SBB Magazine 03

May 2017

SBB

MAGAZINE small business banking magazine

GEORGIA’S BANKING SECTOR

DRIVEN BY INNOVATION Focusing on SME Development: Zurab Masurashvili, Bank of Georgia

Olena Prokopovych: Why banks are seeking to expand NFS

TBC Bank’s ‘Startuper’ Promotes Entrepreneurial Spirit

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PROLOGUE

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This issue examines many aspects of digital banking and disruption technologies in the banking industry.

REASONS TO READ THIS ISSUE…

CONTRIBUTORS TO THIS ISSUE:

Zurab Masurashvili

Dear Reader, we are publishing this issue of our magazine on the eve of the #Caucasus17 SME Banking Conference in Tbilisi, which we are organizing in the region for the third consecutive year. Anyone traveling to Georgia should be prepared for the many changes that have been made in the country’s business environment in recent years. The fact that Georgia was ranked 16th – it is also one of the world’s top 10 countries in terms of implementing reforms to business regulations – out of 190 countries in the latest Doing Business 2017 is worthy of respect. Despite this, Georgian bankers will still tell you: “Yes, but we still have a lot of to do.” This is especially the case in business banking. The picture of what is available in terms of support for the SME segment would be incomplete without mentioning the fact that there is still a lot to be done in the areas of startup banking and export support, digital transformation and value-added services. Zurab Masurashvili, Head of MSME at the Bank of Georgia, summarizes what you need to know in an article about the Bank of Georgia’s case study in SME business development support (page 20).

The agenda for this spring’s Caucasus SME Banking Club Conference 2017 has been shaped by banks’ high degree of interest in the smallbusiness segment. Olena Prokopovych, Program Manager at IFC, is among those senior experts who have undertaken significant efforts to provide advice on how to support commercial banks in the implementation of non-financial services for SMEs. Finally, the continuing influx of digital transformation and fintech disruptions is a hot topic in the banking industry, which is why we expect more extensive cooperation between banks and fintechs in the very near future.

Interview: Zurab Masurashvili, Head of Micro and SME Banking Department at Bank of Georgia page 14

Olena Prokopovych

Why banks are seeking to expand NFS page 18

Nikoloz Kurdiani

TBC Bank’s ‘Startuper’ Promotes Entrepreneurial Spirit – Georgia Today page 20

Yours sincerely, Andrey Gidulyan, Founder of the SME Banking Club

SMALL BUSINESS BANKING MAGAZINE

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CONTENT

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5 reasons to read this issue…

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Focusing on SME Development Zurab Masurashvili, Head of Micro and SME Banking Department at Bank of Georgia

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Olena Prokopovych: Why banks are seeking to expand NFS

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100 SME Banking Mobile Apps Study Welcome to Georgia

MAGAZINE

Foreign Investors Eyeing Georgia

SBB Magazine Magazine of SME Banking Club

Georgia’s Banking Sector Driven by Innovation

TBC Bank’s ‘Startuper’ Promotes Entrepreneurial Spirit – Georgia Today Terabank opens its first coworking branch in Georgia

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Latest updates from three alternative SME lenders

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Non-financial services for SMEs from Bank Zachodni WBK

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Digital SME banks

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Foreign Investors eyeing Georgia

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More than PLN 50 million cashed in Idea Bank Mobile ATMs in March

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How to make banking convenient to entrepreneurs

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5 mobile banking apps for SME customers that can inspire you!

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MarketInvoice, a P2P platform providing invoice financing for SMEs

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Interview: Elina Räsänen, Holvi

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Omnichannel paradigm in communications and marketing

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New models in SME finance Best practice from Spotcap

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Nordea – strengthened focus on SMEs

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How to be successful on a local market. Best practice from Laboral Kutxa

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Focusing on SME Development

SEB’s Offer for SME segment

SME Banking Club Team: Andrey Gidulyan ceo@smebanking.club Olena Gryniuk cee@smebanking.club Alexey Sayapin cis@smebanking.club Guest Authors: Madona Gasanova madonagasanova@gmail.com Nino Gugunishvili Boris Pogacnik Andra Altoa Design, layout: Anna Tserkovna’s Corporate Communication Studio Sources: www.smebanking.club georgiatoday.ge SME Banking Club operated by: Gidulyan Company Ltd, 61/31, Avtozavodskaya str., Kiev, 04114, Ukraine and GG Company Sp. z o.o. ul. Królewska 65a/1 30-081, Krakow, Poland www.smebanking.club www.events.smebanking.club

SME business solutions MENA SME Banking Conference 10 places to visit in Krakow SME Banking Club – Transformation of LinkedIn Group to Regional Platform for SME Trends

QR code leads to the web version of SBB Magazine.

Scan the code to read online MAY 2017

STUDY

100 SME BANKING MOBILE APPS STUDY M

obile banking is becoming more and more important in everyday banking transactions, especially for the younger generation of entrepreneurs who prefer to do their banking on the go. In addition, this customer segment is being actively targeted by new fintech banks (neobanks) that offer complete online banking and mobile onboarding, as well as the ability to open an account in three minutes, together with intuitive mobile apps. As a result, having a mobile app for business customers has become a musthave in the SME banking market.

With this study, the SME Banking Club is starting a new tradition of tracking, on a yearly basis, 100 mobile banking applications and the functionality banks are offering with their apps for SME customers.

METHODOLOGY USED IN THE STUDY: The 100 SME Banking Mobile Apps Study aggregates user rankings from the Apple and Android app stores and from a list of banks offering services to SME customers with no geographical limits.

The data was collected from the iTunes and Google Play stores during the week of February 13-17, 2017, and it includes average reviews and ratings for all app versions.

The overall average rating is a rating weighted on an average iOS and Android rating based on the number of reviews and ratings on each platform.

All information about the applications’ functionality is based on public information published on the Apps page SMALL BUSINESS BANKING MAGAZINE

in Google Play, iTunes and the relevant bank’s website.

In the study, you will find 100 SME banking mobile applications that have been analyzed within four categories: Category 1: Payments, transaction banking – universal applications (available both for individual customers and business customers) (35 applications) Category 2: Payments, transaction banking – applications created specifically for business customers (57 applications) Category 3: Applications for merchants accepting card payments (six applications) Category 4: Applications for business customers to develop their business, networking and scale-up (two applications) Also, you will find 13 showcases of the best applications by ratings or by functions.

Descriptions of some mobile apps from the study are available in the Innovation Library on our website: https://www. smebanking.club/category/innovations/.

To get the 100 SME Banking Mobile Apps Study, please contact us at cee@smebanking.club.

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GEORGIA

WELCOME TO GEORGIA Georgia is a small country situated at the crossroad of Europe and Asia, bordered by the Black Sea and the Caucasus Mountains. Beautiful and diverse nature, rich culture, centuries old history and traditions attract attention of tourists worldwide. The tradition of hospitality, as well as viticulture and winemaking take their roots in the deep history of the country. Georgian Cuisine with a wide variety of delicious food and wines, cultural heritage of historical places, landscapes of mountains and valleys makes Georgia a great place for tourism and hospitality industry.

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f you haven’t visited Georgia yet, start urgently planning your next trip for that you will need help of Capital Georgia Travel – winner of the Best Incoming Tour Operator Award 2016, they will also help you discover Georgia closer, to visit all most viewable places and feel real Georgian spirit. If you decide to see another country in Caucasus region or in Europe Easy Travel Agency – winner of the Best Outbound Tour Operator Award 2016 can arrange best trip abroad from Georgia for you. If you are adventure tourism lover you are also Welcomed to Georgia, this is a contour with lots of possibilities for adventure tourism like rafting, ballooning, hiking, scuba diving, rock climbing, four-wheel driving, fishing, horse riding, skiing and to feel real adventure, Rafting.ge – winner of the Best Adventure Tourism Award 2016 can manage trip full of extreme for you. Georgia is not only a center of eclectic culture and traditions but a very productive business platform, located

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right in the middle of Europe and Asia, Georgia became one of the most wanted business spot. So if you are planning your business trip Georgia is waiting and BTL Georgia – winner in the nomination of Best MICE Tourism Award 2016 will organize it on the highest level.

First place we recommended to visit in Georgia is a divers capital – Tbilisi perched on the banks of Mtkvari River and surrounded by mountains from three sides. Tbilisi, Georgia’s ancient and vibrant capital will enchant you

from the outset. Though small in size, the city has a lot to offer visitors, from its historical buildings and monasteries to its quaint cafes and elite restaurants. Archaeological readings of the region signal human settlement here from as early as the 4th millennium BC. To make your stay in Tbilisi interesting and comfortable we recommend some hotels for all kind budget tourists: Holiday Inn Tbilisi – winner of the Best Business Event Venue Award 2016; Vinotel – winner of the Best

SO THAT GEORGIA IS A COUNTRY THAT LOVES TRAVELERS AND FOUR SEASON PLACE TO SPEND YOUR BEST VACATION. THERE ARE SOME OUR RECOMMENDATIONS BELOW WHICH WILL GUIDE YOU TO ORGANIZE YOUR TRIP IN BEAUTIFUL GEORGIA. MAY 2017

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Boutique Accommodation Award 2016; Courtyard by Marriott Tbilisi – winner of the Best Standard Accommodation Award 2016; Continent Cron Palace Tbilisi – winner of The Fastest Growing Company of the Year in the SME Segment 2016; Dvizh Hostel Eli Spali – winner of the Best Low Budget Accommodation Award 2016; And if you like to taste real delicious, worldwide famous Georgian cuisine visit Restaurant “Georgian House” – winner of the Best Tourism Restaurants Services Award 2016.

Second destination you should visit in Georgia is a miracle seaside city – Batumi surrounded with Black Sea and Mountains.

Batumi is the best destination during all seasons, It is must visit destination for sure. In Batumi we advise you to stay in Hilton Batumi – winner of the Best Sea Accommodation Located on the Coast 2016 and Divan Suites Batumi – winner of the Best Sea Accommodation Located in the City 2016.

Next spot is a picturesque Georgian spa and resort town well known for its artesian natural springs – Borjomi. Archaeological excavations have revealed the existence of stone baths in the area, proving that these mineral waters have been utilized by people for thousands of years. Because of the supposed restorative and healing powers of the area’s mineral springs, it is a frequent destination for people with health problems. Borjomi is also home to the most extensive ecologically-themed amusement park in the Caucasus. And in the best palace of Borjomi located hotel Crown Plaza Borjomi – winner of the Best Deluxe Accommodation Award 2016.

One of the treasures of Georgian landscape is fascinating Caucasus Mountains.

Kazbegi Mountain (or Mkinvartsveri) is the third highest mountain in Georgia.

Kazbegi is the most touristic destination; it’s a base for some wonderful walking and mountain-biking. If you decide to visit Kazbegi during the ski season go to Gudauri, which is the nearest ski resort from Kazbegi. Gudauri is a beautiful ski resort steadily gaining reputation as a prominent skiing destination around the world. To feel real spirit of mountain resort, to enjoy awesome mountain panorama, we highly recommended staying in Rooms Hotel

Kazbegi – winner of the Best Mountain Accommodation Award 2016.

Another national treasure is Georgian Wine – a real internationally known Brand!

Wine is a significant part of Georgian culture.

In 2013 Georgia’s traditional winemaking method of fermenting grapes in qvevri has been added to the world heritage list of the UNESCO. Archaeological evidence of this methodology goes back 8,000 years and it is not a surprise that Georgia is called cradle of wine. Kakheti the center of wine producing region is home to unique “Winery Khareba” wine cellar – winner of the Best Tourism Winery Award 2016. In the heart of Kakheti there is a small paradise situated in the beautiful Lopota Valley, surrounded by ridges of the Caucasian mountain range. Here, each season is distinctively unique. Lopota Lake Resort and Spa – winner of the Best Wellness & Spa Resort Award 2016, best place to experience breathtaking nature, beautiful Lopota Lake, elegant and contemporary hotel and unique atmosphere that provide privacy and tranquility.

Except all of that, breathtaking nature, beautiful seaside and Caucasus Maintains, during the whole year Georgia is hosting large-scale series of cultural events and most of this events are managed by one project which is Check in Georgia – winner of the Best Tourism Innovation of the Year Award 2016. One of such event is an annual Georgian Electronic Music Festival GEM Fest – winner of the Best Festival or Event Award 2016, a one month heaven for electronic music lovers in the hidden escape of Anakila. GEM Fest is an international, multi-platform festival to celebrate the most illustrious, the brightest, and the best in youth culture, dance music, and stagecraft today.

And despite of everything, if you still have any doubts whether or not visit Georgia see this magnificent photos of Georgian landscapes by Shermazana – winner of the Best Travel Photographer of the Year 2016.

Recommendation article prepared by The Welcome to Georgia!

National Tourism Awards

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GEORGIA

FOREIGN INVESTORS

EYEING GEORGIA

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Georgia continues to be among the top reformers, accelerating inclusive and sustainable economic growth and fostering resilience to global shocks,” said Mercy Tembon, World Bank Regional Director for the South Caucasus.

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assle-free bureaucracy, the considerably low amount of investment required, and available niches in various fields are the main factors encouraging foreigners to start up a business in Georgia.

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he country was ranked 16th out of 190 countries in the latest Doing Business 2017: Equal Opportunity for All report from the World Bank. Georgia is also among the top 10 countries in the world in terms of implementing reforms to their business regulations. Furthermore, economic data from the current year provides a clear signal that the country has started overcoming the external shocks that began in 2014.

As a bridge between Europe and Asia, Georgia’s economy is highly integrated into international markets. Through a number of free-trade agreements and the European Union’s Deep and Comprehensive Free Trade Area (DCFTA), Georgia provides duty-free access to markets with over 900 million inhabitants. Following Georgia’s accession to the DCFTA, the EU responded by providing visa-free access to Georgians for the first time ever.

