MAGAZINE small business banking magazine
IDEA BANK’S ENTREPRENEUR’S WORLD
BARTOSZ URBANIAK BGŻ BNP PARIBAS Working with Farmers: Relationship model, Digital Technologies, and Challenges
of SME Finance Digital strategy and cooperation with fintechs
Agile way of working in SME Banking
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REASONS TO READ THIS ISSUE… Dear Reader, In this issue of SBB Magazine, we decided to share key insights and takeaways (pp. 38-43) from the CEE SME Banking Club Conference 2017, which took place in Krakow, Poland, last November, as the conference resulted in a lot of ideas and insights to think about.
This year’s Conference for Central and Eastern Europe will be held in Warsaw on October 29-30 (pp. 48-49). For the second time, we will devote a separate panel during the conference to discussing cooperation models between banks and fintechs. The panel will be hosted by The Heart Warsaw, one of the organizations in the Olena Gryniuk with Bartosz Urbaniak (BGŻ BNP region helping corporations and startups grow together Paribas Bank) during the photo shoot and interview (p. 10-12). This year’s conference will explore more issues related to the digitalization of SME finance (pp. 28-29). The area has evolved a great deal in recent years, considering that two years ago there were no real alternative online-only lenders in the region. And now we have working-capital lenders, automated factoring and automated leasing for micro-enterprises. In terms of market penetration, however, it seems that the market is still at a very early stage. Eighty percent of customers have never considered anything besides their bank to get financing. Read an interview with Mariusz Zabrocki (iwoca Poland) (pp. 22-25). This year, we’d also like to discuss the topic of agricultural finance. Olena Gryniuk spoke with Bartosz Urbaniak (Head of Agri Hub at BNP Paribas) about relationship models, digital technologies and challenges while working with farmers (pp. 30-33). Farmers in Poland are showing optimism, so the availability of financing offers is expanding for them, with leasing and loans remaining the most convenient and most effective forms of financing (p. 34). This issue contains an exclusive article on agile methodology that I hope product managers will appreciate (pp. 36-37). ING Bank Śląski in Poland shared with us just how this methodology operates in SME banking, as this is one of the first banks in the region that implemented the agile methodology. There is something else of note in this issue as well: the incredible inspiration I felt while conducting interviews with bankers who are changing the industry and shaping SME banking every day, right now. I’m delighted and honored. I wish you pleasant reading!
Yours sincerely, Olena Gryniuk, CEE Regional Director at SME Banking Club
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5 reasons to read this issue…
Business Environment Overview in the CEE Region
Individual approach to small and medium companies
How and why banks should cooperate with fintechs
Elevator Lab: Raiffeisen Bank International started FinTech Accelerator
Raiffeisen Bank in Romania launches the first edition of Factory by Raiffeisen Bank
Agile way of working in SME Banking
17 18 19
Invoice Cloud – new e-invoicing platform launched by Idea Bank Group in Poland
RoBots – a digital revolution at BGZ BNP Paribas Bank
22 iwoca: Online Lending to SME
Iwoca: Online Lending to SMEs Is relationship banking going to deteriorate or improve in the digital age?
Smart VAS (Value Added Services) = smart revenue
Digitalization of SME Finance
SBB Magazine Magazine of SME Banking Club SME Banking Club Team:
Idea Bank’s Entrepreneur’s World
Can a customer register a business with your bank? Mobile Banking for SMEs
Working with Farmers: Relationship model, Digital Technologies, and Challenges
Andrey Gidulyan email@example.com @AGidulyan
Olena Gryniuk firstname.lastname@example.org @olenagrinyuk
Alexey Sayapin email@example.com sayapin.alexey
Leasing - one of the primary sources of investment financing for farmers in Poland
Agile way of working in SME Banking
Alior Bank: Digital strategy for SMEs and cooperation with fintechs
Holvi: a digital business account to e-residents
OTP eBiz allows SMEs to manage their business on a single digital platform
SME Banking Club Conference 2017
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
SME Banking Club Conferences 2018
About the SME Banking Club
Design, layout: Halyna Uygur Guest Authors: Ozhan Orge Wojtek Dembinski Sources: www.smebanking.club
For details of advertising please contact us at firstname.lastname@example.org APRIL 2018
Business Environment Overview in the CEE Region: Market and Innovation Overview Business Environment Overview
Source: CEE SME Banking Report 2017 (data as of 31.12.2016), SME Banking Club
Source: CEE SME Banking Report 2017 (data as of 31.12.2016), SME Banking Club
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POLISH BANKS ARE THE TOP5 BANKS IN TERMS OF SME LOAN PORTFOLIO VOLUME AMONG THE 5 COUNTRIES ANALYZED IN DETAIL IN THE CEE REGION (POLAND, HUNGARY, ROMANIA, BULGARIA, SERBIA). POLISH BANKS PREVAIL IN THE TOP10 LIST, ALONG WITH UNICREDIT BULBANK FROM BULGARIA, K&H (KBC) BANK FROM HUNGARY AND CEC BANK FROM ROMANIA Innovations in SME Banking
SME Banking in Numbers
The Bloomberg Innovation Index 2018 shows a positive trend (+1 and +3) in innovations in Poland and Romania, with Poland showing the best result among CEE countries. Bulgaria appeared in the ranking for the first year.
