME value offering.

We decided to organize the events in workshops format to let customers talk about their real problems in business and take the content and the methodology back to their offices and continue their work to improve innovation patterns.

So, we took the topics about customer development, about value offer development, about general development and started to mentor our smallest companies.

Preparing the iLAB format, it appeared that our employees lacked the knowledge about innovations as well. It required developing and focusing on our people first, to prepare and train them to become the mentors and we did this. Today, I can proudly say that innovation thinking, using the newest development methodologies and tools is one of the cornerstones of SEB culture. And as you read, it all started from customers.

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Interview

Interview

Nordea – strengthened focus on SMEs

How to be successful on a local market.

Best practice from Laboral Kutxa What are top priorities for SME Banking in Nordea this year?

To realize our common group strategy for SMEs in all our Nordic countries. In Sweden, we focus on setting a new approach for Nordea on the market, especially in the micro segment where we have been rather inactive last years.

We are the first bank that offers online onboarding for new clients and we also expand our remote advisory concept, very much appreciated by the SME customers.

Stefan Andersson Head of Business Banking

You launched a digital solution for business customers this year with possibility to sign up online. What was the purpose and idea behind this launch?

What is the effect of the service?

Listening to our customers we realized that they requested a new process to become a customer in Nordea. Before they often have to use 4 different channels and 2 weeks process time to sign up with us. Now they normally only need the digital channel and less then 24 hours total process time. This also reduce costs and secure compliance issues since we only have one centrally process. Nordea was the first on the market to launch the first digital solution for new business to sign up online at their convenience, covering >90% of Swedish corporates.

What will be the key focus of your presentation at CEE SME Banking Conference in Warsaw?

Why and how are the needs of SME customers unique? How you as a bank meet them?

Needs of SME customers are unique because they feel and think they are unique. Every SME is asking for a tailored approach and solution. Each their need depends on many factors and combining all of them results in a unique solution, there are thousands of possibilities. Banks have to be aware of this and try to personalize as much as they are able to do. Laboral Kutxa‘s approach is based on senior and skilled relationship manager, 100% dedicated to SME. In addition to that, we design very flexible products with a high degree of autonomy, CRM and marketing tools adapted and able to provide answers and solutions immediately.

How do you manage to compete with big players on the market? What is your recipe?

Many factors: customer proximity, agility, flexibility, deep knowledge of local business environment and at the same time we have the same prices, products and system as the big players.

Do you collaborate with fintech companies or startups in any field of SME Banking?

We have a very sustainable and successful program to support entrepreneurship and start-ups in partnership with local institutions, working for more than 20 years, helping and financing more than 300 new businesses every year. It’s called “Gaztenpresa”.

Oscar Muguerza, Head of Business Banking

What will be the key focus of your presentation at CEE SME Banking Conference in Warsaw (23-24 October 2016) ?

I’m going to focus my presentation on the key factors of competitiveness, how a small, local and cooperative bank can compete and have more market share than big players like Santander or BBVA. At the same time, I’m going to present our latest initiative to differentiate our offer, called Compyte, is a service to promote the competitiveness of our customers.

Lifting the great opportunities and potential in the SME segment and give examples of how Nordea try to deliver great customer value and developing new services, as the Online Onboarding process.

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Interview

Insights

Small businesses ‘unsupported’ by banks Over a quarter of small businesses do not feel supported by their banks, according to a survey of 500 SMEs conducted by YouGov. This feeling is most pronounced in the category of businesses turning over less than £1million, in which 30 per cent claim to feel ‘unsupported’.

New models in SME finance.

Best practice from Spotcap How is that possible that Spotcap offers online loans for SMEs with decision making within 24 hours and banks can’t do this?

The application process is very fast. The application can be filled out online in as little as five minutes. Depending on how much information a client makes available the credit line may be granted in a few hours. Most approved customers will have their credit line available within 24 hours. We evaluate an applicant’s real-life business and cash flow data and not just his backward-looking credit score. Spotcap utilizes many digital data sources including the business bank account access, online accounting software systems, and other digital data streams to utilize in our algorithms and core underwriting platform to make sound decisions within a short amount of time.

What are targeted customers for your loans?

Spotcap lends to micro, small and mediumsized businesses. We serve different industries particularly retail, service, wholesale, and manufacturing industry types. We have minimum standards for our applicant base with each country including minimum annual sales amounts, time in business, business license / registration standards, online bank account access, and access to key financial documents.

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How do you manage delinquencies in loan portfolio?