According to preliminary data from the National Statistics Office of Georgia, foreign direct investments (FDI) in the country amounted to USD 1.645 billion in 2016, up 5 percent from 2015.

The three largest investors in terms of their share of FDI were Azerbaijan, 35 percent; Turkey, 17 percent; and the United Kingdom, 7 percent.

The largest share of FDI was invested in the transport and communications sector, totaling USD 645 million. Next was the energy sector, with USD 203 million, followed by the construction sector, with USD 163 million.

Burton and her husband are developing two small companies in Georgia: one, You Studio, is in the fitness industry, while the other, Mr. Traveller Ltd., is in tourism. In total, they have invested approximately EUR 50,000.

WHY GEORGIA BECAME AN ECONOMIC SUCCESS While Georgia declared its independence from the Soviet Union in 1991, the country’s economic success story only began in 2003. Its double-digit economic growth is the result of reforms. Today, Georgia is the least corrupt nation in the Black Sea region, outperforming all of its immediate neighbors, as well as nearby European Union states.

Much-needed customs reform was a crucial factor for economic development. In the past, laws were complicated, and underpaid officials often supplemented their meager salaries by taking bribes. Crossing Georgia, a country that is only 400 kilometers wide, could be a MAY 2017

ISSUE TOPIC

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If investors are looking for something economically friendly, Georgia is it. Georgia is developing. There are many opportunities in a wide range of sectors. What we liked about Georgia is the efficiency and seemingly easy bureaucracy when it comes to starting up a business. Also, depending on what you are doing, the investment is considerably lower [than] that of a developed country.

Employment salaries are low and literacy is high,” said Nikol Burton, founder of Mr. Traveller Ltd. and You Studio.

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Setting up a business in Georgia is very convenient because you can register a company with zero capital and figure things out slowly as you go,” said Cory Greenberg, a U.S. citizen who first opened the DIVE bar in Tbilisi in 2013.

A second location was opened last year.

three-day ordeal. Things are different now. Simpler customs procedures make it faster and easier to move goods through the country.

And as the effects of this reform take hold, Georgia is improving its competitiveness and strengthening its economy, working to ensure a strong and sustained recovery.

The Georgian Government’s long-term strategy seeks sustained and inclusive growth that is based on macroeconomic stability. It aims to maintain a sound macroeconomic environment, backed by prudent fiscal, monetary and financial policies. Structural reforms to improve governance, encourage employment and reduce poverty are priorities.

The authorities are striving to deliver reforms aimed at promoting the formation of a robust and free private sector assisted by an efficient and fully transparent government.

Fostering a vibrant, competitive private sector, both internally and externally, is seen as a top priority. In this regard, Georgia established a two-pronged long-term growth strategy (Georgia 2020 and sectoral development policies) aimed at achieving a profound transformation of the country’s macroeconomic framework.

Georgia’s aim is to become a go-to trade and logistics hub.

Although the country has done well in the Doing Business index, there are pending gaps that the government is committed to addressing.

In 2016, Georgia’s prime minister introduced a four-point reform program to address economic vulnerabilities and external shocks to the economy. This economic development plan includes new tax benefits, improved infrastructure, governance reforms and an overhaul of the education system. In other words, Georgia is to be run by the rules

SMALL BUSINESS BANKING MAGAZINE

of private business: “know the competition and have your unique selling point.”

Below, we provide a brief overview of several fast-growing sectors in Georgia that are worth watching and that could potentially be a place for your investment dollars.

INVESTMENT OPPORTUNITIES IN GEORGIA’S ENERGY SECTOR Growing domestic and international demand makes energy an excellent business sector for investing. One of the government’s priorities is to ensure maximum utilization of the country’s abundant hydro-resources. The main objective of Georgia’s long-term energy policy is to attract foreign investments for the construction of new power plants.

One of the objectives of this policy is to fully meet the country’s electricity demands through its own resources.

This is to be implemented in stages, first through imports and then by replacing imported energy through domestic thermal generation.

With an abundance of high mountains and fast-flowing rivers, Georgia has a competitive advantage over its neighbors in terms of the cost of power generation. Georgia’s most attractive export market is Turkey, which ranks first in Europe and second in the world after China in terms of its increase in demand for electricity. Turkey experiences electricity shortages during the summer months, while Georgia has a generation surplus. According to estimates by the Turkish Electricity Transmission Company, Turkey’s electricity consumption will grow by 5.5 percent on average annually in the coming years. Nearly 80 percent of Turkey’s electricity is generated by gas and coal-fired power plants. Thus,

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GEORGIA

REAL ESTATE AND HOSPITALITY Real estate and hospitality are two of the fastest-growing sectors in Georgia’s economy. The number of international arrivals in Georgia reached a record number of 6,350,825 in 2016, which was 449,731 more than the previous year, representing annual growth of 7.6 percent. Income from international tourism has also increased, amounting to USD 1.7 billion in the first three quarters of 2016. That represents USD 177 million more than the previous year. Georgia offers visa-free entry to citizens of 94 countries. In addition, holders of valid multiple-entry visas or residence permits from 50 countries may enter and stay in Georgia for 90 days within a one-year period.

Constant growth in the number of tourists visiting Georgia provides significant potential for the development of hotel and leisure, residential, retail and office premises. Investors can benefit from the growing demand for Class A office buildings and entertainment facilities.

Since most international hotel chains in Georgia are positioned in the higher segment, there is untapped potential to develop mid-class hotel brands.

The Georgian authorities recently set up so-called free tourist zones to promote investment in the hospitality sector. All seven of these zones are located on the Black Sea coast, and they offer certain financial benefits to entrepreneurs in terms of infrastructure support and tax advantages.

For example, as an incentive to invest in hotels, land plots for hotel construction are being sold to entrepreneurs at a symbolic price of GEL 1. In addition, the government provides the necessary infrastructure (gas, water, sewerage, electricity) and constructs access roads, construction permits are granted via simplified procedures and with no application fees, the value of the land plot is tax-exempt, and profits earned from providing hotel services are exempt from profit tax until 1 January 2026.

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even with lower oil and gas prices, electricity prices in Turkey are expected to remain high.

In April 2017, the Dariali Hydroelectric Power Plant, the largest hydroelectric plant in the history of independent Georgia, officially opened. The total project cost was USD 123 million, 23 percent of which was contributed by the state, while the European Bank for Reconstruction and Development (EBRD) arranged a USD 80 million syndicated loan for JSC Dariali Energy for the development, construction and operation of the plant. This was the first-ever energy project financed by the EBRD, which highlights the energy sector’s potential.

AGRICULTURE AND FOOD PRODUCTION With 22 micro-climates varying from cool and dry to warm and humid, Georgia has traditionally been an agricultural country.

These diversified micro-climates allow for a longer than normal harvesting season and a wide range of growing conditions.

The country has a significant rural population. Georgia was renowned as a quality food supplier during the Soviet period, and Georgian food and beverage products are still recognized as healthy and high-quality brands in the CIS region. Considering the fact that Georgians are obsessed with food and drink, investing in agriculture and food production can guarantee huge returns.

In addition to a micro-climate that is perfect for producing a wide range of grains, fruits

and vegetables, investors will also benefit from low costs, as employees in agribusiness receive 30-40 percent less than the national average.

Projects for the construction of new processing plants for agricultural products can receive a grant from the government with a total value of up to USD 250,000 (to a maximum of 40 percent of the project value).

In addition, investors can buy state-owned immovable nonagricultural property at a symbolic price of GEL 1 if their investment in a processing plant is at least four times its market value.

Fewer and lower import tariffs are making the country a better place to do business.

And they are making imports cheaper, which means better prices for Georgians and better sales for Georgian businesses.

The country is continuing to push forward with reforms to further simplify customs procedures.

Since 2013, Georgian officials have been treating the agricultural sector as one of the key priorities for development. The Agriculture Project Management Agency, a governmental body, made a number of changes aimed at facilitating growth in the sector, including the introduction of preferential loans for small, medium and large farms; agro leasing; and preferential loans for grape producers, as well as citrus producers and exporters. Georgian commercial banks welcomed the initiative and have been involved in issuing loans to businesses operating in the sector.

MAY 2017

ISSUE TOPIC

GEORGIA’S BANKING SECTOR

DRIVEN BY INNOVATION

For a country with a population of only 3.7 million, Georgia has 16 commercial banks. The fact that there are so many commercial banks in such a small market used to raise questions. Two Georgian banks – TBC Bank and the Bank of Georgia – remain the main players in the sector. Meanwhile, the other banks continue strengthening their niche by offering innovations to their customers. The current trend in the Georgian banking sector is based mostly on technological innovation.

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ccording to the National Bank of Georgia, the country’s banking sector is represented by 16 commercial banks, including 13 foreigncontrolled banks and one branch of a nonresident bank. In February 2017, Georgian commercial banks’ total assets decreased (in current prices) by GEL 0.9 billion (or by 2.9 percent) compared to the previous month, amounting to GEL 29.3 billion (a decrease of 0.1 percent, not including the impact of the exchange rate), as of March 1, 2017.

ous month, (an increase of 0.6 percent, not including the impact of the exchange rate), amounting to GEL 18.7 billion as of March 1, 2017. The volume of loans in Georgia’s national currency increased by GEL 153.4 million (2.3 percent), and the volume of loans in foreign currencies decreased by GEL 605.0 million, or 4.8 percent, in the same period (a decrease of 0.3 percent, not including the impact of the exchange rate).

By the end of February 2017, commercial banks had issued resident legal entities GEL 2.0 billion worth of loans denominated

crease in foreign-currency lending of 1.3 percent, not including the impact of the exchange rate).

In February 2017, the volume of lending to resident individuals decreased by 1.9 percent, or GEL 184.9 million, amounting to GEL 9.4 billion as of March 1, 2017.

The larization ratio for total loans was 36.31 percent as of March 1, 2017. Compared to February 1, 2017, an increase of 0.59 percentage points, not including the impact of the exchange rate.

The total volume of non-bank deposits

in the national currency (0.9 percent less compared to the previous month) and GEL 6.5 billion worth of loans (3.2 percent less) denominated in foreign currencies (an in-

in the country’s banking sector decreased by 3.6 percent (a decrease of 0.4 percent, not including the impact of the exchange rate), or by GEL 619.1 million, compared to

Equity capital in the banking sector amounts to GEL 4.1 billion, which accounts for 14.1 percent of commercial banks’ total assets.

The volume of lending by commercial banks (including loans to non-residents) in February 2017 decreased by GEL 451.7 million, or 2.4 percent, compared to the previSMALL BUSINESS BANKING MAGAZINE

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GEORGIA

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February 1, 2017, amounting to GEL 16.5 billion as For the first time in the region, JSC Halyk Bank of March 1, 2017.

In February, the volume of term Georgia allows payments to be carried out on a Contactless deposits decreased by GEL 508.8 million, or 5.3 contactless basis using a wristwatch. Watch2pay payments are getting percent (a decrease of 1.5 percent, not including watches are equipped with a personalized bankmore popular and the impact of the exchange rate). Demand deposing card that customers may receive at a branch more widespread. its decreased by GEL 110.2 million, or 1.5 percent of JSC Halyk Bank Georgia. This innovative prod(an increase of 1.1 percent, not including the imuct was launched in 2016.

We can say that pact of the exchange rate).

In 2015, JSC Halyk Bank Georgia introduced the payments have The annual average weighted interest rate on first contactless mPOS terminal in the Southeastpassed through term deposits was 4.8 percent. The interest rate for ern Europe region. A year later, more than 100 a ‘contactless deposits denominated outlets were equipped with revolution.’ Watch in the national currency mobile terminals, including A CLOUD-BASED MOBILE PAYMENT was 8.8 percent, and it those that were previously payments are was 3.0 percent for deunable to process card paySERVICE IS ONE OF THE LATEST convenient, and posits denominated in INNOVATIVE PRODUCTS IMPLEMENTED BY ments at all. The Watch2pay there is no need foreign currencies. with a contactless payment VTB BANK GEORGIA. to take out a card.

The US dollar accard was another innovative counted for 85.4 perproject that the bank impleEven everyday cent of the total volume of deposits denominated mented together with the MasterCard payment things are adapting in a foreign currency, while and the euro accountsystem. more and more ed for 12.0 percent.

Later, VTB Bank Georgia added a new feature to to the new digital Collecting deposits and issuing loans still reits Mobile Pay App, making it possible to transreality. Cardholders main commercial banks’ core business. Meanfer money simply by waving two mobile phones while, the methods used to serve customers are near one another. The bank was the first to offer associate contactless changing on a regular basis.

Representatives of Georgian and regional customers this innovative payments with speed banks have claimed that we will soon be entering feature. and convenience, a new era of digital payments, and they are workThe mobile generation, which has been the and this sort of ing hard to support this as a result. main instigator for banks to implement innovaEight years have passed since the first contacttive technologies, is also being offered video watch emphasizes less payment was made in Georgia, and this form banking. In February of this year, VTB Bank Georthese advances even of payment is becoming more and more popular gia launched VTB Video Bank, an exclusive mobile more,” says all the time in the country. According to statistics, application allowing clients to carry out any kind Nikoloz Geguchadze, Georgia is currently one of the leaders among of cashless banking operations remotely via direct General Director of JSC the countries of Southeastern Europe and Asia in communication with a bank employee (using terms of the number of contactless transactions video calls).

Halyk Bank Georgia. made. Contactless payments can be carried out in This app allows users to carry out various bankalmost all POS and mPOS terminals in the country. ing operations, and, most importantly, the VTB Video Bank service, including registration, is completely free charge.

