CEE banks can exploit micro business opportunities with the right strategy
Paris, June 6, 2012
Efma and Roland Berger Strategy Consultants, with the support of KBC Bank, have released a new report titled Retail Banking in CEE: Exploiting the Potential of the Micro Business Segment. The report presents the results of a study on how banks in CEE approach micro businesses – self employed and small private business customers – and identifies key success factors and areas with potential for improvement.
“Having endured a period during which attention has been focused on the stabilisation of bad loan portfolios, by 2011 bankers in Central and Eastern Europe began to start thinking about growth again,” says Hendrik Bremer, a Partner at Roland Berger Strategy Consultants. “The micro business market is an interesting potential target group and offers some attractive opportunities – if approached correctly.”
The report provides insight into how CEE banks handle the micro segment, assessing the challenges of the market, such as the large number and varying needs of potential clients, keeping the rate of non-performing loans low and avoiding high costs of servicing. It reveals that while banks in most countries demonstrate a desire for growth in their micro business portfolio, the commitment and ability to implement varies significantly by bank and by country. For example, in countries where the large corporate segment still provides enough business potential to fulfil banks’ demand, the appetite for fragmented and potentially riskier micro business has limited appeal.
Many CEE banks do have a detailed strategy and approach for the micro business segment. Some of these strategies are quite new and in the process of implementation, so it is difficult to assess their effectiveness. The report identifies three key success factors: a detailed strategy with a focus on segmentation and the service model; tailor-made risk management; and enhanced cross-segment offering.
“In order to succeed in this market, it is essential for banks to have a proper micro business strategy, and the capabilities to implement it,” says Patrick Desmarès, General Manager of Efma. “We believe that this report is an excellent resource for CEE banks. It is helpful both in terms of assessing your micro business status and practice, and in identifying areas for improvement in order to better cope with the changing economic environment in the region.”
Marko Voljč, CEO Of the Central and Eastern Europe and Russia Business Unit at KBC Group, says: “As a recognised market leader in the SME segment in our home market of Belgium, we have a natural link with this customer group. You could say they are part of our KBC’s DNA. The insights gained from this report will help us define and implement dedicated strategies, benefiting both micro enterprises and individual entrepreneurs.”
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