Our default rates are well within expectations. We manage our default rate through our proprietary risk technology. We utilize several analytic models in providing our credit decision as well as models for credit line size determination and our risk-based pricing methodology.

Combined these tools along with our credit operations team provide us with sufficient risk coverage. We continually analyse the portfolio and vintage pools to enhance our models, segmentation strategies, and overall rules engine environment to provide the best decisions possible.

What are the basic criteria for loan delivery when analyzing customer?

When applying for a loan from traditional financial institutions, small businesses are typically asked to provide a large amount of financial history and supporting documents, as well as evidence for a large asset base. However, many small businesses in need of financing have been in operation for only a few years, so do not meet typical bank conditions, despite having healthy business operations. Spotcap uses a variety of data sources to ensure creditworthiness: We assess all of our clients’ bank account data, as well as their business’ financial statements (both on annual and quarterly basis), VAT declarations, and profit and loss statements (retrieved via accounting provider software integration) thus measuring real-time business performance rather than relying solely on credit history which may be of minimal information.

Bruce Brenkus, Chief Risk Officer at Spotcap

he research, further revealed small and medium sized companies are in the dark regarding the notice periods on their business overdrafts. 40 per cent of SMEs claimed their banks had to give them at least a week’s notice or didn’t actually know what the notice period was. The most popular overdraft notice period answers were three months or more than three months, with 14 per cent of small businesses and 19 per cent of medium sized businesses claiming their banks were obliged to give them at least three months’ notice.

These results were not unexpected said Chirag Shah, CEO of Nucleus Commercial Finance: “Unfortunately for SMEs, banks don’t need to give them any notice at all before removing their overdrafts – but they often don’t make this clear. Businesses work this source of unsecured funding into

their budgets and rely on their overdrafts to plug working capital gaps on a month-bymonth basis.

“The fact that a three-month overdraft notice period was the most popular answer suggests many SMEs have a shock coming further down the road when this lifeline disappears.”

Shah continued: “Banks are simply reluctant to make this type of unsecured lending available. Basel III required them to acquire more capital to sustain the same level of risk, and SMEs are often their least profitable and therefore lowest priority business customers.

“That small businesses don’t feel supported isn’t a shock: according to figures from the Bank of England, SME lending via overdrafts alone has fallen almost £8.5billion in four years. In fact, the latest BBA figures show in Q1 this year, banks approved £6.1bn

of new SME loan and overdraft facilities. This was 18 per cent lower than in the same quarter last year. It’s a worrying trend for SMEs.” The survey also revealed that almost a third of SMEs felt Brexit will make it harder for them to secure funding. Shah continues: “With the current financial uncertainty it’s not surprising SMEs felt business funding might be harder to come by.

“Banks were major beneficiaries of the UK’s EU membership. Our withdrawal will potentially make it harder than ever for SMEs to secure finance from them – all this at a time when many SMEs will need liquidity to ensure they stay afloat. It’s more important than ever that they assess all their finance options to ensure the future success of their businesses.”

Why is Spotcap granting loans in Spain, Netherlands, and Australia? Why did you start from these countries and do you plan to expand?

We’re currently operating in Australia, Spain, and the Netherlands. We aim to become a global leader in short-term online business lending. We have expansion plans for additional countries in the near term future. Our goal is to build the most efficient user interface, underwriting platform, and statistical models to ensure sound and timely decisions cost effective results, and intense risk mitigation standards.

As we get closer, we will make the announcements on any further expansion plans.

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Insights

Insights

SMEs need new types of lending

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HERE can be little argument that the winds of change are blowing across SA’s economic landscape. A looming ratings downgrade, inflation possibly hitting 8.1% by the end of the year, petrol price increases, and an unfavourable exchange rate are all contributing to what seems like a dark time for small and medium-sized enterprises (SMEs).

The conditions exacerbate the problems SMEs face as they endeavour to sustain and grow their businesses. Chief among them is the tangled issue of funding.

Most SMEs need funding to support a working cash flow, but traditional lending is centred on financing assets. Funds for expenses such as salaries can be more difficult to secure, particularly when general operating costs increase suddenly.

In SA, the public tends to support large established businesses instead of small businesses. This differs greatly from the attitude towards SMEs in the US and Europe, where craftsmen find supportive customers.

There is also an increasing number of SMEs in the digital economy, while business is becoming more service-orientated. It doesn’t seem as though digital businesses rely on traditional sources to keep themselves afloat.