As we publish our Magazine in April, only Polish banks have officially published their results for 2017 during Q1 2018. For the rest of the region, only data from 2016 are available and shown below.
The Bloomberg Innovation Index for selected CEE countries:
This transfers into innovations in SME Banking and SME Finance as well. Poland, Romania and Bulgaria offer the possibility to apply for an unsecured loan online (see details on pages 28-29). Estonia, ranked 36th, is the first country to offer a digital ID that empowers entrepreneurs around the world to set-up and run a location-independent business, and together with Holvi, to open a digital business account (see details on pages 40-41). One example of innovations in SME Banking in Hungary, ranked 27th and second among CEE countries in the ranking, is a digital platform for SMEs launched by OTP Bank that is one of the elements of OTP Bank’s digital transformation strategy (see details on pages 42-43).
SME Portfolio, mln. EUR
PKO Bank Polski
Bank Zachodni WBK
Bank BGŻ BNP Paribas
K&H (KBC) Bank
Raiffeisen Bank Polska
Banca Comercială Română (BCR)
United Bulgarian Bank
ING Bank Śląski
Budapest Bank Zrt.
Source: CEE SME Banking Report 2017, SME Banking Club * - the ranking was only compiled for banks from 5 countries, which were analyzed in detail in the current report, according to available data as of 31.12.2016.
Head Office of BGŻ BNP Paribas Bank in Warsaw
Polish banks are the TOP5 banks in terms of SME loan portfolio volume among the 5 countries analyzed in detail in the CEE region (Poland, Hungary, Romania, Bulgaria, Serbia). Polish banks prevail in the TOP10 list, along with UniCredit Bulbank from Bulgaria, K&H (KBC) Bank from Hungary and CEC Bank from Romania. Pekao bank reshaped and introduced a new SME Banking line in 2017 (see page 9 for details). Alior Bank is one of the most innovative banks in Poland and is actively cooperating with fintechs (see pages 38-39 for details). BGŻ BNP Paribas Bank, number five in the total SME loan portfolio ranking, is the top bank among commercial banks working with Agricultural customers (see pages 30-33 for details). Global Finance named UniCredit Bulbank The Best Bank in Bulgaria for 2018. Idea Bank, a specialized bank for entrepreneurs in Poland, is known for its innovative solutions and services for
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SMEs. At the beginning of 2018, the bank announced a new strategy focused on digital banking (see pages 20-21 for details). mBank announced that it is now possible to register a sole proprietorship through the bank’s online banking system (see page 16 for details).
In addition to banking sector leasing and factoring companies, online SME lenders and fintechs see plenty of potential in working with the micro and SME segment, and are making plans to develop that potential.
The CEE SME Banking Report 2018 with a detailed analysis of 2017 in SME Banking in the CEE region will be available from June 2018. Ask for your copy at email@example.com
CIS & Caucasus SME Banking Report 2018 SME Banking Outlook for CIS & Caucasus region and detailed analysis per countries: Armenia, Belarus, Georgia. Kazakhstan, Ukraine. Banking Groups Overview for CIS & Caucasus region in SME Banking segment Language – Russian Available from June 2018
CEE SME Banking Report 2018 SME Banking Outlook for Central and Eastern Europe region and detailed analysis per countries: Bulgaria, Poland, Romania, Serbia, Hungary. Banking Groups Overview for CEE region in SME Banking segment Language – English Available from June 2018
Ask for your copy at firstname.lastname@example.org
Individual approach to small and medium companies Pekao Bank introduced the SME Banking line last year and changed its the approach to SMEs
t the beginning of this year, Bank Pekao announced the implementation of new packages tailored for SME customers. Will this be an anchor SME product as part of your offer for this customer segment this year? The SME banking line was introduced at Pekao Bank last year. We started from transactional banking and implemented new packages tailored for SME customers. Now we have created loan products, and SME customers will, from now on, have access to sophisticated products that were previously available only to corporations, like trade finance, treasury product for example.
