Best Practices in SME and Msme Banking

Euromoney Learning Solutions

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  • 5 days
  • in person

What are the topics?

Euromoney Learning Solutions

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Who should attend

This seminar is for top bankers, senior managers who are expected to reach this level, and those who support directly the top management teams of their banks:

  • Owners and main board directors
  • CEO’s and members of boards of management and top executive committees
  • General managers, executive vice presidents and senior managers responsible for MSME Banking, Branch Network Management, and Subsidiary Companies involved in MSME financial services such as insurance, investment, software and educational services
  • Senior executives in Retail, Premium & Private Banking who are interested in selling their services to the staff and owners of MSME’s
  • Senior executives responsible for support divisions, including Strategy, Marketing, Sales Support, Credit Risk and Market Risk Management, Finance, Operations, Human Resources, Information Technology, Internal Audit and Compliance
  • “High-flyers” with potential to rise to top positions will find the seminar beneficial and broadening.

Benefits of the Seminar: What Delegates Will Take Away

The seminar is designed to help delegates:

  • Understand the main areas of MSME banking where best-practices are essential for success today
  • Understand the specific targets associated with best-practice standards of performance
  • Assess the MSME banking strategies and management methods of delegates’ banks against the standards achieved by the world’s leading banks
  • Set priorities for reaching world-class standards in MSME banking
  • Set priorities for upgrading MSME banking marketing, selling, credit risk management, organisation structure, planning & control, and HR management to world-class levels
  • Choose the most important ways delegates’ banks should seek to excel vis-à-vis competitors
  • Set targets for ensuring that delegates’ banks are on seminar to reach best-practice standards

About the course

Implement a successful Micro & SME strategy at this 5-day masterclass

In many countries top bankers recognize the vital importance of micro, small and middle-size enterprises (“MSME’s”) to their national economies and societies. They understand that MSME’s are a national priority and wish to contribute to their development. However, these bankers are also well aware that the profitability to banks of MSME business varies over a wide range. Some banks enjoy high profitability while others lose considerable sums. This presents dilemmas to many banks: How much effort to devote to MSME business? How to run the business so that there is good chance of producing big profits and high profitability? More specific challenges are:

  • How to Choose the Best Mix of MSME business?
  • Which range of Products, Services and Packages to Develop for MSME’s?
  • How to Intensify Selling & Cross-Selling to MSME’s?
  • How to Organise for Success in MSME Banking?
  • How to Advance MSME Credit Management?
  • How to Upgrade the Planning & Control of MSME Business?

Evidently, those banks that lead in MSME banking successfully engage many important challenges:

  • Marketing is focused sharply on to the most attractive sub-segments of the MSME market
  • Selling & cross-selling are intensive with success measured and rewarded frequently
  • Credit management is “scientific”, automated and very cost-effective
  • Overall and branch network organisation structures are tailored to the needs of the MSME market
  • Operations are streamlined, largely automated, centralised and/or out-sourced
  • HR and IT strategies, policies and processes are adjusted for MSME banking
  • Planning & control and management information systems are sub-segmented
  • These leading banks deal with MSME banking in a comprehensive and well-orchestrated manner. They go on to enjoy a high return on the equity attributed to the business.

Objectives of the Seminar

This seminar explores the best-practice MSME banking strategies and management methods adopted by leading banks and how delegates’ banks could upgrade their approaches to these high standards:

  • To provide a comprehensive understanding of the main areas of MSME banking in which best-practices are essential for success in today’s highly competitive MSME banking markets
  • To examine best-practices in MSME banking as they relate to marketing and selling
  • To review world-class approaches to MSME credit risk management
  • To examine the organisation structures, planning & control systems of leading MSME banks
  • To evaluate modern HR policies and processes in MSME banking
  • To assess ways that delegates’ banks could upgrade their own MSME banking strategies and management methods to world-class standards
  • To pinpoint strategic priorities for delegates’ banks over the next year and beyond
  • The seminar is very practical and based on the experiences of many successful banks all over the world. It is not “academic” but does provide a strong conceptual framework for dealing with the complexities of running MSME banking at a high level of profitability.