The importance of implementing remote and “Georgia is one of the most advanced contacttechnology-based services is something that ProCredit Bank Georgia has also noticed. Among less payment markets in Europe. This innovathe innovative banking solutions that the bank is tion has succeeded primarily thanks to the fact now offering its clients are convenient new drop boxes that enable clients to deposit money into that Georgian banks and their clients are open their current accounts quickly and safely, as well to innovation and are not afraid to try new as cash-in ATMs that make it possible to make cash deposits into a client’s account. The main things,” said Elena Brazhnik, MasterCard Europe’s reason for installing these advanced services in customer service manager in Georgia.

24/7 zones was to offer faster and more convenient services.

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MAY 2017

ISSUE TOPIC

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Cash transactions are decreasing on an annual basis.

On the other hand, non-cash payments are increasing. In terms of non-cash operations, we see the future in virtual cards based on NFC technologies. A new era of payments based on digital technologies is approaching. This means that our mobile devices will be the only thing that we will need to make payments not only in our home country but also abroad. This simplifies life. It is no longer necessary to paste [payment] stickers [on mobile phones] or carry plastic cards.

The development of this technology will contribute to a reduction in cash transactions,” said Valerian Gabunia, Chief Retail Banking Officer at VTB Bank Georgia.

These drop boxes enable clients to deposit money into their current accounts quickly and safely, and the deposit is automatically credited to their account upon completion of the operation.

The drop boxes are especially convenient for business clients because both company representatives and third parties (distributors, dealers) can conveniently deposit large sums of money into their accounts 24 hours a day.

Unlike standard ATMs, which only allow clients to make cash withdrawals, cash-in ATMs make it possible to make cash deposits to a client’s account. At the same time, clients have the opportunity to view their account balance and recent transactions.

In continuing to bring advanced technology to the Georgian market, ProCredit Bank later introduced another innovation: the Universal Plus Cash-in ATM, which allows users to deposit and/ or withdraw up to 300 notes in one transaction.

Deposits are counted automatically and then credited immediately to the selected account.

SMALL BUSINESS BANKING MAGAZINE

Universal Plus is available to all the bank’s customers. In addition, these ATMs accept both domestic and foreign currencies.

Banking has been one of the fastest-developing sectors of Georgia’s economy since 2003. In the intervening years, banks have been able to win the trust of customers, who had previously had rather negative banking experiences dating back to the 1990s. According to a Gallup World Poll, when asked whether they had confidence in the country’s financial institutions, 78.8 percent of Georgians responded positively. . In addition, the fact that the sector has gained the confidence of foreign investors is also important. Accordingly, around 90 percent of all bank assets in Georgia are foreign-owned.

Currently, the Bank of Georgia and TBC Bank, the country’s two largest banks, are listed on the London Stock Exchange, a fact that raises their international profile and ensures that they meet international standards for corporate governance and transparency.

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INTERVIEW

FOCUSING ON SME DEVELOPMENT

ZURAB MASURASHVILI, HEAD OF MICRO AND SME BANKING DEPARTMENT AT BANK OF GEORGIA

NEW SERVICE CENTER

How was the year of 2016 for the Bank’s SME Business? What are top five achievements? (products, sales, staff, etc.)

The year was very productive. We have had the biggest growth ever of Micro and SME loan portfolio, 50.5%, which includes ProCredit Bank’s loan portfolio acquisition. We had 94.4% growth in number of MSME borrowers, while in new businesses, we grew by 14%.

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We totally re-started the micro lending process. Now, the loan officer is able to perform financial analysis, approve loan, register client and product package on-site in a just one interaction with the client. In a few minutes loan amount is on the clients card account. And do all these in just 30 minutes. Existing client can get credit and package without signature on the paper and new client signs only one page.

First, new concept branch is opened. We are changing the way we work with the clients.

Very useful, first in Georgia, Cash Card, has been introduced in 2016. Cash Card allows small businesses to access their current account 24 hours a day via ATMs and POS terminals worldwide.

Bank of Georgia was the pioneer in some new initiatives. We launched, first in the country, MAY 2017

ISSUE TOPIC

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Biggest opportunity in Georgia is to replace import with high quality Georgian production.

SME CORNER

start-up program for Women Entrepreneurs. We already have financed tens of new business ideas, delivered training How to start business. We support women entrepreneurs and deliver one-year free transactions to the new businesses.

Under DCFTA, we launched very attractive loan product and organized several events to increase general awareness of DCFTA. We started several important projects, which will be launched in 2017. We are proud of our achievements!

By the way, how many SME customers do you have at the moment?

About 200,000 businesses are registered in Georgia and we have 135,000 MSME customers. Two out of every three new businesses open account in Bank of Georgia.

A quite large number! So you need to meet the expectations of customers from different industries and of different sizes. How do you manage to do it?

We have the largest client base with different type of customers, starting from Micro, more products oriented, to large SMEs with personal relationship requirements and more complex businesses.

I would say this is the main challenge for us to meet the expectations of clients. In 2017 we will finish transformation of branches to new service model, which allows us to differentiate sales and operations. Now clients can get all banking products from one dedicated person. We introduced different service models to different types of SMALL BUSINESS BANKING MAGAZINE

businesses. Large SMEs, which are about 5% of total clients, we cover with Personal Business Bankers and smaller businesses with Business Bankers, using advanced lending technologies. MSMEs are happy with new model and so are we!

As we know, there is an intense competition on the market. You have 33.4% market share (in total assets). What is your Unique Selling Proposition to small businesses which differ you from the competitors?

We are fast and technological. Bank of Georgia is very strong brand, our staff is very well trained and motivated, we have super effective procedures and fast decision making process. We have a broad range of products, we are partner and advisor to businesses. We have very clear KPIs at all management levels. All these make us different from the competitors.

In your opinion, what size of businesses is easy to manage now in Georgia: corporates, medium, small, microor startups?

It’s very easy to start and run business in Georgia. You can register company and open an account in a minute.

Access to financing in not an issue. In general, government’s effort to support businesses has a good impact.

Thus, state Programs – Preferential agro lending program, Produce in Georgia, Host in Georgia, Start-up Georgia inspires businesses for further development. If you look at WB Doing Business ranking, you will find out that Geor-

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INTERVIEW

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Bank of Georgia is the first bank, which promotes SMEs in its new style branches. At the specially defined corners, we present products of our clients, helping them to get more contacts and become popular.

Besides, we have special coworking spaces to entrepreneurs.

gia is 16th in overall rank. In some indexes, like Getting Credit, Georgia is 7th. Doing business in Georgia is easy for every kind of businesses.

And what type of business (industry) are more in favor now?

Georgia was several times named as the best tourist destination by different publishers or popular sites. We see how tourism is growing in general. A lot of new hotels, cafes and restaurants are opened in Tbilisi and regions. Georgia is becoming touristic hub in the region. Second is agro business. After signing DCFTA, many new agro businesses are opened and we see how their potential is growing. Every day, new and new companies start exporting Georgian agro Production in Europe. Government does a lot to support these and other industries. This makes us happy.

During each visit to Georgia we see that new buildings are appearing, new constructions, and new businesses. Are local players investing much in it or these are international ones? And what is the role of banks in it?

Investments are both, local and international. Few years ago, Georgia was dependent to only foreign investments, but today we see that many locals are investing. Successful businesses diversify their businesses investing in the different sectors. The role of the banks is essential in developing of new businesses.

Only Bank of Georgia has invested GEL 1.4 billion in Micro and SME businesses.

Sometimes, we hear Georgia is the small country, and exporting is the only way your local businesses can grow. Is it true?

True is that, Georgia is the small country and export is the key way for businesses expansion. We also see the trend, how Georgian businesses export their production in Europe, China and other big markets. Georgia has unique chance to grow its exporting potential via DCFTA.

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How BoG helps local exporters and to those who would like to enter foreign markets?

What banks can do is to increase general awareness of SMEs through organizing of trainings, events, seminars on DCFTA, Global GAP standards and other topics.

Moreover, we attracted special, long term funding from EBRD with 15% cash back to businesses which makes investment in implementing EU standards and quality.

BoG acquired a large SME portfolio from ProCredit Bank. How will it impact on your strategy in the segment for the 2017 year?

The transaction added 2,400 micro and small business clients and a net value of GEL 120 million loans. Acquisition of the part of ProCredit Bank’s portfolio is in line with the Bank’s strategic target to grow the MSME loan portfolio within the next years.

How does your SME Business Line structure look like? How many people there?

Our structure is very effective. We have various types of customers, as I have already mentioned, our department’s structure repeats client segmentation. Each client segment has dedicated manager, in charge of business development and results. We have young team, which consists of 13 members with an average age 31 years.

Do all of the team members have banking experience, or you are looking to bring some cross-industry experience?

All we are bankers with MSME banking experience and with entrepreneurial spirit. If you ask, am I an entrepreneur or not, my answer will be – YES, I am! In my opinion, we are entrepreneurs; we manage very large business within the bank.

Tell us about your distribution strategy. As we see on the market banks are investing in new branches’ models a lot. You have 266 branches.

Can you share with us about your plans of redefining branch model?

MAY 2017

ISSUE TOPIC

Georgia is a very small country with 3.7 million populations. Bank of Georgia has more than two million clients totally (58% of population), the largest number in the country and we deliver the highest service quality to our clients. Branch network is one of the main driver for high quality service. Our branches are highly standardized.

Micro and SME bankers are represented in only 45 branches. The greatest part of other branches is small format branches, mostly dedicated to perform transactions or simple product issuing.

So you believe in branches. At the same time, there are many talks about digitalonly banking and that the branches will die.

Besides the branches, we have the largest network of ATMs, self-service machines and POS terminals. 350,000 transactions are performed in self-serving machines daily, and it was only 25,000 three years ago.

In Georgia, as well as all around the world, penetration of the internet and mobile banking is increasing. We are always one step ahead and are offering new digital solutions to our clients. Mass lending to individual customers and micro businesses are now paperless and fully moved to internet banking or SMALL BUSINESS BANKING MAGAZINE

self-service terminals. Client signs agreement using SMS one-time codes. In 2016, we introduced new internet bank for retail customers and in 2017 MSMEs will have the opportunity to taste new generation internet bank as well.

Bank has formed new Digital Products Development Unit, under subordination of CEO, and many innovative digital products will be launched soon.

Now banks tend to become a partner for their small business customers to help them grow and scale up. So if the customers grow, the bank will also grow in volumes and profit in this segment. One of the ways to do so is to implement nonfinancial services (NFS) for SMEs. What do you think about NFS? We are doing a lot to be the best partner for businesses, this is the part of our strategic goals. We help businesses to grow and it’s not only NFS, but the way we work with the customers. We work together with the clients to find the best ways for financing, we help to choose proper products and services, which make business more efficient. We advise businesses how to deal with Government preferential programs, and etc.

Do you have some cases of NFS implementation?

We support businesses and here is some examples how we do this: As you know, Georgia signed Association Agreement with the European Union, which came into force from 1st July 2016. We are the only bank yet who managed to receive USD 100 million funding to support SMEs, in which 50% funding is for DCFTA to support Georgian SMEs in entering EU market. Bank of Georgia did the priceless work to increase awareness of SMEs through delivering trainings, success stories, etc.

First time in Georgia, we introduced start-up financing and supports of women entrepreneurs. We are delivering free training sessions “How to start business” to the women entrepreneur borrowers.

Recently, we created video catalogue of our most successful business customers and showed to 3 million unique users via social network. These activities are performed to make businesses more popular and inspire others to start or grow their businesses.

And finally, in May, we will launch MSME portal (businesshub.ge), where customers can read interesting articles how to start or run business, get inspired by stories of the most successful businesses. The portal will provide financial and business-related advice to entrepreneurs in order to enhance their finance management skills and ensure the sustainable development of their businesses. The portal will contain information on trainings; provide entrepreneurs with knowledge and skills in accounting, legal documents, business development, sales and marketing.

What are your priorities and challenges this year?

We stay focused to increase a market share, which is the Bank of Georgia’s strategy for next years. We are restarting some processes to make service more comfortable. We did a lot in 2016 and still continue to implement non-financial services strategy to support businesses. We work to launch new internet banking for SMEs with some very interesting features, which will be totally new experience for SMEs. Thank you for your time and sincere answers. We wish you all the success.

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INTERVIEW

WHY BANKS ARE SEEKING TO EXPAND NFS OLENA PROKOPOVYCH, IFC NON-FINANCIAL SERVICES LEAD IN THE EASTERN EUROPE, MIDDLE EAST AND NORTH AFRICA REGION SHARES IFC’S EXPERIENCE ON WHY BANKS ARE SEEKING TO EXPAND THEIR NON-FINANCIAL SERVICES. THERE IS GROWING INTEREST FROM BANKS IN NON-FINANCIAL SERVICES. WHY ARE NONFINANCIAL SERVICES BECOMING SO POPULAR? WHAT DO THEY BRING TO BANKS? The rationale is very simple – if your client does well, you do well. Experience proves that banks get tangible advantages through helping their clients grow. This holds particularly true for small and medium enterprises (SMEs) because the SME market provides significant untapped potential.

Let me explain why the SME market is so attractive for banks. There are about 400 million small businesses operating in the developing world. About 280 million of them (70 percent) do not use external financing, though many are in dire need of it. About 340 million (85 percent) suffer from credit constraints. Among the key reasons for this is a lack of information or poor business skills/financial literacy, meaning they’re unable to speak the same language as financial institutions.

Recent studies underscore that the SME sector can be extremely profitable: Many banks report higher returns on assets with SME clients than with traditional clients. And as SME banking becomes more and more popular, the competition in this segment is increasing and intensifying, so much so that price competition is no longer sustainable. From the other side, the transaction costs for serving SMEs are high, as many of them lack business skills and require individual relationship services. At the same time, there still isn’t enough information about

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SME needs. This makes the situation worse – services offered to SMEs do not match their expectations and needs. As a result, the number of clients does not increase significantly and profits remain low. This is a lost opportunity because the sector has huge potential. And here NFS can be a solution.