In the 2015 SME survey, a mere 2% of respondents indicated that they would turn to a bank for financing.

Clearly, a new approach to lending is needed to keep the essential SME ecosystem alive during troubling times. In part, technology and the sharing economy offer a viable answer. Many lenders can provide smaller amounts of funding to businesses in which they have a vested interest.

As these lenders do not carry the cost burden of infrastructure and branches that large banks have, and because they are not answerable to shareholders, they can ask for significantly lower interest rates.

Equally as important is attracting a diverse array of potential lenders, ranging from individuals to development agencies and big businesses — spurring competition between them to provide the best interest rates.

Lenders are able to diversify into up to 100 SMEs, which allows them to broaden their portfolio, while managing and minimising their risk. Aiding this is a comprehensive scoring methodology that takes into account SMEs’ prospects and their histories.

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The collective power of lenders can be significant — 1,000 of them each providing a loan of R1,000 equates to R1m, which can change a business.

Such an approach becomes even more critical for businesses hoping to survive tough times. Prevailing wisdom dictates that one is better served by being prepared for the worst-case scenario. If it doesn’t occur, it’s a bullet missed, rather than a shocking injury sustained.

An immediate effect of a ratings downgrade will probably be on the banks, which might then consolidate their operations and clamp down on lending, which is already happening.

This could spur crowdfunding platforms and credit marketplaces to bring new, diverse sets of funders into the ecosystem. The void could be filled by development agencies and corporates that still have access to capital and choose to fund their suppliers or customers.

The danger is that SMEs could turn to organisations that in a less competitive environment can and do charge exorbitant rates.

Some unscrupulous lenders are already charging anything up to 40% annualised cost of finance, while others charge SMEs an initiation fee of up to 25% of the money they borrow.

Considering that most SMEs operate on a profit margin or gross profit ratio of about 20%, any one that takes finance at a rate higher than an annualised real cost to them of more than 20% is putting their business in significant jeopardy.

Financial constraints don’t necessarily have to spell doom and gloom for SMEs. Much like when a large tree falls in the forest, it clears the way for smaller plant life to grow.

As history has demonstrated, large corporations tend to bear the brunt during economic downturns, often responding with mass layoffs and by concentrating on their familiar operations instead of innovating. Savvy entrepreneurs and agile smaller businesses can benefit by filling in the gaps that the consolidation of larger corporations may create.

A notable difference between today and other downturns, such as 2008’s recession, is that companies have access to technology and innovative solutions like never before. Access to crowdfunding, the ability to scale a business quickly thanks to cloud solutions, and various e-commerce opportunities are a few of the developments that offer hope.

Six reasons why SMEs find it hard to get finance from banks With non-bank lenders popping up every month to fill the multi-million dollar gap in business financing, it’s hard to know where to start. So why do SMEs find it hard to get finance from banks?

1. Lack of security

Housing affordability has meant that many small business owners, especially younger people, don’t have a house they can offer as security. Others who own property might simply not be prepared to mortgage their house either because they don’t believe they should have to or because they are not prepared to take the risk.

2. It’s not just property security that is not available

The proliferation of service businesses has meant that many SMEs don’t have plant and equipment, inventory or even debtors they can offer the bank as security. They still need to get funding to establish and grow their business but they just don’t have the kind of security banks like.

3. Lack of track record

Technology and globalisation enable businesses to grow rapidly but they may not be able to demonstrate a track record of profitability over the length of time needed to give the bank comfort.

Wells Fargo Explains SME Loan Rejections

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mall businesses today have struggled to access working capital loans from traditional lenders, giving way for alternative and marketplace lenders to enter the sphere.

The lag in small business lending by banks is no secret; earlier this year, the U.S. Federal Reserve found that, while bank lending to small businesses was up, it has yet to return to pre-recession levels.

But the demand for bank loans stays steady. While rejection can be a tough pill to swallow, one major SME lender is taking steps to help businesses understand why they were not approved for a loan.

Wells Fargo, the nation’s largest SME lender, has reportedly begun calling the small businesses it has rejected for a loan to explain its decision and provide advice for business owners on how to improve their standing the next time around.

Reports by Forbes on Thursday (July 7) said Wells has taken to a new strategy to maintain its position in an ever-increasingly competitive market. While its calls to rejected SMEs can certainly help the small business moving forward, reports added that Wells is positioning these companies for potential future business with the bank.

According to the company, Wells said it has already called more than 12,000 small businesses that were rejected for a loan since it first began this program in March 2015.