Methodology

The seminar is intensive and participative. Various methods are used:

  • Presentations, with discussions, including many real case histories of banks around the world
  • Case studies that illustrate the application of the approaches examined
  • Group work in which delegates discuss improvement priorities for their own banks
  • “Question & Answer” plenary discussions with the seminar leader

Half of the seminar timetable is devoted to case studies and group work so that delegates have the chance to exchange perspectives and experience with other delegates and the seminar leader.

Agenda

Day 1

  1. Presentation: Introduction to the Seminar
  • Seminar Overview: Themes, Timetable and Topics
  • Introduction of Delegates and Seminar Leader

Theme 1: Overall strategies for MSME Banking

  1. Presentation: The Important Contributions Made by MSME’s to Economies, Society and Government
  • Provision of Numerous Goods and Services, Many Crucial to Modern Living
  • Provision of Employment, Usually Large in Most Countries
  • Stimulation of Innovation and Spurring of Competition
  • Generation of Tax Revenues
  • Common Barriers to the Development of MSME Banking
  1. Presentation: Definitions of MSME's Used by Governments and Banks
  • The Importance of Having Clear and Agreed Definitions of MSME’s
  • Definitions Used in the European Union: Autonomous, Partner and Linked Enterprises
  • Definitions Applied in the USA
  • Definitions of MSME’s Used by Illustrative Banks Around the World
  • Discussion: Comparison of MSME’s Served by Delegates’ Banks
  1. Presentation: The Key Elements of MSME Banking Strategy
  • The Link Between Good Strategy and High Profitability:
    • Main Elements of MSME Banking Strategy in Leading Banks
    • Importance of Being Superior in Many Elements of Strategy
    • Importance of Ensuring That All Elements of Strategy are Consistent
  • Overall Framework for Strategy & Profit Improvement in MSME Banking
  • Boosting Business & Income at Acceptable Risk: Marketing, Selling and Credit
  • Ensuring High Cost-Effectiveness: Organisation Structure, Processes and Operations
  • Optimising the Allocation of Scarce Resources: People, Time, Capital and IT Investment
  • Fostering Strong Governance and a Progressive Culture
  1. Presentation: World-Class Standards & Examples of MSME Banking
  • The 13 Main Elements of MSME Ranking
  • The 250+ Sub-Elements of MSME Banking
  • Assessing a Bank Against World-Class Standards - the SMEAM Methodology
  • Setting Development Priorities
  • Case History Examples of How Several Banks Become World-Class

Theme 2: Marketing and Selling to MSME's

  1. Group Work: Segmenting the MSME Markets of Delegates' Banks
  • Defining Mutually Exclusive Market Sub-Segments
  • Dimensioning the Sub-Segments
  • Getting the Information Needed for Sub-Segmentation
  • Deciding Which Sub-Segments to Use for Market Strategy Formulation
  • Deciding Which Sub-Segments Should be Represented in the Bank’s Organisation Structure
  1. Presentation: Case Histories: Successful MSME Marketing Strategies
  • An Arab Bank
  • A European Bank
  • An Asian Bank
  • A Russian Bank
  • Overview of Other Banks

Summary of Day 1

Day 2

  1. Presentation: MSME Products, Services, Packages and Channels Provided by Leading Banks
  • Examples for Products, Services & Packages Sold by:
    • Several European Banks That are Leaders in MSME Banking
    • Several Banks Based in the Middle East
    • A Large Russian Bank
    • A Specialist MSME Bank in Asia
    • Overview of Some Other Banks
  • International Trends in Products, Services & Packages Offered to MSME’s
  • MSME Sub-Segments that Seem to be Priorities for Banks Around the World
  • Product Packages for Target Sub-Segments of MSME Markets
  • Important Practical Lessons and Impact on Profitability
  1. Group Work: Setting MSME Product & Channels Development Priorities for Delegates' Banks
  • Review of MSME Products, Services and Packages of Delegates’ Banks:
    • Loan Products
    • Deposits
    • Savings Products
    • Investment Services
    • Cash Flow Services
    • Advisory Services
    • Educational Services
    • Software Services
    • Business Advisory Services
    • Product Packages for Target Sub-Segments of the MSME Market
  • MSME Sub-Segments That Seem to be Priorities for Delegates’ Banks
  • Critique of the Existing MSME Products and Packages of Delegates’ Banks
  • Choosing the Best Products and Packages to Develop and Sell
  1. Case Study: Formulating a "Winning" MSME Marketing Strategy
  • Introduction to the Case Study Bank
  • Defining Useful Market Segments for the Bank
  • Assessing the Attractiveness of the Market Segments
  • Assessing the Bank’s Competitive Position in Each Market Segment
  • Setting Marketing and Other Priorities Across the Market Segments
  • Developing Execution Plans for Each Market Segment
  1. Case Answer: Formulating a "Winning" MSME Marketing Strategy
  • Delegates’ Answers to the Case Study in Session 10
  • Presentation of the Model Answer
  • Discussion: Strengthening Market Strategy Formulation at Delegates’ Banks
  1. Presentation: Case History: How One Bank Intensified Selling to MSME’s
  • The Meaning of “Selling” and the Importance of Increasing Selling Time
  • How Increasing Selling Time Drives Up Cross-Selling and Profitability
  • Introduction to the Case History Bank
  • Staffing and Use of Time at the Bank Before It Was Reengineered
  • Ways the Bank Changed Jobs and Staffing to Boost Selling Time:
    • Type and number of jobs created
    • Type and number of jobs removed
  • Staffing and Use of Time at the Bank After It Was Reengineered
  • The Big Beneficial Impact of the Reengineering on Bank Performance