SO, WHICH NON-FINANCIAL SERVICES (NFS) DO BANKS USUALLY OFFER TO THEIR CLIENTS AND WHAT NFS PRODUCTS ARE THE MOST POPULAR? Non-financial services (NFS) are also called business support services. Usually these are noncommercial services, designed by the banks to help their SME clients improve their business value-add to services. And it is important that these services complement the financial offerings of a bank. There is a wide range of examples, from information support (web platforms, call centers, publications and media) to trainings (to improve business skills, financial management, marketing, operations) and even consultancy advisory (by inhouse and/or outsourced experts). Networking, like trade fairs, expos, discounted buying, and business clubs, is also a good example.

There are four popular types of NFS, including web platforms, training programs, SME clubs and consulting support.

SME WEB PLATFORM with educational content (articles, videos, sample agreements and forms, calculators).

• SME ACADEMY – training programs for SMEs, conducted by bank staff or outsourced vendors, to strengthen business skills.

• SME CLUB – the design and content may vary to provide products/services/provider or partnership offerings of privileged services for target groups (networks, pooled services, discounted buying, premium services, gender-specific or youth targeted formats, etc.).

• SMALL BUSINESS ADVISOR, a customized program for a bank’s relations managers to enable them to advise client SMEs on business issues.

WHAT ARE THE KEY CHALLENGES IN IMPLEMENTING NFS? Our experience in many countries shows that there are some typical mistakes, which later might lead to not getting payback or not meeting a client’s expectations and requiring costly changes.

First, successful NFS requires a systematic MAY 2017

ISSUE TOPIC

approach, starting from a needs assessment to adjusting the selected NFS product and integrating it into a bank’s strategy. The bank’s management should be involved in the strategy design and NFS product selection. This is key to success; often banks ignore this, which is the main reason for most failures.

Not doing a proper assessment and relying only on the information available is the second pitfall. The bank should strategically asses its needs and internal capacity, as well as research the SME market and identify gaps to understand the external and internal environment for NFS. Third, there is no solution that suits all. Often banks select a standard product without adjusting it. NFS is a tailor-made product, which should be relevant to a bank’s SME strategy and resources.

The fourth pitfall for banks is understanding the importance of staff coaching, building new skills, and closely collaborating with outsourced vendors, as well as structuring internal and external communications on NFS. The last, but not least, challenge is for banks not to treat NFS as a fancy promo tool, but instead to integrate it into its strategy, with KPIs to monitor, adjust and measure the return on investment.

So, designing their own NFS requires diligent and extensive homework, where is where banks require additional support from IFC. IFC SMALL BUSINESS BANKING MAGAZINE

has a team of highly experienced experts who have been working on NFS for many years, consulting with management and working teams, and helping with initial feasibility studies to identify client needs and adjust the NFS products accordingly.

WHAT ARE THE KEY ADVANTAGES OF NFS? Well implemented NFS rewards banks with strong market differentiation, client loyalty and better portfolios: By helping to grow their SME clients, banks gain strategic market advantages.

First, there is strategic differentiation from competitors. NFS allow a bank to position itself as an SME partner and offer focused products and services. Second, it’s about better client retention. NFS allows banks to learn more about their SME clients to better tailor services, and increase SME customers’ loyalty by strengthening their performance and profitability.

Third, banks implementing NFS often get better portfolios because of targeted marketing, higher cross selling, and a wider range of products for stronger SME clients.

THREE KEY BENEFITS TO BANKS FROM PROVIDING NFS TO THEIR SME CLIENTS

100 80 60

94%

69%

40 20 0

Strategic differentiation

Client retention

50% Portfolio growth

Source: “Why Banks in Emerging Markets are Increasingly Providing Non-financial Services to Small and Medium Enterprises”, IFC, 2012

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EXPERIENCE

TBC BANK’S ‘STARTUPER’

PROMOTES ENTREPRENEURIAL SPIRIT – GEORGIA TODAY

T

BC Bank in Georgia has launched a project – Startuper – aimed to support startups and promote entrepreneurship in Georgia. Interview with Nika Kurdiani, Deputy CEO at TBC Bank, about the project was done by GEORGIA TODAY, and we are publishing the full text of it: Why did TBC Bank decide to support Startups?

At TBC Bank, we very well realize that, as a financial institution, we are one of the key contributors to the country’s economy. We employ thousands of people, have thousands of clients, and more than 80,000 business clients that we serve. In other words, we’re a very big corporate player and that’s what I would like to underline: when you’re a big corporate

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player you have to understand that corporate social responsibility is crucial; that your behavior and the decisions you make affect society and the country as a whole. We’ve been doing a lot in the corporate social responsibility dimension for several years now, be it arts and culture, or rugby, for example. The same goes for the business support programs that TBC Bank started in 2013 together with organizations like IFC and ADB. We’ve been serving large corporations, small and medium size and micro businesses. Now we see that supporting startups is a necessary extension.

They need support from an early stage. It shouldn’t only be through banking products, but also through various non-financial services- from trainings, consulting, and third party solutions to marketing and PR support.

Tell us about the Startuper program We divide start-ups into two. One is an idea at the so-called incubation stage, when an individual has an idea, makes a prototype and finds the first client, gets enough money from the first client to make another prototype and, with his own capital invested, starts production. The second stage begins with the sales: if you’ve been able to sell your product for the first three months and you’ve already established that cycle, the risk that you won’t be selling it for the fourth one becomes lower and that’s when we offer our assistance by providing loans. We will not offer loans at the idea level, but as soon as the startup gets going, we’re there. The program Startuper has different components: operational products like business cards, for example, which are MAY 2017

NEWS

available for clients even at the idea level. I would divide the program into three, actually: non-loan products for all types of startups, loans that we offer after the initial three-month operation period and onwards, and nonfinancial support like trainings, consulting and more.

We’ve put it all together under the program umbrella concept and we’ll be adding even more components to it as it develops.

What are the non-financial components the program already has?

At this stage, apart from financial products within the program, we offer startupers non-financial components as well: • Trainings in marketing, finance and developing startups.

• Networking and educational events.

• One-to-one consultations for startupers.

• Startuper web-catalogue.

• Media support.

We also plan to have various competitions on different topics related to the startup ecosystem and are currently working on creating a partner network of companies who will support startups with discounts or special propositions. In other words, our new Startuper project is to unite many different activities and offers that startupers will benefit from. That’s the main statement. Startuper is a place where you can find numerous products, offers and services that you can use for the development of your startup.

What about the financial support?

The Startup loan is for legal entities and entrepreneurs who have a minimum three years’ experience in business management. At the first stage, we intend to have a business category covering startup businesses that operate in the manufacture and service spheres. It is important to mention as well that a company must already have a history of sales for a minimum of three months, which means a startup has to already be serving clients and have sales. The minimum loan for startups is 20,000 GEL, however, lower loans can also be considered. The maximum amount for loans is 100,000 GEL. Startupers can fill in the application and present their business plans on www.startaperi.ge What are the long-term results you expect from the project?

There are two things to be considered. One is the general corporate purpose, and the other is a concrete business goal. In terms of business, we have an extremely strong market presence, with every sixth newly established company opening its account in TBC Bank, so we SMALL BUSINESS BANKING MAGAZINE

don’t have any issues in that regard. Our purpose is to increase awareness of startupers in general in our country. We want being a Startuper to become trendy. In a way, we want it to be a network of people sharing their new ideas on a daily basis, getting to know each other and connecting. If, with our efforts, there will be more startups and new initiatives created in our economy, at the end our part of corporate social responsibility will be fulfilled. Of course, that’s combined with a long-term business goal and expectations, too. Why are we doing it? Because we’re investing in our future customers.

What is the interaction of state and private sectors in small and medium business development?

The State is doing quite a lot in that direction- in the last two years alone we’ve seen the launch of a lot of programs: Startup Georgia, Produce in Georgia, the Innovation and Technology Agency and Techno Park projects, as well as programs for agriculture development.

All resulted in getting more individuals involved in promoting the concept of startups, be it hackathons or startup weeks, and that’s encouraging. We at TBC Bank got inspiration from that; when we saw how active the State is. In November last year, the Prime Minister presented a startup friendly program in Techno Park, and TBC Bank was one of its first participants. When the State supports the promotion of startups and more new initiatives, the private sector is of course there to assist its development.

How will the Startuper program be linked with the TBC Business Awards?

There will be a startuper nomination added and, of course, all of it will be integrated in the wider Business Awards scheme.

Idea#1 “INCUBATION STAGE, WHEN AN INDIVIDUAL HAS AN IDEA, MAKES A PROTOTYPE AND FINDS THE FIRST CLIENT, GETS ENOUGH MONEY FROM THE FIRST CLIENT TO MAKE ANOTHER PROTOTYPE AND, WITH HIS OWN CAPITAL INVESTED, STARTS PRODUCTION.”

Idea#2 “THE SECOND STAGE BEGINS WITH THE SALES: IF YOU’VE BEEN ABLE TO SELL YOUR PRODUCT FOR THE FIRST THREE MONTHS AND YOU’VE ALREADY ESTABLISHED THAT CYCLE, THE RISK THAT YOU WON’T BE SELLING IT FOR THE FOURTH ONE BECOMES LOWER AND THAT’S WHEN WE OFFER OUR ASSISTANCE BY PROVIDING LOANS.“

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EXPERIENCE

TERABANK OPENED ITS

FIRST COWORKING BRANCH IN GEORGIA

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ast summer, Terabank (Georgia) opened its first coworking branch in Tbilisi, called Business Hub, making it the first corworking facility both for the bank and for Georgia. Business Hub is located at the bank’s head office.

In 2015 and 2016, Terabank underwent a rebranding process, changing its focus to SME customers as its key priority. Accordingly, it was necessary to change its image, communication style and interior design so as to provide high-quality banking services to the above-mentioned segment in a comfortable

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environment. Local and international agencies worked together on the rebranding process.

The project was supported by the bank’s shareholders, sheikhs from the United Arab Emirates.

The new concept for the bank’s branches is to provide something of a domestic environment for clients, where the interior is arranged like a home: with a fireplace, soft furniture and decorative photos. At Business Hub, SME bankers and SME analysts offer business banking products and can assist customers in decision-making and provide business advice.

The bank has a special offer for Business Hub customers: one year free of charge for opening and maintaining a business account.

SME customers can use cozy meeting rooms for their business activities and book conference rooms for negotiations with their clients. Internet access is free for all Hub visitors.

Terabank plans to open 20 more business hubs all over Georgia.

Terabank has been playing an important role in the Georgian banking sector for over 17 years now.

MAY 2017

NEWS

LATEST UPDATES

FROM THREE ALTERNATIVE SME LENDERS

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ost alternative SME lenders have a 24-hour decision-making process, which is ideal for most small businesses that need regular financing and have limited resources for dealing with time-consuming bank lending procedures.

P2P platforms and online SME lenders use advanced underwriting algorithms and analyze additional criteria like bank transaction histories, tax filings, credit card histories, invoice volumes, etc., a process that significantly improves the chances of granting loans to SMEs. This way, alternative SME lenders can quickly underwrite small-ticket loans that banks find difficult to service.

Such customer-centric processes make alternative SME lenders one of the main parts of the SME lending ecosystem.

We recently heard news from the following alternative P2P and online SME lenders:

SPOTCAP Spotcap is an online SME lender that was founded in 2014 and has its headquarters in Berlin. In the last three months, Spotcap has launched its service in two new markets, the UK and New Zealand, meaning that the company now finances SMEs in five markets in total: Australia, the Netherlands, New Zealand, Spain and the UK. The company has raised more than 63.5 million euros in equity and debt financing and currently serves over 4,000 users in its initial markets: Australia, the Netherlands and Spain. Spotcap has provided more than 50 million euros in financing for SMEs over the past two years.

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Customer-centric processes make alternative SME lenders one of the main parts of the SME lending ecosystem”

BIZ2CREDIT The American company Biz2Credit announced a new partnership with Tradeshift in February. Tradeshift, which provides eCommerce and eProcurement solutions for SMEs, will integrate Biz2Credit’s lending marketplace into its client offerings. Tradeshift customers will receive financing through the Biz2Credit platform and will be able to apply for a loan without leaving the Tradeshift platform.

FUNDING CIRCLE Funding Circle is the leading P2P platform for business loans in the world. Since Funding Circle’s launch six years ago, investors – individuals, the governmentbacked British Business Bank and a range of financial institutions – have financed more than 15,000 small businesses based in the UK through the Funding Circle platform.

SMALL BUSINESS BANKING MAGAZINE

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EXPERIENCE

NON-FINANCIAL SERVICES

FOR SMES FROM BANK ZACHODNI WBK

NON-FINANCIAL SERVICES FOR SME CUSTOMERS Bank Zachodni WBK in Poland (Santander Group) is developing and offering non-financial services for SME customers. The bank has a range of tools to support small business growth: An online portal for SME customers called Firmowe Ewolucje (Company Evolution).

The following services are available on the portal: 1. Online access to the second season of a TV show. We wrote previously about the first season. Read here.

2. E-learning. A set of free e-learning courses to improve soft skills.

3. Live seminars and workshops in every region. A schedule of events is available on the portal, so customers can choose the date, topic and venue, and register online to participate. The main themes are import-export tools, implementation of new technologies by SMEs, raising funding etc.

4. A partners club offering exclusive discounts for the bank’s SME customers.

5. An employment program that helps, first, to find employees (including through the free publication of job vacancies on the Polish job portal) and, second, after a suitable employee is found, refunding up to 50% of salary costs.