Some people are ready, and others have to become credit-ready,” explained Wells Fargo Head of Small Business Lisa Stevens in an interview with the publication. “We realize that we wanted to be approving more people, and that part of the relationship with the customer isn’t just approving them for loans but being on the journey with them when they get declined.”

Reports added that Wells had previously announced a goal of providing $500 billion in small business loans over the next five years.

The pilot program to begin calling rejected SMEs first began in 2012 before its official rollout.

These business owners don’t know what they don’t know,” Stevens added, with reports noting that many small business owners are unaware of how banks make their decisions to lend money or not, or of how to build up their credit.

4. Taking too long to make a decision

Most SMEs are dissatisfied with the time it takes to get a decision. Often this is on requirements as basic as posting a bank guarantee for rented premises.

5. Constant restructuring and personnel changes

One of the reasons customers experience time delays is that the frequency of restructuring and personnel changes hinders the ability of the bank to process loan applications in a timely manner.

6. Disengagement

All these factors have led to a disengagement with SMEs concluding there are just too many hoops to jump through to get support from the bank.

Neil Slonim is the founder of theBankDoctor.org and Graham Brown is a writer at Tyro Payments. This is an edited extract from Tyro’s SME guide to business loans in Australia. To read more, visit the Tyro website.

Why fintech is different in the SME space Has fintech disrupted the small- The outdated SME finance model to-medium enterprise market, oth the fintech and small business markets were changed by the Global Financial Crisis (GFC), but in different ways. Fintech or just brought it back to where surged in the wake of the GFC, while many small businesses struggled in its wake. it should be?

Prior to 2008, SMEs turned mostly to banks for debt finance.

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intech is synonymous with disruption, but in the Australian small business lending market, new market entrants don’t have much to disrupt. Lack of financing, difficulty managing cash flow and forced long payment terms from big business suppliers are high on the list of SME pain points, so how have fintech companies alleviated these while still driving innovation?

However, according to Neil Slonim from not-for-profit SME finance resource theBankDoctor, this SME-bank relationship model is no longer viable.

One of the shortcomings of the existing SME banking relationship model is its reliance on real estate security, but demographics, business models and attitudes have changed,” Slonim said. “Housing unaffordability is causing the demise of the Great Australian Dream and those new age business owners who do have property with some level of equity are

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Insights

less inclined to put it at risk based on the view that their business should stack up on its own.”

When fintech lenders came into the SME space they were entering a market with a strong demand for finance and a dearth of innovation.

Online SME lenders such as PayPal, OnDeck, Prospa and Moula entered the space and offered new solutions.

Business owners could apply by connecting their online accounting software to the lender and without needing a formal business plan; loan terms as little as three months were introduced and eligibility criteria was flexible, including no need for real estate security.

Niche lenders for niche problems Fintech firms are relying on data and algorithms to approve loans and can do so faster than traditional banks. The shorter repayment terms and smaller loan amounts have also found favour with business borrowers despite some of the fees being higher.

A new niche, peer-to-peer (P2P) business finance, has emerged that focuses more heavily on risk-based pricing for businesses. Established P2P lenders such as RateSetter have entered the space as well as new lenders, such as Bigstone.

As well as dealing with lack of time, human resource management and compliance issues, Slonim identified cash flow as one of the biggest problems for SMEs, and he says it’s not getting any easier.

“Juggling competing interests to stay cash positive is a constant battle,” he said. “Big companies are also increasingly using SMEs to fund their own working capital needs. For instance, only last week Kellogg’s and Fonterra both announced they were extending their payment terms from 90 to 120 days. Fonterra justified this decision on the basis that it was adhering to “international best practice”. It seems the multinationals are screwing the little guys all over the world.”

Australia’s “long payment culture”, or the delay in the payment of business invoices, is the worst in the world. On average, Australia pays invoices 26.4 days overdue, with Mexico coming just ahead of us with an average of 18.6 days overdue.

The government may step in by introducing a prompt payment protocol, but fintech companies have also offered solutions. Invoice financing companies such as Skippr and Waddle offer a way for companies to bring invoices forward in exchange for a fee. Banks have previously offered this service, but fintech companies are also offering integration with accounting software and more transparent fee structures. Larger banks have increasingly been moving out of this space or offering an invoice financing product through a third-party.

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Fintech vs banks?

Without much to disrupt, does the “fintech vs bank” discourse have a place in the SME space?

“I don’t see it in terms of lenders versus banks. I see fintech lenders filling a gap in the market for those SMEs that the banks are not able or willing to service,” says Slonim.