WE HAVE 61 BUSINESS CENTERS WITH DEDICATED SME RMs LOCATED ALL OVER THE COUNTRY, SO OUR RMs ARE EASILY ACCESSIBLE.
With SME customers, not micro-enterprises, but companies from the SME segment, we donâ€™t sell them products, but solutions. We focus on our relationship with these customers, understanding their needs. So, if there is a trade company that needs contract financing right now, then we can help them with that; if a company needs to enlarge its premises, then we can offer investment loans. We also offer our customers leasing and factoring products, so not only pure lending. An interesting offer that we have here at Pekao and that is available to SMEs as well is called e-finance, which is structured financing of contracts, which is
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something that is unavailable to SMEs from other financial institutions in the market. And, of course, our cash management solutions are also available for SMEs. Next steps are simplification of process inside the Bank which will have impact on Customer satisfaction, quick credit decision and time for disbursement. The world is changing quickly; companies are becoming digital, automation matters. We understand it and go with the times. What is your relationship model with this segment? The SME business line has broad coverage throughout the country through dedicated SME centers. We have 61 business centers with dedicated SME RMs located all over the country, so our RMs are easily accessible. These RMs are purely dedicated to SME customers, so they know how to approach them properly. We believe that this adds value. We also have dedicated product specialists in the area of trade finance, treasury, factoring and leasing. These product specialists are in the regions where the bankâ€™s buinsess centers are located to support our RMs in selling these specific products. And regarding loans: what are the main sectors that you are financing? There are no sectors that we exclude. We look at the customer and their financial condition and creditworthiness.
Jolanta Ciskowska Head of the SME Product Development Department at Bank Pekao (Poland)
We mainly work with customers that have PLN 5-60 million (EUR 1.2-15 million) in annual revenues, companies that perform full accounting. Of course, we want customers to have comprehensive relations with us, with a current account, lending products, leasing, and factoring in one RM.
Pekao Bank (Poland) Universal commercial bank, second-largest by share of total assets in Poland. Founded as a state bank in 1929. During 1999-2017 was a part of Unicredit Group. From June 6, 2017, Bank is a part of the PZU Group and Polish Development Fund - state-owned financial group. Key figures: as of 31.12.2017 Number of branches - 851 Number of customers - 5 mln Total Assets - EUR 43 654 mln Micro & SME Loan Portfolio - EUR 1 170 mln
COOPERATION WITH FINTECHS
How and why banks should cooperate with fintechs Maciej Marszałek, Industry Head and Partner at The Heart Warsaw, shares successful stories of cooperation between banks and fintechs, and how The Heart Warsaw is contributing to that trend. before you realize they even exist. Then it is too late, because it becomes less important whether they develop a strategic partnership or merge.