SANTANDER TRADE PORTAL AND TRADE CLUB The Santander Group has launched tools called the Santander Trade Portal and Trade Club within all Group banks. The Santander Group used the basis of non-financial services to create a digital ecosystem for non-financial services that is currently being offered to their SME customers in 15 countries.

Santander’s Trade Portal helps SMEs market their products and services abroad by providing a helping hand in the world of export and import. Trade Portal offers an on-

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IDEA #1 The Trade Portal helps SMEs to market their products and services abroad by providing a helping hand in the world of export and import.

line solution that provides Santander customers with unparalleled access to a wealth of international trade such as information on the best countries to trade with, trade shows and market reports. Most importantly, it can provide details about potential buyers and suppliers around the world.

Santander Trade Club is an online network of SME customers across their 15 footprint countries. Trade Club allows SME customers to find business opportunities by receiving automatic matchmaking with other counterparts based on their products and services. Read more.

There is a trend in SME banking that suggests that banks are becoming partners for their SME customers, helping them to: • connect with their peers; • improve soft skills (sales skills, management skills); • gain access to specific services and products at special prices; and • expand their business abroad and find new business opportunities across the bank’s network of customers.

IDEA #2 The Trade Club allows SME customer find business opportunities by receiving automatic matchmaking with other counterparts base on their products and services.

MAY 2017

INNOVATIONS

DIGITAL SME BANKS

Banking for SMEs is still expensive and slow, with paperwork mainly and branches involved. The SME banking and financial services segment is not highly valued by banks, and so it has not been as quick to innovate as the private individual banking sector. It seems like it stacked in the previous century. This is why neobanks, which are developing online and digital banking for SMEs, are paying more and more attention.

Here is our listing of four fintechs offering digital services for opening a business account, payments, invoicing and bookkeeping.

BANKUP BankUP is a bank for small business that has been redesigned from the ground up. It offers a business current account, cards and business apps.

BankUP is targeting so-called millennipreneurs (millennial entrepreneurs), a younger generation of business owners and freelancers.

Mobile and web services, together with data analytics, are used to solve the day-by-day problems facing SMEs and to deliver innovative banking services in the EU. The bank’s mission is to bring SME banking to a simple, digital and mobile level, to meet the needs of young entrepreneurs and to provide them with the tools that they want the most. These are mashups of banking functions, business tools (e.g., built-in accounting) and third-party (partner) widgets, which can support specific industry and business needs).

PENTA Penta is launching full services this year in France and Germany. Its core product is transactional banking and online smart banking for SMEs incorporated with data-driven services. Everything is online with onboarding in several minutes. Penta balances accounts in real time, even on weekends.

SMALL BUSINESS BANKING MAGAZINE

HOLVI Holvi is a Finnish fintech start-up that was founded in 2011. Its target audience includes European entrepreneurs, freelancers and small-business owners – so-called makers and doers. Holvi provides SMEs with a range of financial and business services, including an online business current account with an IBAN number, a business MasterCard, digital accounting and bookkeeping, an online store and a business app. After a successful pilot in Finland, Holvi is expanding across European markets and is now available to customers in Austria, Finland and Germany.

Holvi Tutorials explain how these product work.

Watch a presentation by Holvi’s Mikko Teerenhovi, Head of Product & Design, in the Challenger Banks category at the European FinTech Awards & Conference 2016 in Amsterdam.

TIDE Tide is a UK mobile-based small business banking service designed specifically for small business and sole traders. Onboarding with Tide takes no more than three minutes and provides access to credit while also allowing you to accept card payments and manage your accounting, expenses, and foreign exchange transactions, etc.

Source: https://www.smebanking.club/

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INTERVIEW

MORE THAN PLN 50 MILLION CASHED

IN IDEA BANK MOBILE ATMS IN MARCH

Idea Bank, Poland’s most innovative bank supporting the country’s dynamic and vibrant entrepreneurial culture, has reported on Thursday a record performance of its cash-in Mobile ATMs in March. Total value of mobile ATMs deposits reached a historic high of PLN 51.5 million (€12,1m), up 418% on a yearly basis and 38% more than in February. Mobile ATMs now account for more than 20% of cash in transactions at Idea Bank.

Dominik Fajbusiewicz,

Idea Bank’s executive commented:

"

March was a record month in the history of Mobile ATMs, in terms of both the total deposited and the number of transactions. The March results confirm that ATM carhailing is exactly what Polish entrepreneurs need. We were able to achieve that record result thanks to growth in the number of customers using the option of standing orders, network customers who have several stores, restaurants or outlets, and thanks to changes in the mobile application.

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Today the Mobile ATM project is celebrating its second birthday. The first app –ordered car that offers a safer alternative to traditional nigh-time cash deposits at a local banking branch, took to the streets of Warsaw on 13 April 2015. From that moment on, Idea Bank has steadily increased its fleet of Mobile ATMs. It now comprises 19 vehicles, and will be increased by a further 18 this half-year. The cash pickup service is now available in 14 cities.

6,340 transactions in March In March of this year, for the first time ever, the total amount cashed in Mobile ATMs exceeded PLN 50 million. Customers deposited a total of PLN 51.5 million (€12,1m), an increase of 418% over 2016 and 38% more than in February.

There were 6,340 transactions, almost four times more than in March 2016.

The mobile app is the only way to order a Mobile

ATM. It enables users to place one-off orders or call for a car in advance, setting the day and time.

According to the web portal cashless.pl, there are 6,295 cash deposit ATMs in Poland. Whereas NBP /National Bank of Poland/ data suggest an average monthly amount deposited per device of PLN 792,000 (€ 187,000). In contrast, one Mobile ATM collects an average of PLN 2.7 million (€637,000)

MAY 2017

INNOVATIONS

One Mobile ATM collects an average of PLN 2.7 million (€637,000) per month, making it 242% more effective than the average stationary device. per month, making it 242% more effective than the average stationary device.

Customers deposit an average of PLN 7,800 (€1840) to Mobile ATMs. In comparison, the average amount deposited by an Idea Bank customer to stationary cash deposit ATMs in the Euronet network is PLN 2,170 (€512). Yet by far the largest deposits are made by customers using the Mobile Drop Box. This is a recent innovation by Idea Bank, and at the moment is only available in Warsaw. Currently, the average total deposited to a Mobile Drop Box is PLN 69,140 (€16,300) and is growing quickly.

High account balances The authors of this innovative service are delighted that only one out of five Mobile ATM transac-

tions involves an amount less than 1,000 zlotys (€236). These data confirm that it is paying off for Idea Bank to have and expand its network of mobile devices. This is also confirmed by the fact that Mobile ATM customers have account balances more than 3 times higher than other customers (for the bank, the most effective source of financing credit campaigns).

A survey conducted by Idea Bank shows that 32% of microbusinesses settle only in cash, while the other 68% mix cash and cashless transactions. The free service for Idea Bank customers arose with just such business owners in mind, so that they could deposit revenue safely, conveniently and quickly.

Idea Bank has cars converted for the purpose of carrying cash by Germaz, while the ATM devices themselves are installed by Wincor NiXdorf. The drop boxes were designed by Globe. 18 cash deposit ATMs operate within the Euronet network, and one vehicle – a BMW i3 – is in direct communication with the bank. The application for ordering a car was created by iTaxi.

Listed on the Warsaw Stock Exchange (WSE:IDA), Idea Bank supports Poland’s dynamic entrepreneurial culture by offering its clients a 360-degree assistance on all stages of business development: from the registration of a new company with the authorities, to bookkeeping, and financial advisory in the first phases of growth.

The Mobile ATM has received a number of prestigious awards in domestic and foreign competitions. In 2015, at the BAI Finacle Global Banking Innovation Awards the idea was recognised as the biggest innovation in the world in the field of payments, and at the Efma Accenture Distribution & Marketing Innovation Awards it was named the biggest innovation breakthrough.

Source: https://www.ideabank.pl/

SMALL BUSINESS BANKING MAGAZINE

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INTERVIEW

HOW TO MAKE BANKING

CONVENIENT TO ENTREPRENEURS

Tochka.com is digital-only bank for entrepreneurs in Russia (backed

by Otkrytie Group banking license). Tochka has around 40 thousand business accounts and over 80 thousand personal accounts (employees and directors). Launched in February 2015 as the first online bank for entrepreneurs in Russia. Headquartered in Yekaterinburg. after the closing of that project, you created Tochka, and you are staying in banking system till now, but you do not consider yourself as a Banker. Tell us who you are?

Firstly I worked for Severnaya Kazna Bank, where we actually created one of the first internet banking solutions in Russia. And in four years Bank24 started. Well, I’m just a human being. I know people who dreamed to be bankers, I never did so. Long time ago I just wanted to get IT job somewhere in the area of websites or system administration, but I was always fascinated by technology and I was always fascinated by the way it can change people’s lives and experience and just starting to work in a bank I’ve seen how outdated a lot of stuff is, how painful it is and seen then I’ve been trying to play inside the bank but on the client’s side of the things.

Today we speak to Boris Dyakonov, CEO at Tochka Bank.

Boris, in all your interviews, I’ve read and seen, you say that you are not a Banker.

If to say your biography in short to our listeners – you studied at Philosophy Faculty in Ekaterinburg, then you worked as a pastor, right? Then you studied in the USA, and after that, you came back and got a job in Bank24.ru as an IT specialist, as a programmer and stayed in that Bank till getting the Executive position in it. And

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We know that your motto which you always say and evangelize is that your mission and task is to make the world convenient to entrepreneurs. How exactly are you doing it in Tochka?

I think it’s all about the team; it’s all about the way we work together as a team. We just think about our clients, and we try to come up with a solution that they would love. That’s pretty much how it works.

You are digital-only bank in Russia, so with no branches at all. How this concept generally is perceived in Russia? As we see that digital services are the expectations of millennials rather than older age en-

The QR code leads to SME Banking Club on the SoundCloud-online.

Simply scan the code and listen to the podcast.

trepreneurs? Is it difficult to persuade customers to open an account with you?

Maybe three or four years ago that was something we haven’t dreamed of, but now we see that all people use a taxi from a company that doesn’t own any taxi, we talk about Uber or Yandex Taxi for that matter. So, I think market expectations have shifted, and people are more often consuming digital products, digital stuff. So, it’s not an issue anymore since Tochka works inside Otkrytie Group, which is the largest financial privately owned banking group in Russia, so in that sense, we don’t have an issue saying, “We are big, we are reliable, etc.”, we just moved on with the understanding that “Hey, it’s inside the large financial corporation,” but it’s just a digital service, a digital bank that does a very nice layer of banking experience to the clients, so we are in a very beneficial position in that.

What is the average profile of your entrepreneur? How does he look like? How old is he, working in which segment?

Our core customers are digitally minded entrepreneurs, mid-aged, both men and women, who just want to do their business, don’t want to mass round with papers and banking stuff, that’s the core, that what we have in the heart of client’s proposition. Then we have students, we have all the folks, we even have large corporations who bank with us, and that’s OK. Is entrepreneurship a skill that you are born with, or it can be taught?

I think even if somebody was born as an enMAY 2017

INNOVATIONS

trepreneur they have to learn their lessons and I think everybody can create stuff, but it does take some learning and some luck at the end of the day. So it’s a mystery.

Do you consider yourself an entrepreneur?

Sometimes I do, sometimes I don’t. It depends on how much coffee I had in the morning.  In your opinion, how entrepreneurial do you think Russia is?

Russia and the whole post-soviet area they were very entrepreneurial and the proof I have for that – even in the times when entrepreneurship was illegal and it was outside of the boundaries of the law people was still doing small stuff, were still looking for ways to earn money, to create stuff, even if it was making vodka at home. So, I think all the nations, and Russians included, covered under Soviet regime were very entrepreneurial.

For which part of your customer base you are the only bank. I mean that they don’t have any banking products with another bank?

From our latest research around 70% of the customers bank only with us, which is a higher percentage than the average on the market.

Whom do you consider as the main competitor in Russian market?

Well, on the one hand, we’ve educated a bunch of competitors on the market that come from all over the place. But the way I like to think about it is that for all Russian banks Sberbank is the major competitor, and then there is another way to think about it is that our true competitor is inside our head and it’s about our limitations, and our believes, and our capacity – just doing my job and do stuff, at least that’s what I’m competing with. That makes sense.

You are constantly on top of different ratings in Russia and not only – as the most convenient bank, as the best online bank and mobile app, the best salary project.

This March you’ve launched P2P payments SMALL BUSINESS BANKING MAGAZINE

for entrepreneurs. Which service do you consider as the best one in Tochka?

Well, I don’t think there is one single better service that we can say “Hey, it’s the best,” it’s combination of them, it’s like asking what is the best icon on your Android or iPhone. It’s the way the whole thing works together, and at the end of the day, it’s all about the experience that we can share with our customers. So, it’s all of them that you named and beyond. It’s the way the whole thing is put together, and our value is taking old stuff out and rethinking some stuff in bundling all of the functions closer together, and I think the way to look at that as the least of functions is not entirely helpful.

I just have to ask you about a holacracy system you have adopted in your office.

In general, holacracy means a structure of self-organized teams rather than being vested in a management hierarchy. Tell us what is it all about in Tochka exactly?

If it’s playing by the book, if it’s holacracy, it’s about giving power to the circles, that’s what exactly it means: hola – circle, cracy – power, so it’s giving power to the circles. For us it’s a way to continue to be agile, continue to be flexible and continue to innovate without a dictatorship, and to scale while staying human and being very transparent to the people we work together with.

What is being transparent to your employees?

One of the part and one of the ways holocracy plays is that all decision-making is very transparent, so it’s just very clear rules of the game.

How many people counts your team and where is it located?

Our Head Office is in Yekaterinburg but we located all over Russia, and we are more than 800 now because of explosive growth we’re experiencing. So, we have offices and people working on behalf of Tochka all over the place.

What are plans for this year? What are your targets?