“Banks will always be cheaper but there is certainly a role for fintech lenders although this new breed of lender is by no means the panacea for all of the SME sector’s funding woes.”

There have been several partnerships between SME fintech companies and banks, with the banks involved citing they are able to service a market which they cannot. This includes Commonwealth Bank and OnDeck, recipients of the Fintech-Bank Collaboration of the Year award at the Fintech Awards 2016, and Westpac and Prospa.

As the space develops and new innovations emerge, whether through partnerships or standalone lenders, it should always come back to the needs of the small business.

“Whilst it is still early days with fintech lenders, there is an urgent need for more regulation and pricing transparency to safeguard the interests of small business borrowers. Building integrity and trust is critically important in this emerging form of SME finance.”

New Concept branches – TBC Bank’s latest innovation in Georgian Bank Sector What is the difference between the new and old branches?

Could you please describe in detail what the new concept branch means?

The new concept combines several important principles and changes. First, the design is significant in that it is modern, spatial and comfortable. All details were calculated in advance in order to make customer visits and “travel” in the #branch more positive: who meets comsumers at the branch entrence, how many places he/she must visit during the service process, in which area he/ she should go – these all factors have been taken into consideration. Even the two colours of floor tiles were selected to send a message to consumers. The role of the digital world is also incorporated in the new concept branches. In the new branches, special tables are equipped with mobile phones and laptops. With the help of this technology, consumers are learning to use mobile and internet banking.

Why did you decide to create new concept branches?

“Better the devil you know” Alternatives to the banks are there for business borrowers, but according to Slonim, one of the barriers for business owners is the lack of awareness of their options.

“SMEs do have lots of financing options outside the Big Four banks, but they just don’t know what they all are and even if they did, they would struggle to determine which one was best suited to them. As a result many just default to the status quo of ‘better the devil you know’.

If the bank won’t help, they borrow from family, friends or on the credit card, or they somehow just find a way to get by.”

The numbers support Slonim. According to a report released by The Productivity Commission in September 2015, bank loans were one of the last places startups turned for finance. The report drew on results from a 2014 survey by Startup Muster, which showed private capital from Australia was the most popular funding source for startup businesses, followed by funds from family and friends and public grants.

Bank loans were third least popular with only 2% of startups relying on bank finance.

The strict criteria banks set for business lending leaves many ineligible. The Commission’s report, called Business Setup, Transfer and Closure, also found that out of the businesses that did apply for finance in 2014, 9% were not approved while an additional 9% did not receive sufficient funding. This is compared to 10% of businesses in 2011 that weren’t approved for finance and 5% in 2007.

In the modern world, where life moves fast and the situation is constantly changing, people are switching to digital technologies.

Respectively, the role and the function of bank branches have changed.

New concept branches respond to this challenge. Nearly 10 years ago we implemented the Senteo Concept, and over the past decade, that concept was really effective and innovative for Georgia. But times have changed and a new model is needed. So, we thought that it was time to implement an ultramodern, future oriented concept that would match modern tendencies.

What will change for consumer at the new concept branches?

Around the world, there is a move to conducting banking transations using ATMs and devices. Thus, today bank branches serve the function as a place for consultions and selling products. We have focused on this tendency in the new concept banches. We reduced the number of armoured cashboxes and increased consulting areas and large meeting rooms. At the entrance of the new branches, clients enter an environment that says”Hello and Welcome!”. Consumer participation is an important part of the new concept: In the consulting area, clients have an opportunity to sit next to bank operators and observe banking services in real time on monitors. Status clients play an important role in the new concept branches, which include a unique interior design and details. We have also used paintings for decoration, which we purchased from students at the Academy of Arts.

Comfortable service for clients is very important. In fact, building strong client relations depends on the quality of the customer service environment. #TBC Bank decided to implement a new innovation for its clients: new concept branches, where, according to bank employees, modern technology will help visitors receive services with ease and comfort. The Business #Georgia interviewed TBC Bank Chief Operating Officer, Vano Baliashvili, who explained the new concept branches in detail.

What where the steps to developing the new concept branches and who has TBC bank partnered with to implement it?

Work on TBC Bank’s new concept branches lasted around a year and a half. This concept was based on a study of the branches, as well as research and interviews with bank representatives. The project was implemented with an international company, Allen International.

How important is this innovation for the banking sector?

