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About the course

Enhance your value by implementing efficient credit decisions

A comprehensive 4-day strategic management course for banking experts that will help you to:

  • Implement a successful SME strategy
  • Build a SME focussed sales force and increase the cross-selling rate
  • Introduce innovative products and "product bundles"
  • Calculate risk adjusted pricing
  • Apply standard risk cost, RAROC, economic capital and EVA
  • Apply modern credit scoring systems
  • Improve the credit decision process
  • Implement an effective risk limit system

Course overview

Lending to SME customers presents one of the greatest opportunities for commercial banks to pursue growth and profitability; at the same time it ties up a large amount of economic capital and represents substantial credit risk.

Taught by an internationally experienced banking executive, this course is designed to give delegates a comprehensive overview of how to build a successful SME banking strategy and how to raise the performance of their institution. The course will teach how to use the planning process to set goals, to control costs and to increase the profitability of clients and focuses on the needs of SME customers, how to define their product needs and discusses efficient client relationship management. The concept of risk adjusted pricing and minimum pricing based on the usage of standard risk costs, economic capital, RAROC and EVA will also be introduced.

Methodology

The course will use real-life case studies and examples to develop delegates' understanding of all aspects of SME banking, client management and credit risk issues.

Provides hands-on examples of how to create value by implementing efficient credit decisions and creating efficient rating and scoring systems.

Through practical examples illustrate how qualitative and quantitative ratios are applied to examine the creditworthiness of clients and transactions.

Finally, you will assess the main risk factors in SME banking and learn how to mitigate these risk factors and to use an effective portfolio management.

Day 1

Session 1: Introduction to the Course

  • Course Themes, Subjects and Timetable
  • Introduction of Delegates and the Course Leader

THEME 1: THE NATURE & IMPORTANT CONTRIBUTIONS OF SME’s

Session 2: Definitions by Governments and Banks of SME's

  • The Importance of Having Clear and Agreed Definitions of SME’s
  • Definitions Used in the European Union: Autonomous Enterprises Partner Enterprises Linked Enterprises
  • Definitions Applied in the USA
  • Definitions of SME’s Used by Illustrative Banks Around the World

Session 3: Important Contributions Made by SME’s

  • Provision of Numerous Goods and Services, Many Crucial to Modern Living
  • Provision of Employment, Usually Large in Most Countries
  • Stimulation of Innovation
  • Spurring of Competition
  • Generation of Tax Revenues
  • Common Barriers to the Development of SME Banking

Session 4: World-Class Standards & Examples of SME Banking

  • The Challenge of Achieving High Profitability in SME Banking
  • Main Elements of SME Banking: Key SME Sub-Segments Main Management Functions
  • World-Class Standards of SME Banking
  • Examples of Successful SME Banking
  • Discussion: Priorities for Upgrading SME Banking at Delegates’ Banks

THEME 2: MARKETING & SELLING TO SME’s

Session 5: Case Histories: Successful SME Marketing Strategies

  • Market Segmentation in Banking
  • The Nature and Contributions of SME Marketing Strategy Focused on Profitability
  • World-Class Standards of SME Marketing Strategy in Leading Banks
  • Examples of “Winning” and “Losing” SME Marketing Strategies
  • How Well-Founded and Executed Marketing Strategies Can Increase Bank Profits by 30%
  • Important Practical Lessons
  • Discussion: Priorities for Upgrading SME Marketing Strategy Across Delegates’ Banks

Session 6: Group Work - Segmenting the SME Markets of Delegates' Banks

  • Choosing and Defining Segments of the SME Market
  • Estimating the Sizes and Contributions of SME Market Segments
  • Technical and Political Barriers to Market Segmentation
  • Practical Steps in Segmenting a Bank’s Whole Customer Base
  • Training Bank Personnel and Customers About Segmentation

Day 2

Session 7: SME Products, Services and Channels Provided by Leading Banks

  • SME Products & Services from Leading European Banks
  • SME Products & Services from Leading Banks in:

  • Russia

  • The Middle East

  • Asia

  • Sub-Segments of the SME Market Being Targeted by Banks

  • The Growing Range of Specialized Channels Used by SME Banks

  • Key Perspectives and Conclusions About Developments in SME Banking


Session 8: Group Work - Setting SME Product & Channels 
Development Priorities for Delegates' Banks


Product & Service Development Priorities, including:

  • Deposit, Savings and Investment Services
  • Loans and Mortgages 
  • Insurance Services 
  • International Banking Services 
  • Business and Support Services
  • Discussion: SME Product Development Priorities for Delegates’ Banks


Sales & Delivery Channels Development Priorities, including:

  • Mobile Sellers Focused on SME’s
  • Tele-Selling to SME’s
  • Dedicated SME Websites
  • Traditional, Non-Segmented Branches
  • Stand-Alone Business Centres for SME’s
  • SME Business Centres Within Dual or Multiple Segment Branches
  • Discussion: SME Channels Development Priorities for Delegates’ Banks

Session 9: Case Study - Formulating a Winning SME Marketing Strategy

  • Defining Mutually-Exclusive Segments of the SME Market
  • Assessing the Attractiveness of SME Market Segments
  • Assessing a Bank’s Competitive Strengths in Different SME Market Segments
  • Setting Development Priorities Across SME Market Segments
  • Specifying Action Plans for Moving Ahead
  • Setting Profit Improvement Targets for Individual SME Market Segments
  • Setting the ROE Target for the Whole SME Customer Base

Session 10: Case Answer - Formulating a Winning SME Marketing Strategy

  • Delegates’ Answers to the Case Study in Session 9
  • Presentation of the Model Answer
  • Discussion About Advancing SME Marketing Strategy at Delegates’ Banks

Session 11: Case History: How One Ambitious Bank Intensified Selling to SMEʼs

  • The Meaning of “True Selling” as Used by World-Class Banks
  • How Selling Intensity Drives Up Cross-Selling and Profitability
  • World-Class Standards of Selling & Cross-Selling
  • Case History: Steps Taken By One Bank That Intensified Greatly Selling to SME’s
  • Impact of Steps Taken on the Bank’s Growth and Profitability

Day 3

Session 12: Group Work - Intensifying Selling to SME's by Delegates' Banks


  • Estimating the Current Selling Intensity Across Delegates’ Banks
  • Increasing the Number of Existing Types of Selling Job
  • Creating New Types of Selling Job
  • Transferring Personnel from Cost-Generating Jobs into Income-Producing Jobs
  • Increasing Selling Time in All Selling Jobs
  • Reengineering Delegates’ Banks to Reach World-Class Standards of Selling Intensity

THEME 3: ORGANIZING FOR EFFECTIVE SME BANKING

Session 13: Case History: Building a Successful SME Division

  • Alternative Locations for the SME Division - Pros & Cons:


  • Within Corporate Banking?

  • Within Retail Banking?

  • Divided Between Retail and Corporate Banking?

  • A Separate Division Alongside Retail and Corporate Banking?

  • Organization of Branch-Based Selling

  • Organization of Mobile (Direct) Sales Forces

  • Organization of Product Management

  • Organization of Key Support Functions: Strategic Planning, Marketing & Sales Support, Credit Management, Financial Control, Human Resources Management, IT Liaison


Session 14: Case Study - Segmenting Branches to Boost SME Sales, Service, Productivity & Profitability


  • Information About the Case Study Bank, its Segments and Strategic Options
  • Adjusting Service Quality Levels for SME and Other Market Segments
  • Improving the Ratio of Front to Back Office Staff Across the Network
  • Boosting Branch Selling Intensity
  • Establishing Special Branches for SME’s and Other Key Market Segments
  • Adjusting the Role and Size of Head Office


Session 15: Case Answer - Segmenting Branches to Boost SME Sales, Service, Productivity & Profitability

  • Delegates’ Answers to the Case Study in Session 14
  • Presentation of the Model Answer
  • Discuss About Segmenting the Branch Networks of Delegates’ Banks


Session 16: Best-Practice Relationship Management of SMEʼs


  • The Objectives of Best-Practice SME Relationship Management
  • Choosing Key SME Customers and Organizing Relationship Teams
  • Focusing SME Relationship Managers on to Sales & Service
  • Planning & Controlling Key SME Customer Relationships
  • The “12 Rules” of Best-Practice SME Relationship Management
  • Discussion: Priorities for Upgrading SME Relationship Management in Delegates’ Banks


Session 17: Assessing, Training & Rewarding SME Relationship Managers

  • Performance Appraisal Criteria for SME Relationship Managers
  • Types of Training Provided to SME Relationship Managers by Leading Banks
  • Reward Systems for SME Relationship Managers

Day 4

THEME 4: WORLD-CLASS CREDIT MANAGEMENT FOR SME BANKS

Session 18: World-Class Standards of SME Credit Risk Management

  • The 250 Elements of SME Credit Risk Management
  • World-Class Standards of SME Credit Risk Management
  • The Credit Risk Assessment Methodology – “CRAM”
  • Case Histories: How Illustrative Banks Became World-Class at SME Credit Management

Session 19: Case Study - Pricing SME Loans - Target-ROE Risk-Adjusted Pricing - “TRAP”

  • Explanation of Target-ROE Risk-Adjusted Pricing of SME Loans
  • 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 SME Credit Operating Costs
  • Calculating Margins Needed to Cover SME Bad Debts
  • Adjusting Margins to Exploit Competitive Dominance in SME Banking
  • Discussion About Strengthening SME Loan Pricing at Delegates’ Banks