We have hundreds of them, there are product related targets, we think about several innovative products on the market, and we plan to grow till the end of 2017 heading 70000 walkin clients, that’s almost triple our sales by the end of the year. But we also have targets that

are very hard to measure, but we are still after creating the best experience possible for those who changed the world better for us.

What is your job and your role as a CEO to make these targets done?

Currently I try to delegate as much as possible, and the way I look at it is if there is a way that I could work not at Tochka but on Tochka, how can I be useful to move a company forward cause every company will stay where it is if just everybody keeps doing what they are doing, and the question what I have is I what extra stuff that can change the future I can be helpful with.

So, it’s mainly about talking to key people and writing several emails, that type of stuff.

Do you find Tochka a successful project?

What is success for you?

I don’t know what is the success for me because there are a lot of criteria for that. But I’m very keen that customers would be happy with that and our NPS of 72.5% I think is highly indicative of that. And we’re also on to our shareholders’ satisfaction, and they seem to be satisfied since Tochka is a profitable project from the middle of the past year, so that’s pretty much where we are.

So Tochka is a profitable project?

It is profitable for more than 9 months now. And we have enough profits to provide our growth.

Boris, where do you personally see an inspiration and ideas how to do a better job.

Maybe some country do you see as an example or maybe some particular banks and their models are inspiring you?

Well, sometimes a couple of coffee or tea can inspire, sometimes sitting and looking at the way Istanbul is full of entrepreneurial energy, so I think inspiration can come from everywhere.

I get a lot of inspiration from talking with our partner, co-founder of Knopka, with whom we transformed Bank24 and restarted Tochka – Eduard Panteleev, he was at one of your conferences, so I find that highly inspiring and we do some things together.

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BEST PRACTICE

5 MOBILE BANKING

APPS FOR SME CUSTOMERS

THAT CAN INSPIRE YOU!

With SME customers completing more and more transactions on their mobile phones, and not at bank branches, every day, the quality of mobile banking apps is a critical point that can differentiate banks in their competition to retain existing clients and attract new ones. Here is a random list of dedicated mobile banking apps created specifically for SME customers with the objective of providing them with a cutting-edge tool for their financial needs.

DBS BUSINESSCLASSY – A MOBILE BANKING APP FOR SMES BY DBS BANK (SINGAPORE) This is a mobile app for small and medium-sized enterprises that allows them to connect directly with a network of industry experts, venture capitalists, entrepreneurs and DBS SME specialists. It also allows them to view topics, events and articles that have been specially curated based on the customer’s location.

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MOBILE BANKING APP FOR SMES FROM COMMBANK – SMALL BUSINESS APP This banking app, combined with a mobile payments and invoicing app, accepts all payment methods, creates paperless invoices and tracks payments on the go.

CommBank’s Small Business uses Bluetooth to pair with Emmy (a compact payment terminal), turning a smartphone or tablet into a payment tool.

NAB NOW – A MOBILE BANKING APP FOR SMES FROM AUSTRALIAN NAB NAB Now allows users to accept credit and debit card payments from customers anywhere, anytime, using an app on their smartphone and a Bluetooth card reader.

UOB BUSINESS APP The UOB Business app

by United Overseas Bank Limited (Singapore) is aimed at providing SMEs with a single access point for all their business and banking needs consolidated into one app.

FETCH MOBILE PAYMENTS – KIWIBANK BUSINESS BANKING Fetch payment solutions from Kiwi Bank (New Zealand) help businesses get paid faster. Fetch mobile payments lets a customer get paid on the go using a smartphone or tablet.

INNOVATIONS

MARKETINVOICE, A P2P PLATFORM

PROVIDING INVOICE FINANCING FOR SMES INNOVATION DESCRIPTION MarketInvoice is a VC-backed peer-to-peer fintech platform. Its funds are provided by investors from around the globe, including the UK Government-owned British Business Bank. The platform uses a peer-to-peer approach to provide day-today operational financing for small companies as varied as mobile development agencies, food SMALL BUSINESS BANKING MAGAZINE

brands and care homes. It’s the largest start-up in this space worldwide. It is currently lending over £30 million/month to small businesses and is on track to double (according to plans) that amount within the next year.

Watch an interview with Anil Stocker, CEO & founder of MarketInvoice, at the Silicon Real Show, discussing how they do invoice financing.

Innovation Details Organization: MarketInvoice Country: UK https://www.marketinvoice.com/ Reasoning To provide small businesses with fast working capital financing solutions in a flexible and transparent environment.

Unique value proposition Providing small businesses with fast cash by financing invoices and thus letting small companies run their everyday business.

Implementation • Process steps and timeline: n/a • Current status and progress: Launched in 2010 Investments • Overaall: n/a • Marketing & PR: n/a • IT & Ops.: n/a Results Already lending over £30 million/month to small businesses and on track to double that within the next year.

31

INTERVIEW

INTERVIEW:

ELINA RÄSÄNEN, HOLVI Elina Räsänen, Head of Marketing & Communications at Holvi – Bank for Makers and Doers as they say

You launched in 2011. How do you feel in 2017 after six years of activity?

We feel great, it’s been an incredible journey for Holvi. We started out in 2011 and got our Payment Institution Licence from the Finnish Financial Authority in 2014. That was a big milestone for us, as it was the stepping stone for crossborder servicing and opening new markets for Holvi in Europe. The second big milestone was in 2016 when we were acquired by BBVA and nowadays continue to grow Holvi from our HQ in Helsinki.

Are you a fintech company or a bank? I remember from one of Conference speeches of your team three years ago that Holvi worked under other banking partner’s license, so you didn’t have yours. Technically that means that you have a right to open current accounts, to hold customer’s money, to make payments but compared to banking license all customer’s funds are on the balance sheet of banking partners and your main Banking partner is Nordea. Has something changed or you keep going this way?

We’re a fintech company. Nordea is or never was our banking partner. We are independently regulated.

Even after the acquisition, we continue to operate independently using both the infrastructure we have built from the ground up on our own and the payment institution licence we have. We’ve never had a banking partner and have never used anyone else’s licence. That’s what makes Holvi unique – having both the regulation and infrastructure in place independently. Acquisition by BBVA won’t change that, we have no integration plans at all. We use a number of credit institutions as our partners in the background but we don’t have a single banking partner.

What are your customers? Makers and Doers – who are they? Whom do you target?

Our customers are entrepreneurs and micro-busi-

32

nesses in Europe. We call them Makers and Doers – our customer segments include freelancers, contractors, and small business owners. Examples could be designers, consultants, wellbeing entrepreneurs, online merchants and e-commerce businesses.

At what markets do you work? You started from your home Finland. What is your market share there? And in which EU countries do you work now?

Our licence covers the whole EEA, at the moment we are open for customers in Germany, Finland and Austria.

How do you feel/estimate competition in these markets for SME customers? Whom do you consider as your main competitors?

Holvi offers a wide solution for money management for micro-businesses. We offer the core banking relationship, and we’ve integrated to the current accounts paperless bookkeeping, webshop and invoicing. It’s a simple tool for small business owners to collect money (through an online shop, invoice, and bank transfers), spend (through our Holvi BusiMAY 2017

INTERVIEW

ness Mastercard) and manage (through financial reports. Needless to say that it’s a wide horizontal product that not many other companies are able to provide to their customers. Our competitors would be those targeting the entrepreneurs and small business owners with some aspect of their money management flow.

How many customers do you have?

What is the dynamics of customers’ acquisition?

As we are part of BBVA nowadays, we are not reporting independently our internal metrics. Our primary channel for customer acquisition is digital – through inbound marketing, growing organic reach and through advertisement.

Your customers – are they new opened businesses that are just starting an opening their first current account with you? Or these are acting companies, and a current account with Holvi is not the first/ the only account for them? Do you want to be a primary choice for the entrepreneur to open a current account with? Or you position yourself more as a payment acceptance service which is easy integrated into online stores, for example, like PayPal? We have both – so Holvi can be used for starting, running and growing your business. We acquire both new entrepreneurs and also those who want to change their SMALL BUSINESS BANKING MAGAZINE

traditional bank to something more digital and less costly. We offer an easy solution for entrepreneurs to manage their finances with us. We see ourselves more as a toolkit for entrepreneurs – they can choose which part of the product they want to use, or they can use it all. Of course the best benefits they get out of the product by concentrating all their financial management to Holvi. Thus they can get up to date bookkeeping reports with e.g. VAT calculated in real time.

You have several products in your off they are Holvi business account, Holvi business Mastercard, Invoicing & Online Store apps. What is the penetration rate of each product?

We don’t reveal any internal metrics to public.

What is your core team? What is your background?

Our founders and many of the Holvi employees are former freelancers and small business owners themselves. Still today a number of our employees are also parttime entrepreneurs. We started Holvi from the point of view that we had problems in our business financial management and we want it to solve those. For product innovation, it’s crucial that we understand the every day life of an entrepreneur in order to be able to create elegant and simple solutions to manage their finances so that they can focus on their core business.

How does Company’s structure look?

How many employees do you have?

What is the structure within departments/teams? What is the geographic location of the team?

We have around 45+ people at the moment. Our teams are divided into Product and Design, Marketing & Communications, Support & Engagement and Technology and infrastructure. Teams are quite equally sized, most of our team is in Helsinki. We have a small sales & marketing team in Berlin and a couple of people in Madrid.

What is your business model? How do you earn? So if you don’t have a banking license, it means you can’t do assets-liabilities activities, isn’t it? In that case, your income is purely commission fees from the payments or monthly fees?

Subscription and payments What is the primary challenge for you at that moment?

One challenge for any tech company is recruitment – we are looking for experienced technology experts, and sometimes it takes time to find the right candidates.

What are your plans for 2017? New products? New markets?

New products and a new market. Stay tuned!

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BEST PRACTICE

OMNICHANNEL PARADIGM

IN COMMUNICATIONS AND MARKETING Once a buzzword, ‘omnichannel’ is now at the forefront of all marketers’ minds looking to improve user communication and engagement. However, despite omnichannel gaining traction for a while, and its benefits being well proven amongst those that seek to orchestrate user journeys across platforms and devices, it’s typically not been easy to implement for businesses.

Boris Pogacnik, Infobip

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THE OMNI-LANDSCAPE According to a study by the Aberdeen Group, companies with strong omnichannel strategies retain an average of 89% of their customers and see an average 9.5% year-on-year increase in annual revenue. Approached correctly, omnichannel offers increased brand visibility, more routes for interaction with new and existing customers, and much-improved customer satisfaction.

Consumer demand has been the major driving force behind the growth of omnichannel. In the age of the smartphone, where users have access to a wealth of devices, the birth of the ‘want it now’ consumer has left companies trying to adapt to a generation of users that expect easy interaction across multiple channel-based on what’s easiest for them. This could be anything from SMS, an OTT application, or something else entirely. This

expectation means it’s now essential for brands to put a platform in place that delivers seamless communication and interactions in the way users want, when they want, and how they want, in order to stay ahead of the competition.

AN OMNI-CHALLENGE Whilst there is a clear advantage to taking an omnichannel approach, actually introducing this concept isn’t without its own challenges. A common struggle for businesses starts with initial implementation using their own existing IT infrastructure, which requires significant time and resources to get right. On top of this, stitching together separate solutions beyond SMS and email – be it push notifications, chat apps, or even voice – is neither practical nor cost effective.

MAY 2017

MARKETING

Once a roll out of omnichannel does occur, other issues arise including; how do you achieve transparency between each tool, and how do you achieve easy reporting and analysis on each channel? If a business is solely focusing its efforts on the actual set up of a system and are unable to see the full picture, they run the risk of ignoring, and thereby potentially losing, the most important factor of all – the customer.

NEW OMNICHANNEL MODEL ON THE BLOCK Many businesses came to believe it’s vital to have a centralised platform in place, one that

CLIENTS

CONNECTION

is able to join up all popular communications platforms and provide flexible communication, through a single integrated hub.

One way of achieving this is through the Communications-Platform-as-a-Ser vice (CPaaS) model, designed to overcome these challenges businesses face when looking to roll out omnichannel and offers an array of benefits to businesses. Being able to monitor, analyse and report on customer engagement is as important having a functioning and professional omnichannel messaging platform in place. If you don’t know, when, where and how individual customers prefer to be engaged, you are at risk of missing out on potential avenues for marketing and other business functions such as promotional messages or push notifications.

Nowadays, new messaging services are regularly launched in line with the continual change in consumer demand. The CPaaS model can provide quick support for new platforms that are introduced – allowing highly efficient roll out of new solutions into a system, helping to meet consumer demand.

Furthermore, one of the other major challenges associated with managing multiple

communication platforms is trying to deal with the potentially huge volume of customer messages. These can run into tens of millions on a daily basis for major brands and international businesses. Only the well-established platforms, with a reputation for handling large amounts of traffic that already have the infrastructure, messaging framework and an extensive network in place, can ensure messages will be delivered all over the globe.

OMNICHANNEL AND BEYOND Many brands and businesses are quick to talk about the benefits of adopting an omnichannel marketing approach. However, the wealth of communication channels now available can often pose a double-edged sword, and businesses can struggle to deploy a platform that is up to consumer expectations. As a result, the need for an integrated messaging platform, that manages all popular communication tools, including implementation, maintenance and management, has never been greater. By adopting the CPaaS model for their omnichannel needs, companies can truly make this a reality and drive their consumer engagement to new heigts.

OPERATORS

INFOBIP

USERS

SMS

MULTI-CHANNEL HIGH AVAILABILITY GEOREDUNDANCY SCALABLITY & SECURITY 24/7 SUPPORT ANTI SPAM

SMALL BUSINESS BANKING MAGAZINE

OMNI CHANNEL

VOICE

OTT

PUSH

MAIL

35

INTERVIEW

NEW MODELS IN SME FINANCE

BEST PRACTICE FROM SPOTCAP Bruce Brenkus, Chief Risk Officer at Spotcap

The QR code leads to SME Banking Club on the SoundCloud-online.