The Georgian banking system is one of the most developed in the region, not only due to the quality of the service and products, but also in terms of reliability. We think that TBC Bank’s latest innovation will once again underscore our bank’s pioneering image and, in general, the image of the country’s banking system.

As we know, two new concept branches are already open for clients. Will this process continue?

In Tbilisi, four new concept branches are already operating. Soon a branch in Poti will also open. Generally, from now all new branches will offer this special environment. As for other branches, as the infranstructure ages, they will be renovated with the new concept. Our plan is that in three years all TBC Bank branches will be refitted according to the new style. This does not concern the status rooms, which will be changed in all branches in the near future.

What feedback are you received from clients about the service in new concept branches?

As soon as they enter the new concept branches, clients notice the innovative design and feel special and comfortable. It is clear that they like the new concept and openly say that they wish to visit such

branches. We always receive positive comments not only in branches, but also on social networks.

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Marketing

Marketing

Non-financial services

Idea Bank – Można?

from TEB

Można!

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hen launching #SME banking in 2005, TEB set out the goal of becoming one of the top names that would first come to the SME’s minds as for SME bank in #Turkey. Since then #TEB Bank has launched a lot of initiatives in non-financial services for SMEs, such as SME Academy, SME consultants, SME Hotline, TEB SME Club and TEB SME TV. All these services are targeted both for existing customers (as retaining tool) and prospects (as hook product). As a result, TEB was announced by IFC as one of three banks in the world that have been identified as a model for SME banking in non-financial services.

Campaign Description

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dea Bank’s campaign „Można?Można” (“Can You? You can!”) shows daily problems of entrepreneurs in a humorous way, such as bureaucracy, lack of time or comfortable place to work, and how Idea Bank’s innovative solutions and services (Mobile ATM, coworking branch Idea Hub, unsecured online business loan Kredit Fair) help entrepreneurs to solve their problems. The campaign consisted of messages placed on external media in Warsaw, advertising in local arthouse cinemas and radio stations. Aso Idea Bank had a promotion on national TV and Internet movie online resources. For that campaign, Bank won a lot of awards, among them a polish competition called Kreatura (Creature) in category TV/ movie.

Client TEB SME TV

within existing customers. On the whole TEB bank was perceived as SME Champion in the country.

TEB SME TV was launched in 2006 with the purpose to give SMEs free access to information which they need in their businesses and to create a channel that includes videos covering information on every subject that may attract SMEs attention. TEB SME TV provides information 7 days a week and 24 hours a day for free. Information containts new business opportunities for SMEs, marketing and sales information, export targets and information on foreign markets, sector news and recent legislation changes affecting the industry and trade, all types of opinion of the sector representatives, experts, from business world to politics related to SMEs and everything related to SMEs’ world such as things that SMEs need to pay attention in business life etc. Moreover, registered members have access to stock exchange indexes, stock prices and bondsbills market data, Central Bank, free market and Grand Bazaar foreign currency rates, domestic/foreign market precious metal prices and investment funds data.

TEB SME Club

SME Academy

The purposes for launching SME Academy were the following: • Increase business management skills of SMEs • New customer acquisition & deepen the current relation TEB invited guest speakers and organized 100 events in 49 cities with 25500 participants overall. The target of new customer’s acquisition was done at the level of 4500 new customrs. And increasing customer loyalty

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The purpose of Club creation was to give opportunity for SMEs to minimize their costs of purchase goods&services for business. So it’s a membership-loyalty club where SMEs are able to buy with up to 50% discount. 45 trade partners were involved, 16.000 registered members in the Club and $1.6M yearly fee.

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dea Bank is a Polish midsize SME bank.

Founded in 2010, the company is already perceived as a leader in servicing entrepreneurs, primarily thanks to its dedication to delivering easily deployable business-related tools for the SME sector.

SME Consultants

600 consultants are availbale at TEB Branches all over the country to help SMEs with solving business issuees and offer them a solution to grow.

After completing a 24-months of intensive training program SME consulters are able to provide SMEs with detailed analysis of the company and not only the financial one, but also to identify problems in; Production management, • Organizational structure, • Marketing activities, • HR management.