lena Gryniuk: I won’t ask why banks should cooperate with fintechs; that’s obvious. But how? How long in your experience does it take to build an innovation culture inside a bank or corporation to start cooperating with startups and what roadmap and main steps does that process entail? Maciej Marszałek: First of all, it might be obvious for you, though it is not that obvious for all banks. The first step is to admit that large financial institutions neglected the acceleration of fintech growth and how significantly they would drive innovation to this rather stable vertical. There are incredible examples, like Revolut among many others, where innovation came from relatively small players and it could have come from the big banks. That’s one part - understanding that innovation and keeping up with trends, especially now when new generations are entering important banking segments. The second thing is that it requires a focused effort with a plan and budget. There are active competitors out there and they will approach the most promising start-ups
Thirdly, the fact is that technology and relatively easy access to capital lowered entry barriers for fintech players who can now compete in certain niches with fullfledged banks. This is changing the paradigm for relations between banks and customers completely. In the past, banks could dictate the standard customer experience and manage it against their profits. Good CX costs money, not only in terms of mobile banking functionalities but also in terms of customer costs. Revolut is growing so rapidly mainly because the interchange spreads are high and they found a way to make it cheaper for customers. Online F/X portals grow so fast because they offer lower spreads on currency exchanges than banks. This is also customer experience. Banks need to understand that if they don’t board this train, it will leave them behind. This is still not common knowledge. Now to your question. Our job here at The Heart is not to build an innovation culture inside banks. This is their task. We help banks understand the key factors for that to happen and support them in the process. It is rather a side effect of our core task that comes from the fact that some of us at The Heart worked in corporations and managed transformation programs. It is a lengthy process and it takes a lot of time and effort. We partnered with EY, who do this job well, and prepare corporations to work with us. However, it is not rocket science either. Most of all, this openness needs to come from the very top. We organize what we call Board
Immersion Days, which are sessions tailored to this level of management. The successful programs we run start with them. And we see that if the Board is not interested in delegating innovation to lower levels, they are not ready. Once key influential people in the corporation involve themselves in this process, it speeds up dramatically. We see in such cases rapid adoption of some of our programs, taking no more than a few months. If the Board is not interested, we see cases where our start-ups give up at the agreement processing stage. They, too, don’t want to waste time and shift their energy elsewhere. In one sentence - get the Board on board and magical things will happen. OG: What exactly is your job at The Heart? What do you do? MM: I have two jobs, really. Both just started a couple of months ago. I moved back to Warsaw after working abroad in Paris and
OUR JOB HERE AT THE HEART IS NOT TO BUILD AN INNOVATION CULTURE INSIDE BANKS.THIS IS THEIR TASK. WE HELP BANKS UNDERSTAND THE KEY FACTORS FOR THAT TO HAPPEN AND SUPPORT THEM IN THE PROCESS.
he Heart is a European hub for corporate-startup collaboration. Set up together with Mastercard and over 30 corporate partners, it helps leading financial institutions to accelerate digital transformation by scouting and integrating latest technologies from Europe and Israel. The Heart also acts as a venture builder, building next-generation businesses together with corporate partners.
The Heart Warsaw is a venue for the panel devoted to cooperation models between banks and fintechs during CEE18 SME Banking Club Conference, October 29-30. See pages 48-49 for details or visit https://events.smebanking.club/cee/
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COOPERATION WITH FINTECHS
The Heart Warsaw organizes events tailored to support innovation culture inside the corporations and cooperation with start-ups
Madrid for the last couple of years, managing digital and data transformation of AXA entities in Latin America, Africa, Central and Eastern Europe and the Middle East. One comes from my background. I’ve worked in financial corporations for almost the last 15 years, managing mostly digital and data transformation or direct/online channels sales, marketing and ops. Because of this background, I make sure all our programs for financial institutions meet a certain standard and really tackle important challenges that are current, and I know are important points on all CEO agendas. I help shape Board Immersion days and Corporate Club discussions, assess startups we scout, etc. The second and larger one is a new arm of The Heart that I took responsibility for building. I met The Heart while still working for AXA and I was amazed what a great platform it is. Not only to help scout for relevant technologies or fintech products but also as a place where
so many institutions meet at all management and expert levels. And I knew that there is not always a start-up for every challenge. I knew that this platform is a great starting point to do more for corporations that are mature or ambitious enough not only to follow the fintech trend but also to shape it. I shared my thoughts with Tomasz Rudolf, the CEO of The Heart, who told me that he and The Heart management had long thought the same. It didn’t take much time to decide to join forces and create our new offer - Company Builder. We are now assembling a platform, a mix of top notch experts and partners that will form a shared service for all key start-up building components. From strategy and idea creation, through design thinking and UX, software and hardware development, data management, branding, performance marketing and sales capabilities. We also cooperate at a strategic level with our incredible partner Mastercard. Together we are able to offer enormous value, especially to banks. We haven’t even started yet
officially and we already have projects at the PoC stage that are moving fast towards MVP. OG: Can you share some success stories of cooperation between banks and fintechs that became possible thanks to the The Heart? MM: Of course. We have over 30 examples of collaboration. Unfortunately, most of them are under NDA, but we have some that we can share. We have collaborated many times with BNP Paribas. For example, in the offer for new micro companies at eMikroksięgowość (eMicroaccounting), they implemented Cyber Productivity accounting automation, or Vintom (video marketing automation) for BGŻ Optima customers. Also, we were involved in the widely reported Zencard acquisition by PKO BP, the biggest bank in Poland. Maciej Marszałek will be speaking during the Cooperation models between banks and fintechs Panel within the CEE SME Banking Club Conference 2018 in Warsaw, October 29-30. See pages 48-49 for details.