Session 20: Case Answer - Pricing SME Loans - Target-ROE Risk-Adjusted Pricing

  • Delegates’ Answers to the Case Study in Session 19
  • Presentation of the Model Answer
  • Discussion About Strengthening SME Loan Pricing at Delegates’ Banks

Session 21: Case History: Strengthening SME Credit Management in a Major Bank

  • Changes to Overall Credit Policy
  • Changes to SME Credit Policy
  • Advancements to SME Credit Processes
  • Improvements to the Organization of SME Credit Management
  • Enhancements to SME Credit Training and Certification


Session 22: Group Work - Advancing SME Credit Management in Delegates' Banks

  • Assessment of Important Elements of SME Credit Management at Delegates’ Banks Against World-Class Standards Using the CRAM Methodology (Abbreviated):

SME Credit Policy: Segmentation, Formulation, Documentation, Communication

SME Credit Management Processes, Including Credit Scoring, TRAP Pricing, Loan Applications Processing, Early Warning Systems, Remedial Management & Recoveries, Portfolio Monitoring & Management, and Operating Costs

  • Identification of the Main Improvements Needed to Reach World-Class Standards
  • Development of an Action Plan and Timetable for Reaching the World-Class Standards

THEME 5: PLANNING & CONTROLLING BUSINESS WITH SME’s

Session 23: Case Study - Measuring the Profitability of SME Customer Relationships

  • Understanding the Case Study Bank’s Balance Sheet and Profit & Loss Account
  • Assessing Transfer Rates for Defining SME Profitability and Selecting the Best: “Psychological” Transfer Rates Cost-of-Funds, Single Pool and Dual Pool Rates Mark-to-Market Rates
  • Calculating and Attributing ALM Profits: “Gapping” Profits and “Structural” ALM Profits
  • Calculating and Attributing SME Customer Profits: Deposit Profits, Lending Profits
  • Restructuring the Case Study Bank’s Balance Sheet to Balance Profits and Risks

Day 5

Session 24: Case Answer – Measuring the Profitability of SME Customer Relationships
 * Delegates’ Answers to the Case Study in Session 23 * Presentation of the Model Answer * Discussion About Upgrading SME Profitability Measurement at Delegates’ Banks


Session 25: Case History: How One Bank Boosted the Profitability of SME Business Greatly

  • Introduction to the Case History Bank
  • Best-Practice Calculation of SME Banking Profitability
  • The “Drivers” of SME Banking Profitability
  • Impact on SME Profitability of Individual Best-Practices
  • Impact on SME Profitability of Combined Best-Practices
  • Priority Actions for Boosting SME Banking Profitability 

Session 26: Focusing Bank Planning & Control on to SME's

  • Overview of SME-Focused Planning & Control
  • Building Superiority with Strategic Planning
  • Action Planning: Translating Strategy into Practical Action
  • SME-Focused Budgeting, Financial Control and Key Performance Targets
  • SME-Focused Performance Appraisal
  • Key Challenges to Overcome
  • Examples of World-Class SME Planning & Control Systems
  • Discussion: Establishing Best-Practice SME Planning and Control at Delegates’ Banks


Session 27: Group Work - Setting Key Performance Targets for SME Banking

  • Measuring SME Profitability Success
  • Tracking Selling Success
  • Controlling Cost-Effectiveness
  • Monitoring SME Bad Debt Performance
  • Assessing Adherence to Policies and Procedures
  • Determining SME Customer Satisfaction
  • Appraising Development of Human Resources 

THEME 6: PRIORITIES FOR PROGRESS AT DELEGATES’ BANKS

Session 28: Group Work – Priorities for Developing SME Banking in Delegatesʼ Banks

  • Setting Priorities for Establishing SME Best-Practices
  • Defining the Actions to be Taken
  • Proposing Timetables for Moving Ahead

Session 29: Summary of the Course

  • Presentation of Certificates
  • Closure of the Course

Who should attend

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

  • The leaders of banks who are keen to enter or boost business with SME’s:

CEO’s, members of boards of management and top executive committees

Owners of banks and their supervisory board directors

  • General managers, executive vice presidents and directors who are:

Directly involved in SME Banking

Working for subsidiary companies that provide specialized services to SME’s, for example, insurance, leasing, investment and software services

  • Senior executives responsible for “support” divisions, including Strategy, Marketing, Sales Support, Risk Management, Credit Risk, Market Risk, Operations, Finance, Human Resources, Information Technology, Legal, Internal Audit and Compliance “High-flyers” with potential to “rise to the top” will also find the course broadening and beneficial.

Trust the 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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