All the participants of last Caucasus SME Banking Conference 2016 (18-19 May) in Tbilisi had a chance to communicate with Simla Unal, Marketing & Business Development Director, TEB SME Banking, about all non-financial solutions TEB had launched

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Innovations

Innovations

Mobile ATM from Idea Bank

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he service was launched in 2015, starting from one car as a pilot in Warsaw. Now Mobile ATMs are available in 13 cities in Poland: Warsaw, Wroclaw, Cracow, Poznan, Lodz, Gdansk, Gdynia, Sopot, Katowice, Lublin, Szczecin, Rzeszow and Bialystok, and city coverage is constantly increasing. Customers can book time and place of ATM’s arrival via phone call or mobile app (available both for iOS and Android). By using mobile app customers can additionally track the route of the car. Available time for booking is 4 days ahead. So the process of booking is similar to a simple taxi’s one. The cash-in process is the same one as for ordinary ATM. The service is free for customers which have an active current account and payment card with the Bank. Bank has a separate call center to track the route of ATMs and contact customers in case of car’s delay.

First Mobile ATMs were based on electronic car BMW i3 with integrated ATM from the side of right back door. The new ones will be based on Ford Courier with the possibility to install ATM with cash-in and cash-out functionality. With this innovation Idea Bank won a lot of international awards, among them EFMA Accenture Distribution&Marketing Innovation Awards (2015) as the Most Disruptive Innovation, BAI Finacle Global Banking Innovation Awards (2015) as Innovation in Payments and many others.

Digital SME marketplace by nab and Telstra N

ational Australia Bank (nab) together with Telstra (Australian Telco company) invested 50/50 into the online marketplace for SMEs called Proquo. Proquo will offer Australian small businesses an online platform to network, trade or swap services with each other. The platform is a solution for the SMEs’ request which was found out during the research done by NAB Labs. It allows small businesses to source a range of services from other providers, create briefs for the work they need, exchange quotes, manage payments and publish reviews. The platform is not exclusive to Telstra or NAB customers and could in time serve as a channel for both to push new product offerings into the SMB market. The application has been developed using cloud-based technology and can be accessed from the web, tablet or mobile devices. At the very moment, the marketplace is launched in the pilot regime. A full launch is expected from July 2016.

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Innovations

Innovations

Chat-bot from Bank Tochka

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ussian bank Tochka (Otkrytie group) has launched financial chat-bot for SME customers, the first bot of this kind in the world. Using Facebook Messenger Bank’s customers – legal entities and private entrepreneurs – can receive answers regarding branches&ATM location, check account balance, communicate with support service and even are able to do payment transfers. The service is available for customers, which are authorized users of Bank’s internet banking service. Solution development is done by Russian IT-company Angry Developers LLC. The service is linked to Bank’s Facebook page. Bank expects about 10000 customers to use chat-bot. Boris Dyakonov, CEO & cofounder of Tochka Bank, participated as a speaker at previous SME Banking Conferences in Tbilisi 2016 and Warsaw 2015. Don’t miss the opportunity to meet Boris during Tochka Experience Study Tour

Spotcap: online business loans within 24H

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potcap is online platform offers unsecured online loans to SMEs in Spain, the Netherlands, and Australia. This fintech lender provides short-term unsecured loans and makes the decision within 24H. The platform was launched in 2014 in Madrid, and next in March 2015 in Amsterdam and in May 2015 in Sydney. Loan amounts which Spotcap disburses are the following: €1 000 – €100 000 in Spain €5 000 – €150 000 in The Netherlands $5 000 – $250 000 in Australia The platform targets start-ups and SME customers which either don’t have access to banking lending (e.g. due to lack of collateral) or the ones preferring to avoid bureaucracy procedures in the process of applying for a loan. Spotcap is backed by Rocket Internet – the world’s leading global internet platform outside of the US and China.

New banking for SMEs from Finnish fintech start-up

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olvi is a Finnish fintech start-up and means new way of banking for SMEs – European entrepreneurs, freelancers and small business owners – or «Makers and Doers” as they say. Holvi was founded in 2011. Startup provides SMEs with a range of financial and business services through its digital platform: an online business banking account, Business MasterCard, digital accounting and bookkeeping, and online store. After a successful pilot in Finland, Holvi is expanding across European markets and now is available to customers in Germany, Austria and Finland.

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TOCHKA BANK / Best practice Study Tour + Q&A Sessions ABOUT THE STUDY TOUR Thank you for your interest in the Tochka Experience Study Tour. Within the SME Banking Club and Tochka Bank you have exclusive opportunity to learn how to improve customer service, develop digital solutions and inspiring core values and empower your employees to excel in your organization.