Simply scan the code and listen to the podcast.

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 medium-sized 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.

How do you manage delinquencies inloan 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 en-

36

hance 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 realtime business performance rather than relying solely on credit history which may be of minimal information.

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.

MAY 2017

MARKETING INTERVIEW

NORDEA – STRENGTHENED FOCUS ON SMES 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, Haead of Business Banking, Deputy Head of Banking, Nordea (Sweden)

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. The page to sign up https://prod.dwa.nordea.se/coopublic/corporate-onboarding#/ login-form. 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.

SMALL BUSINESS BANKING MAGAZINE

37

INTERVIEW

HOW TO BE SUCCESSFUL ON A LOCAL MARKET.

BEST PRACTICE FROM

LABORAL KUTXA

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.

Oscar Muguerza,

Head of Business Banking at Laboral Kutxa

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 start-ups 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”.

SEB’S OFFER

FOR SME SEGMENT

I am representing SEB Bank. It is a Scandinavian bank with the headquarter in Stockholm.

The group serves 140 thousand SME customers and 1.8 million private customers in Baltic region.

Our purpose on the SME market is to be much close to entrepreneurs and their minds, and the companies with innovative intentions in order to really support their aspirations and their growth ambitions.

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I will tell you how we developed an offer for SME segment.

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 organization was pretty low. We were not very proactive, especially when it MAY 2017

INTERVIEW

Andra Altoa, Head of Segments at SEB Baltic

came to small and medium size businesses recently suffered from economic downturn. Then in 2011 we really made our mind and decided to turn our face towards our customers again.

So we introduced the Advisory Campaign. We rented ten Smart cars. The intention of using Smart cars was to show visually and communicate single clear message – we really wanted to give our customers smart advice, and we decided to be cost efficient ourselves using tiny economical cars.

We went with these cars very close to the rural, to the smallest customers to show that we are aiming to support a local business. At that time the common stereotype was that SME’s would typically expect to meet a banker in the bank’s office. So, running the campaign, our own employees needed to leave the comfort zone and visit small companies at their sites, which definitely helped us to get more insights on how everyday life in those companies look like.

Within Advisory campaign, we visited vast amount of customers in a short period. Extensive PR work was done. Our senior level managers were asked to join the visits to our smallest customers and they supported our efforts during the campaign.

During those visits, our client executives conducted the survey and asked customers five questions. It was about: 1. their growth ambitions, 2. the export markets ambitions, if they plan to enter to the next markets, 3. if they plan to increase the number ofemployees, 4. what they take as a next innovation step, 5. sort of investments they are planning for next year.

So they gave the answers related to the next year.

As a result we found out the fact that our customers were not aware of innovation topics. Items related to incremental product innovations were easier to connect with, but the business model innovation as almost a separate discipline or new skills of employees, new ways of working or in-house innovation – this was really the field without strong expertise. Concluding the survey, we understood how the companies focused on growth and export while operating in extremely small Baltic markets, and importance of export as almost only option for growth. As an example, Estonian export is 80% of GDP. So export-driven growth was already recognized quite a lot, but the companies were lagging behind in understanding how to add value to their products and services using innovation techniques. We took the innovation focus and we started to talk about innovations.

We decided that we could improve the situation and we launched Innovation Lab for our customers, running the events in Tallinn, Vilnius, and Riga.

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.

SMALL BUSINESS BANKING MAGAZINE

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BEST PRACTICE

SME BUSINESS SOLUTIONS CASE STUDY: TBC BANK’S NON-FINANCIAL SERVICES STRENGTHEN GEORGIAN SME CLIENTS

TBC Bank, Georgia In partnership with

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MAY 2017

MARKETING

Project Lead Says: TBC Bank provides an excellent example of how financial institutions can effectively embrace the untapped potential of SMEs by helping existing and prospective clients develop their business and financial skills. TBC Bank’s experience led to a chain reaction: new clientele started onboarding very shortly after the bank offered NFS. This translates into a growing SME portfolio, increased sales of SME products/services, lower NPLs, better results and satisfied customers choosing TBC as their partner bank.

GARTH BEDFORD, Banking Advisory Services Lead, Central Asia and Eastern Europe, IFC

Results TBC Bank’s focus on small and medium-sized businesses, through its NFS approach, has been a considerable success. Since the launch of the Business Support Program in 2013, the Program has helped position it in the market as the partner of choice for that customer segment.

Strategic differentiation from competitors

#1 50%

of newly registered businesses become TBC Bank’s clients.

57%

increase in the number of SME clients (from 42,000 in 2013 to 67,000 in 2015)

Portfolio growth

37%

annual growth in the SME portfolio since 2013

Increased client loyalty

59%

Net Promoters Score (NPS)

Better client acquisition

Partner Says: The innovative NFS package truly complemented the TBC Bank’s new MSME strategy and helped us stand out in a very competitive and well-developed financial market. As a result of supporting our client MSMEs through NFS, TBC Bank is now perceived as a partner bank for micro, small and medium size businesses.

TAMAR ZHIZHILASHVILI Deputy Director, Business Banking

partner bank for businesses

Strengthening client performance and profitability

2%

non-performing SME loans remain low despite political and financial turmoil

Beneficiary Says: Those who have made investments into small family businesses often are unable to get business advice from highly qualified specialists. It’s the same with me. Being self-educated and new to the business environment, I am trying hard to learn and develop professional business skills. To do so, I could never imagine any better partner than www.tbcbusiness.ge.

MARIAM GENGASHVILI Entrepreneur and Founder of Silver Hotel

The success of the NFS program and IFC’s skills development offerings for SMEs in Georgia were recognized by the International Business Brilliance Award under the category, The Best New Product Launched in 2014.

Benefits for the Bank 1. Market leadership: By deploying non-financial services, TBC Bank brought its service for MSME clients to a new level, where the bank is providing a combination of financial support and business advice.

2. Maximum reach to clients: A suite of complementary NFS offerings maximized the reach of TBC Bank to its clients through new delivery channels.

3. Better performance of SME clients: The business performance of SME clients can be enhanced by offering complementary non-financial services that strengthen SME business skills.

4. Sustainable customer base: NFS also enhances SME client satisfaction and loyalty, providing a stronger, more stable customer base despite local and global political and financial turmoil.

5. Global expertize to local clients: Partnerships with international development institutions, such as IFC, ADB, or PUM, help local banks bring global experience to local clients.

IFC EMENA Banking Advisory Services IFC SME and Value Chain Solutions Olena Prokopovych, EMENA Non-Financial Services Lead oprokopovych1@ifc.org ifc.org SMALL BUSINESS BANKING MAGAZINE

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LAST DESTINATION

MENA SME BANKING CONFERENCE

T he SME Banking Club, together with its local partner, Big Time International Company (Egypt), organized the MENA SME Banking Conference, which took place on8 December 2016 at the Hotel Sofitel Cairo El Gezirah and gathered 100 SME and business bankers, financial regulators and government officials from offices related to SMEs, NGOs and financial non-banking institutions.

T

he purpose of the conference was to exchange best practices and successful banking strategies; to see banking and non-banking financial institutions as making an integrated commercial offer to SMEs rather than as competitors; and to promote awareness of financial tools such as leasing, factoring and insurance among SME clients and the SME community.

The conference was supported by its general sponsor, –Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, and its bronze sponsor, Elsewedy Electric. The strategic partners for the conference were the Egyptian Banking Institute and the Federation of Egyptian Banks.

Hayder Al-Bagdadi, Head of GIZ’s MFMR and PAFSME projects, representing one of the conference’s partners, introduced the event and presented GIZ’s projects.

Representatives of the Central Bank of Egypt, the Egyptian Banking Institute and the Federation of Egyptian Banks participated in a discussion about the development of banking for SMEs. Nermine El Tahri, General Manager of the Banking Reform Division at the Central Bank of Egypt (CBE), talked about the CBE’s vision and strategy for SME banking in Egypt. In December 2015, the CBE introduced a definition of the SME segment of the market and introduced a requirement that commercial banks establish a specialized SME department at each bank and that 20 percent of its total loan

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portfolio be dedicated to SMEs within four years. In January 2016, the CBE launched a program to provide some 350,000 SMEs with EGP 200 billion in financing over the next four years at an annual interest rate of 5 percent.

Mohamed Refaat, Managing Director at IScore, the first credit bureau established in Egypt, talked about challenges facing the SME segment and their solutions to those problems. He also clarified the size of the current SME market, as well as market trends.

Ola El Khawaga, Director of the Research and Awareness Department at the Egyptian Banking Institute (EBI), presented the EBI’s input into developing SME banking. In 2009, the EBI established its SME Unit, which offers a wide range of capacity-building services for SME units at any bank and raises awareness among entrepreneurs about access to finance.

MAY 2017

EVENTS

Mohamed Antably, Head of the SME Banking and Microfinance Division at QNB AA Bank, talked about building the bank’s SME banking strategy and the importance of the SME segment.a Participants exchanged their international and regional experience during the second session.

Andrey Gidulyan, CEO of the SME Banking Club, made a presentation about global trends and case studies on innovations in SME banking. You can find the full presentation here.

Yuriy Voychak, CEO at a SME finance com-

SMALL BUSINESS BANKING MAGAZINE

pany from Ukraine, shared his experience in building SME lending projects in China as a case study on foreign markets.

Reem El Saady, Principal Manager of the ASB SME Finance and Development Group at the European Bank for Reconstruction and Development (EBRD), presented EBRD programs for SME support in Egypt.

Mohamed Amiri, Head of Business Development at SAIbank, talked about financial leasing facilities as an alternative financing mechanism for SMEs. Bassam Azab, Business Risk Services from UAE, shared his view on factoring transactions in the Middle East region and why and how factoring works for SMEs. During the last session, the speakers shared their views on the development of nonbanking financial services and on how development can continue.

Shaninaz Rashad, Executive Director at the Egyptian Financial Supervisory Authority (EFSA), discussed the EFSA’s regulations supporting SMEs. The EFSA regulates and supervises non-banking financial services in Egypt, namely leasing, factoring, insurance, capital markets and microfinance. In Egypt, there are currently 22 active market players in the financial leasing market, seven in factoring and 32 in life and non-life insurance.

Finally, it was also important to hear the

voices of SME customers. Daker Abdella, board member at the Egyptian Union for Construction Contractors, and Alaa El Sakty, Chairman of the Association of SME Investors, represented customers at the conference, identifying their needs by priority, including what their needs are in terms of banking.

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a federal enterprise that supports the German Government in achieving its objectives in the field of international cooperation for sustainable development by engaging in international education work around the globe. Among other activities, GIZ helps promote access to financial services for SMEs and raises awareness of banking and financial tools such as leasing, factoring and insurance for SME clients and the SME community.

Elsewedy Electric is a well-established group with extensive holdings, both domestically and beyond Egypt’s borders in several other Middle Eastern and African countries, as well as in Europe and Asia. Elsewedy Electric’s goal is to provide customers with a one-stop solution in terms of designing, engineering, procurement and construction.

The strategic partners of the conference were the Egyptian Banking Institute and the Federation of Egyptian Banks.

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NEXT DESTINATION

10 PLACES TO VISIT IN KRAKOW The #CEE17 SME Banking Conference for the Central and Eastern Europe region will take place in Krakow, the main city in the Małopolska Voivodeship, on November 23-24, 2017. If you decide to stay for the weekend following the conference, here are 10 places that we recommend to visit:

WAWEL CASTLE

The residence of Polish Kings from the middle of the 11th century until the end of the 16th century. The first Polish King crowned at Wawel Cathedral was Władysław the Short (1306-1333) on January 20, 1319, beginning a tradition that would see a further 35 royal rulers crowned there. All of these rulers used the Castle as a residence, and all of them added their own architectural details to the build-

ing. The relocation of the capital to Warsaw in 1596 and Poland’s subsequent decline and partitioning saw the Royal Castle fall into a state of disrepair.

After Poland lost its independence in 1796, the Austrians took over the Castle and turned it into military quarters. During the German occupation in World War II, the Castle was used as the headquarters of the Nazi Governor-General, Hans Frank.

KRAKUS MOUND (KOPIEC KRAKUSA) The Krakus Mound is a tumulus located in the Podgórze District of Krakow that is thought to be the resting place of

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Today’s Castle complex is a beguiling muddle of styles, including Medieval, Romanesque, Renaissance, Gothic and Baroque. The inner courtyard, with its delightful colonnades, is a true architectural masterpiece.

LEONARDO DA VINCI’S LADY WITH AN ERMINE One of Leonardo’s undisputed masterpieces, his portrait of the beloved mistress of Ludovico Sforza, “Il Moro,” Duke of Milan, will be on display at the Wawel Royal Castle through May 7, after which it will be moved to the main building of the National Museum. http://www.wawel.krakow.pl

Krakow’s mythical founder, the legendary King Krakus. It is located on Lasota Hill, approximately 3 kilometers south of Krakow’s city center at an altitude of 271 meters, with a base diameter of 60 meters and a height of 16 meters. Together with nearby Wanda Mound, it is one of Krakow’s two prehistoric mounds and the oldest manmade structure in Krakow. Nearby, there are also two other non-prehistoric manmade mounds, Kościuszko Mound, constructed in 1823, and Piłsudski’s Mound, completed in 1937. Together, they make up Krakow’s four memorial mounds.

MAIN SQUARE

Krakow’s main market square (Rynek) is the natural starting and finishing point for any tour of the city. Originally designed in 1257, the Rynek ranks as one of the largest medieval squares in Europe, and is surrounded by elegant townhouses, all with their own unique names, histories and curiosities.