Summary of Day 2

Day 3

  1. Group Work: Intensifying Selling to MSME’s by Delegates' Banks
  • Estimating Current Selling Intensity in Delegates’ Banks
  • Increasing the Number of Existing Types of Selling Job
  • Creating New Types of Selling Job
  • Increasing Selling Time in All Selling Jobs
  • Moving Personnel Into Income-Producing Jobs from Cost-Generating Jobs
  • Providing Essential Training
  • Introducing Sales Incentive Schemes
  • Reengineering Banks to Reach World-Class Standards of Selling Intensity

Theme 3: Organising for effective MSME banking

  1. Presentation: Case History: Building a Successful MSME Division
  • Organisational Design Principles Followed by Leading MSME Banks
  • Organising MSME Banking Business Divisions
  • Organising MSME Banking Support Divisions
  • The Role of a Modern MSME Marketing & Sales Support Division
  • Establishing a Modern Marketing & Sales Committee
  1. Presentation: Best-Practice Relationship Management of MSMEʼs
  • The Objectives of Best-Practice Relationship Management:
    • What MSME customers want from relationship management
    • What banks need from MSME relationship management
  • Choosing Key MSME Customers
  • Organizing Relationship Teams and Focusing Relationship Managers on to Sales & Service
  • Planning & Controlling MSME Customer Relationships
  • Assessing & Training MSME Relationship Managers
  • The “12 Rules” of Best-Practice Relationship Management
  1. Case Study: Segmenting Branches to Boost MSME Sales, Service, Productivity & Profitability
  • Setting Different Service Quality Levels for Different Types of Customer
  • Rebalancing Front and Back-Office Personnel in Branches
  • Increasing the Amount of Time Spent Selling in Branches
  • Boosting Income Per Customer From Customers in Different Market Segments
  • Changing the Balance of General-Purpose and Segmented Branches
  • Increasing the Amount of Time Spent Selling in Head Office
  • Alternative Strategies for Developing the Branch Network:
    • Network Expansion Versus Down-Sizing
    • Rebalancing the Relative Sizes of the Network and Head Office
  1. Case Answer: Segmenting Branches to Boost MSME Sales, Service, Productivity & Profitability
  • Delegates’ Answers to the Case Study in Session 16
  • Presentation of Model Answers
  • Discussion About Segmenting the Branch Networks of Delegates’ Banks
  1. Presentation: Assessing, Training & Rewarding MSME Relationship Managers
  • Performance Appraisal Criteria Used by Leading Banks
  • Type & Amount of Training Provided by Leading Banks
  • MSME Incentive Schemes: Bonuses, Share Options and Profit-Sharing