Our Tochka Experience Study Tour is a 2-days glimpse into the Tochka Bank culture and experience. This tour does give an inside look into our everyday work life on campus. If you’re looking to see what all of the talk is about, this is the tour for you. This excursion offers a glimpse into the Tochka Bank business model. Say hello to some of our amazing culturefilled departments, such as Relationship Management (customer service), Marketing and our IT Team. Of course, Boris Dyakonov is the key manager will wait for you and ready to share with personal experience and knowledge.

DO YOU WANT TO HAVE AN EXCLUSIVE TOUR?

MENA SME BANKING CONFERENCE SIX GOOD REASONS TO ATTEND

THE CONFERENCE DAY

1. Acquire the required contents, Interact and Network with top notch international & local experts, SME clients and all stakeholders in a professional and exciting context.

2. Know SME market figures, analytics and trends to recognize your bank market share and set your future targets.

3. Listen to customers’ voice and SME segments’ financial & products needs.

4. Define / Audit / Re-define your SME banking strategy and platform.

5. Design / Audit / Re-design solid and profitable SME banking model.

6. Identify quick-wins for 2016 and plans for 2017 and beyond.

SME has been key concern in MENA countries and Egypt where it produce majority of GDP and jobs for the wide spectrum of educational and skillful levels, flourishing SME sectors together with financial inclusion represent key challenges and ideal remedy for governments and banks in the present economic climates, therefore Central Bank of Egypt took along 2016 structural measures highlighting the opportunity and extending SME Banking landscape.

Consequently, this conference is an important milestone gathering all stakeholders to share: where do we stand, building SME banking solid and profitable model, set and review clear strategies for 2016 and along 2019 set by central bank to make SME 20% of banks portfolio.

The conference comprises three progressive sessions with three breaks and seated lunch for maximum refreshments and networking, starting by the opening remarks highlighting the expected outcome of the conference.

The 1st session will be reviewing global SME banking context, local market analytics, components of successful SME banking solid & profitable Model and relevant SME Banking strategies.

Then the 2nd session will cover best practice from India, Central & Eastern Europe, China, Morocco where SME represent 25% of banks portfolio and locally focusing on SME market segmentation and modeling, also a key presentation about SME BANKING INNOVATION LIBRARY displaying SME innovations around the world.

Afterward, the 3rd session will start with listening to customers’ voice from SME owners and associations telling how they regard banks and what products they need now, moving to Non-financial products advisory and consultancy especially to the small segments, supporting applications of workflow, CRM & Scoring, Training to build SME capacity then ending with another key presentation SME BANKING BETWEEN TWO ERAS. The concluding remarks will be wrapping up all conference presentations and interactions into SHORT & CLEAR ROAD MAP for the remaining of 2016, along 2017 and ahead.

Look forward to join such exciting event, uplifting your SME Banking into the next level!

WHO WILL BE THERE

HOW TO SAVE MONEY

MENA SME Banking Conference in Cairo will bring together key decision makers in SME industry and all stakeholders namely banks’ SME heads and teams, Corporate and Branches heads, Risk, Marketing, Strategy, Projects and Business development. SME clients, regulators, Consultants, IT and training providers. In brief: SMEs Community.

All bank delegates have the opportunity of the early registration: EUR 400 (valid till August, 31); EUR 500 (valid till September, 30); EUR 650 (valid since October, 1).

Special discounts for Groups, Alumni, Associations and Self-payment.

ABOUT THE CONFERENCE

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Do you have a large group that would like to visit the Tochka Bank and Knopka? Do you have some special request and your management would like to visit separately from other ones? Well, the option ‘Corporate’ is for you! You will receive the Tochka Experience Study Tour as well as an additional one hour presentation following your needs. This presentation will dive deeper into the area you are looking for details.

HOW TO ATTEND? You can choose individual registration and join one of a group with up to 10 people per group. Please click ‘Book Now’ below, and we will start working on your fantastic study tour to Tochka Bank.

Come to the Tochka Experience Study Tour and get your questions answered!

WHAT’S INCLUDED: • • • • •

on-site visit to the Tochka Bank and Knopka offices; the interviews and presentations from the Tochka Bank management; the on-site visit to online office; business solutions overview; insides from compliance and risk management; specific presentations about Agile and holocracy approaches implementation in the bank; • the private keynote speech from Boris Dyakonov; • Q&A session with the bank’s management.

WHAT’S EXCLUDED: • travel cost (flight, taxi, train, etc.); • accommodation expenses (hotel); • food.

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MAGAZINE SMALL BUSINESS BANKING MAGAZINE

your essential global briefing on

BUSINESS BANKING SMALL BUSINESS AND SME FINANCE

www.smebanking.club