Through the centuries, Krakow’s Rynek was where allegiance was sworn to the king and public executions were carried out.

Taking center stage is the Cloth Hall (Sukiennice).

Built in the 14th century, this huge hall was effectively the first shopping mall in the world. To this day, it is still crammed with merchant stalls selling amber, lace, woodwork and assorted tourist items.

In 2010, RYNEK UNDERGROUND , a 4,000 m2, hitech museum tracing the history of the Cloth Hall, and that of the entire city, opened underneath it. http://www.mhk.pl/branches/rynek-underground On the second floor, the Cloth Hall hosts the 19TH CENTURY POLISH ART GALLERY http://mnk.pl/branch/gallery-of-the-19th-centurypolish-art-the-sukiennice-the-cloth-hall

MAY 2017

EVENTS

The district south of the Old Town between the Vistula River and ul. Dietla was the center of Jewish life in Krakow for over 500 years, before it was systematically destroyed during World War II. Now it’s Krakow’s most exciting district, a bustling, bohemian neighborhood packed with historical sites, atmospheric cafes and art galleries.

FLORIAŃSKA GATE Completed in 1307, the Floriańska Gate is one of the few surviving parts of the ancient defense walls that once circled the Old Town. Topped with a Baroque roof that was added in 1657, the gate stands 34.5 meters high and was the city’s main entrance in medieval times. The original starting point for what was dubbed the Royal Road, it was through this gate that visiting kings, queens and nobility would enter the city on their way to Wawel.

KAZIMIERZ Founded in 1364 by Casimir III the Great, Jagiellonian University is the oldest university in Poland, the second-oldest university in Central Europe and one of the oldest surviving universities in the world. Notable alumni include mathematician and astronomer Nicolaus Copernicus, Polish King John III Sobieski, Pope John Paul II and Nobel laureates Ivo Andrić and Wisława Szymborska.

Jagiellonian University is made up of several campuses and academies all over Krakow, but the main points of interest for tourists are all clustered around ul. Św. Anny and ul. Jagiellońska, just minutes from the Market Square. Collegium Maius, the university’s oldest building and home to its museum, shouldn’t be missed. Adjacent is the picturesque Professors’ Garden, and around the corner you’ll find the beautiful Collegium Novum, beside which stands a monument to Copernicus. http://www.maius.uj.edu.pl/

SCHINDLER’S FACTORY (FABRYKA SCHINDLERA) The story of Oskar Schindler and his employees was popularized by Steven Spielberg’s 1993 film Schindler’s List (which was shot almost entirely in Krakow), and while that story is covered in detail at the original site where many events took place, the museum actually casts the city of Krakow in the starring role in its permanent exhibition titled, “Kraków During Nazi Occupation 19391945.” http://www.mhk.pl/oddzialy/fabryka-schindlera SMALL BUSINESS BANKING MAGAZINE

JAGIELLONIAN UNIVERSITY 45

#CEE17

CEE17 Central and Eastern Europe Krakow, Poland

A Conference will focus on some hot topics: • Digital-only SME Banking: online onboarding and online lending to SMEs • Factoring and leasing finance - becoming a main source of assets an invoice finance to SMEs • New relationship models: partnering customer with less banking: non-financial services banks are implementing to help their SME customers to scale up and breakthrough • How to achieve successful partnerships between banks and fintechs https://events.smebanking.club/event/cee17 Organizer: SME Banking Club

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23-24 November

Krakow Technology Park Park Inn by Radisson Krakow Hotel

MAY 2017

MARKETING

REGISTRATION FORM ATTENDEE’S INFORMATION Mrs. Ms. Mr. / First name

Last Name

Job title Institution

VAT ID number

Address Tel Email

Twitter account @

Assistant’s information (or person in charge of the registration) First name Tel

Last Name Email

PRACTICAL INFORMATION DATES The Conference will begin with welcome drink on Thursday 23 November at 14.00 and will end on Friday 24 November at 20.00

01st of November 2017. Full price cancellation fee will be charged for all cancellations made after that date as well as for delegates that are unable to attend unless a substitute delegate is provided. Substitutions are accepted at any time.

VENUE Krakow Technology Park – 23 November Park Inn by Radisson Krakow Hotel – 24 November

REGISTRATION FEE  €400 for representatives of non-member financial institutions – price till August 31  €600 for representatives of non-member financial institutions – price from September 01  €1000 for consultants and IT/service providers  €0 for SME Banking Club members* * according to membership terms ____________________________________ All registrations are strictly individual.

In a case of registration more than one participant from one company the following discounts are provided: Third and next participant - 10% discount for all tickets.

LANGUAGES All sessions will be held in English ACCOMMODATION Each participant must pay the cost of his or her accommodation directly to the hotel before departure REGISTRATION The registration fee covers participation in SME Banking Conference, documents, lunches and coffee breaks. Registration fees must be paid in full before the event.

CANCELLATION All cancellations must be received in writing. A 20% cancellation fee will be charged for all cancellations received before

Please send this registration form by email at cee@smebanking.club Or register online at https://events.smebanking.club/event/cee17

SMALL BUSINESS BANKING MAGAZINE

PAYMENT  Bank Transfer  Credit Card Date____________ Signature_____________

Organizer’s contacts: Olena Gryniuk, +48733404985, e-mail: cee@smebanking.club

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SME BANKING CLUB –

TRANSFORMATION OF LINKEDIN GROUP TO REGIONAL PLATFORM FOR SME TRENDS

E

very country has a clear understanding of the importance of the SME sector in terms of economic development. Meanwhile, the level of advancement of the SME sector varies widely in every country. Together with the economic environment, one of the main backbones of the sector is its communication with the banking sector. The idea of ensuring that the two sectors are able to communicate properly encouraged one of the founders of the SME Banking Club to bring together bankers and industry experts. Six years after it was founded, the SME Banking Club became one of the main platforms for networking between banks and other financial organizations contributing to the development of small and mediumsized businesses in four regions. The company’s ambitious plans include entering the UAE and Singapore markets.

The history of the SME Banking Club started in 2010. Being involved in SME banking at one of the top banks in Ukraine, Andrey Gidulyan felt there was a lack of information about the market and a lack of networking between bankers and industry experts. This

48

was what motivated him to create a group on LinkedIn to share information. The LinkedIn group gave rise to the SME Banking Club as a community of SME bankers, which soon became a professional banking community for providing information on what national, regional and local banks were offering to micro, small and medium-sized businesses.

The SME Banking Club’s first conference was organized in 2012 in Kyiv, Ukraine. Gidulyan was the company’s only team member at that time. Currently, the SME Banking Club offers online services and organizes conferences in four regions: the Caucasus, the CIS, CEE and MENA. “We survived, we are developing, and we love what we do, we love SME banking. The positive feedback that we receive from SME bankers motivates us to move forward,” said Gidulyan.

“Eighty percent of conference participants, SME bankers, are ready to recommend us to their colleagues,” said Gidulyan, adding that this factor is the main measure of the SME Banking Club’s success. “We see that what we do and what we love to do is also interesting and necessary for bankers.”

The SME Banking Club will soon hold three more annual conferences in Georgia, Ukraine and Poland. The main topics of discussion will be the latest trends developing in the industry.

At the upcoming conference in Georgia, startup banking will be discussed, as banks are entering this segment.

Non-financial services that banks are implementing to help their SME customers to scale up and break through will be a topic of discussion at all three conferences. The SME Banking Club team has invited digital-only banks and online SME lenders to their conference in Krakow in November to talk about purely digital SME banking with paperless processes for opening a current account in three minutes and online lending within 24 hours. “We will discuss how to achieve successful partnerships between banks and fintechs, as we see now that the right model is cooperation and not competition,” Gidulyan explained. Leasing and factoring products for SMEs will also be much discussed in Krakow.

Over 300 attendees are expected at all three conferences this year, including banks, financial companies working with the SME segment (like factoring and leasing organizations) and fintechs.

MAY 2017

WHAT SMES NEED The main demands of the SME sector in relation to banks vary from country to country and by different types of customers. However, the general trend is that customers are demanding less banking from banks. They want to spend less time on banking transactions and more time on business.

First of all, there were the millennials – the younger generation of entrepreneurs – who expected banks to provide a completely online onboarding process, as well as other paperless processes and the ability to complete certain simple actions like opening a current account without having to visit a branch. Now, neobanks are offering just those things. And not only young entrepreneurs but also older ones are starting to expect the same services. Regarding transactional banking, making payments for customers invisible, without having to spend any extra time on them, is now the number one priority. It’s all about integration of the Internet and mobile banking with accounting systems, with CRMs, so as to automate everything that can be auto-

SMALL BUSINESS BANKING MAGAZINE

mated by using AI and machine learning to avoid spending any addition time on banking operations. This refers to everything to minimize the number of contacts a customer has with the bank and also to partner SME customers with non-financial services.

Going forward, banks will not only need to invest in their SME programs, but they will also have to devise innovative products and take a different approach in order to win over the SME segment.

WHAT BANKS ARE OFFERING Once banks introduce an innovation, the competitive environment pushes them not to wait for several years to find out the outcome. Banks are working on numerous projects to bring something new to the market. They understand the importance of trying to deliver what customers need at the moment.

Banks should think about those they served yesterday, are serving today and will serve tomorrow. Of course, banks do no earn profits from Generation Y or millennials.

However, many banks are putting a lot of emphasis on these categories of customers, including start-ups and other projects that are investments for their future customers.

This is a common strategy for every brand.

They always take one step forward beyond the existing generation.

Traditionally, SME business has been associated with micro lending. Meanwhile, the practices of global leaders show that SMEs are not only about lending. They involve liabilities, deposits, current accounts, card products and non-financial services.

Currently, consumers expect more than just lending from their banks. They require

that their banks be their consultant, their IT service provider and their financial partner.

Consultations, training, office space, ATM cars and even translation services are what modern banks are offering their clients in response to growing demands. Another challenge for the banking sector is coming from Generation Z. Having grown up with electronic devices, this segment requires a special approach based on modern technologies.

THE SME BANKING CLUB’S FUTURE PLANS For this to happen, the team plans to continue to develop the products that they already have, such as its – annual conferences and online resources, including unique content that is published on its website: the Innovation Library, the Marketing Library and interviews with SME bankers. This information is available free of charge, and it will stay that way forever.

This year, the SME Banking Club launched audio podcasts in which Olena Gryniuk talks to SME bankers and fintechs about SME banking. The development of studies and reports on the SME market and SME product topics will be continued.

The Club plans to intensify its activities in the MENA region and open up the Asian region. Last year, the MENA SME Banking Club Conference in Cairo, Egypt, was organized, which was quite successful. “As exSME bankers, we understand banks’ needs, and when we go to the region with all our products, we take into account region specifics (by doing content localization, by developing regional reports and studies) and bring the best international practice to the local banking community,” said Gidulyan.

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EVENTS

SME BANKING CLUB CONFERENCES 2017 Conference: Caucasus17 Date: 24-25 May Place: Tbilisi, Georgia Twitter hashtag: #caucasus17 III Annual SME Banking Club Conference 2017 in Caucasus region [Caucasus17] will gather international experts and local bankers as to discuss innovations in micro-, small and medium business segment and how banks can help start-ups. Additionally, we are visiting new Georgian Technology Park.

Conference: CIS17 Date: 21-22 September Place: Kyiv, Ukraine Twitter hashtag: #cis17 Banks showed significant net profit growth last year! This year senior bankers and SME experts will meet each other on VI Annual SME Banking Club Conference 2017 in ะกIS region [CIS17] to discuss the opportunities in sales and cost efficiency.

Conference: CEE17 Date: 23-24 November Place: Krakow, Poland Twitter hashtag: #cee17 During upcoming III Annual SME Banking Club Conference 2017 in Central and Eastern Europe [CEE17] business bankers and financial experts will meet as to discuss the latest digital transformation trends in SME banking segment and a role of new players in SME financial services.

International and regional banking conferences dedicated to micro-, small and medium business segments

JOIN US!

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For more information go to www.events.smebanking.club MAY 2017

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MAGAZINE small business banking magazine

ALL TEXT ADVERTISEMENTS ARE ALSO PUBLISHED AT: • www.smebanking.club (at the main page and appropriate library archives) • In a weekly newsletter to email subscribers • At LinkedIn, Twitter and Facebook pages of SME Banking Club

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File Requirements: We accept fully prepared layouts, collected in a separate document Adobe InDesign CS4. The document format must correspond to the journal page – 210x276 mm, even if the layout is a fraction of the page.

Bleeds are to be 5 mm. All texts should be converted into curves. All colors other than Cyan, Magenta, Yellow and Black will be converted to CMYK automatically.

Bitmap images must conform to the actual size and have an extension 300dpi. They must be prepared in Adobe Photoshop CS 4 with applying CMYK Evroscale Coated v.2 color profile. Files must be saved as TIF only (without compression and the use of layers).

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Vector pictures must be prepared in Adobe Illustrator and saved in EPS with the following rules: PostScript Level 2, 8-bit preview, with bitmap images (if needed).

All layouts must follow the following rule – zone from any text object to trim (where the cut is to be made) is minimum 7 mm; zone from any text object to binder – 10 mm.

Contacts: ceo@smebanking.club +38 (050) 383-12-43

Claims regarding the color of the layout are only provided if there is a color test, made with wet colors indicating the printing parameters, made in the editorial office or in agreement with the editorial office in the printing house, in which the journal is printed.

Any layouts which do not meet these requirements will be sent back for finalization even in short deadlines.

Advertisement (website): see details at www.smebanking.club or email to ceo@smebanking.club

CIS SME

21-22

September 2017 Kyiv, Ukraine

BANKING CLUB CONFERENCE 2017

Organized by SME Banking Club https://events.smebanking.club

WELCOME TO KYIV

#CIS17