Summary of Day 3

Day 4

Theme 4: World-class MSME credit risk management

  1. Presentation: World-Class Standards of MSME Credit Risk Management
  • The 13 Main Elements of Credit Risk Management
  • The 250 Vital Sub-Elements of Credit Risk Management
  • World-Class Standards of Credit Risk Management
  • The Credit Risk Assessment Methodology – “CRAM”
  • Case Histories: How Illustrative Banks Became World-Class at Credit Management
  • Discussion: Advancing Credit Policy and Processes in Delegates’ Banks
  1. Case Study: Target-ROE Risk-Adjusted Pricing of MSME Loans – “TRAP”
  • Explanation of Target-ROE Risk-Adjusted Pricing of Loans – “TRAP”
  • Calculating Margins Needed to Meet the Bank’s Target Return on Equity
  • Estimating Margins to Cover Funding and Opportunity Costs
  • Building in Margins to Pay for Credit Operating Costs
  • Calculating Margins Needed to Cover Bad Debts
  • Adjusting Margins to Exploit Competitive Dominance
  • The Dangerous Impact of Incorrect Loan Pricing – “Adverse Pricing”
  1. Case Study: Target-ROE Risk-Adjusted Pricing of MSME Loans – “TRAP”
  • Delegates’ Answers to the Case Study in Session 20
  • Presentation of the Model Answer
  • Discussion About Strengthening MSME Loan Pricing at Delegates’ Banks
  1. Presentation: Case History: Strengthening MSME Credit Management in a Major Bank
  • Introduction to the Case History Bank
  • Assessment of the Bank’s MSME Credit Management Against World-Class Standards:
    • Credit Policies
    • Credit Processes
    • Credit Organisation Structure
    • Credit Human Resources
    • Credit-Related IT Systems
  • Priority Actions Set by the Bank’s Board to Reach World-Class Standards
  1. Group Work: Advancing MSME Credit Management in Delegates' Banks
  • Abbreviated CRAM Assessment of MSME Credit Management at Delegates’ Banks:
  • The Banks’ Strengths
  • The Banks’ Weaknesses
  • Proposed Actions for Reaching World-Class Standards

Theme 5: Planning and controlling business with MSME's

  1. Case Study: Measuring Correctly the Profitability of MSME Customer Relationships
  • Understanding the Case Study Bank’s Balance Sheet and Profit & Loss Account
  • Choosing the Best Transfer Rates for Defining Profitability
  • Calculating ALM Profits: “Gapping” Profits and “Structural” ALM Profits
  • Calculating MSME Customer Profits:
  • Deposit Profits
  • Lending Profits
  • Restructuring the Case Study Bank’s Balance Sheet to Balance Profits and Risks

Summary of Day 4

Day 5

  1. Case Answer: Measuring the Profitability of Products, Customers and Branches
  • Delegates’ Answers to the Case Study in Session 24
  • Presentation of the Model Answer
  • Discussion About the Crucial Importance of Measuring Profitability Correctly in MSME Banking
  1. Presentation: Focusing Planning & Control on to MSME’s
  • Overview of Market-Focused Planning & Control
  • Market-Focused Strategic Planning and Action Planning
  • Market-Focused Budgeting
  • Market-Focused Financial Control
  • Market-Focused Key Performance Targets - KPT’s
  • Market-Focused Performance Appraisal
  • Key Challenges to Overcome
  1. Group Work: Setting Key Performance Targets for MSME Banking – “KPT’s”
  • Understanding the Case Study Bank’s Strategic Priorities
  • Choosing KPT’s for the Bank’s Branch Managers
  • Choosing KPT’s for the Bank’s MSME Relationship Managers
  • Deciding the Weightings for KPT’s
  • Examples of Commonly-Used KPT’s at Leading Banks
  1. Presentation: Case History: How One Bank Boosted Greatly the Profitability of MSME Banking
  • Introduction to the Case History Bank
  • Best-Practice Calculation of MSME Banking Profitability
  • The “Drivers” of MSME Banking Profitability
  • Impact on Profitability of Individual Best-Practices in MSME Banking
  • Impact on Profitability of Combined Best-Practices
  • Strategy Execution Priorities for MSME Banking Profitability
  1. Group Work: Setting Priorities for Delegates' Banks to Achieve Best-Practice MSME Banking
  • Setting Priorities for Upgrading MSME Banking at Delegates’ Banks
  • Defining the Actions to be Taken
  • Proposing Timetables for Moving Ahead
  1. Presentation: Summary of the Seminar

Evaluation of the Seminar

Closure of the Seminar

Experts

Chris Batt

Chris Batt has extensive experience of helping banks to boost profitability. He is an internationally-recognised authority in advising the owners, boards and top management teams of leading banks and other financial institutions, worldwide. He has worked with over 160 banks and other financial in...

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