COOPERATION WITH FINTECHS
Elevator Lab: Raiffeisen Bank International started FinTech Accelerator In 2017, Raiffeisen Bank International AG (RBI), launched RBI’s new fintech accelerator program called “Elevator Lab.”
Anders Nordkvist (Asteria) and Johann Strobl (CEO of Raiffeisen Bank International AG)
steria delivers smart cash flow forecasting to help small businesses keep track of invoices. With Artificial Intelligence and big data, Asteria analyses payment patterns and can suggest improvements to get better cash flow. Asteria’s software is integrated into the customer’s and bank’s software. Customers get automated cash flow forecasts and
Extra questions from SME Banking Club How the solution adds on to SME Banking offer? BT: We are aware that managing cash flow (including its grouping, monitoring, planning and scheduling) is a time-consuming and strategically crucial task for our SME customers. Especially so, because cash flow management is usually always a personal task for the senior management or the owner herself/himself, and a process that requires precious time (and nerves). Therefore, our SME customers are open for professional support and willing to pay for a reliable and convenient solution.
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ast year, on 1 June 2017, Raiffeisen Bank International AG (RBI), launched RBI’s new fintech accelerator program called “Elevator Lab.” Following successful application phase with 336 submissions from 56 countries, Raiffeisen Bank International (RBI) has been working intensively with five start-ups starting from October 2017 as part of the fintech acceleration program “Elevator Lab.” One of them - Asteria - is focused on SME Banking. During the proof of concept phase, five pilot projects were developed and successfully tested in Austria and four markets in Central and Eastern Europe (CEE).
receive an alert when there is a cash flow gap and a suggestion to solve it with their bank. Customers get continuous feedback on how to optimize receivables, cash positions and credits and see how it affects their future cash flow. Asteria visualizes the most important parts of their customer’s business software data to help make more data-driven decisions. Through the software, businesses can increase earnings, cut costs and stay one step ahead of their competition.
This insight was the reason why we started an incubation phase to meet this customer requirement. What is the stage of your cooperation between RBI and Asteria? BT: We completed the acceleration phase in February, after a four-month long proof-of-concept phase. In the next stage, Asteria will now focus on our network bank in Belarus and do more testing with local SME customers. Will Asteria’s solution be implemented into the SME offer in the banks of RBI Group in CEE region?
Balazs Topor, SME Product & Segment Leader at Raiffeisen Bank International AG
BT: At this point it is simply too early to answer this question. We have put a lot of effort and time into this pilot project and gained a lot of insight and new knowledge about our SME customers’ needs and the technical requirements needed to offer our customers the perfect product. For now, we know that we want to continue our journey together with Asteria with the goal to – at some point – offer our SME customers the ideal cash flow management tool for their daily business.
Raiffeisen Bank in Romania launches the first edition of Factory by Raiffeisen Bank Raiffeisen Bank has launched a startup program called Factory by Raiffeisen Bank.
aiffeisen Bank has launched a startup program called Factory by Raiffeisen Bank. The primary purpose of the program is to encourage the development of startups, to support them with solid business plans, and to develop and implement viable business projects with added value for the economy that will lead to the implementation of innovative ideas to improve the position of SMEs in the market and increase their competitiveness. A project competition will be launched on the platform (www.raiffeisenfactory.ro) on March 20. The submitted projects will be evaluated up June 29, when the most innovative and viable business ideas will be given loans worth up to 50,000 euros. The loans will be provided through the COSME program, with a guarantee from the European Investment Fund. After projects are submitted, they will be checked to ensure that they comply with the eligibility criteria and then evaluated by Raiffeisen Bank specialists. The startups selected for the final stage will be invited to present their business plan in detail, and the final decision will be made to determine which projects will receive financing through the Factory by Raiffeisen Bank program. The jury will determine the exact amount of funding to be granted to each project on a case-by-case basis, taking into account the request submitted and the needs of the participating entity, as outlined in the project uploaded to the platform. Participants may be Romanian entrepreneurs and companies that may or may not be clients of Raiffeisen Bank when they submit their project. If selected for funding, winners will be required to open an account with the bank to receive financing. Participants in the Factory by Raiffeisen Bank program may be small or mediumsized enterprises with no more than two years of business activity or entrepreneurs who have a business idea but have not yet established a business. By enrolling in this competition, entrepreneurs can test their business ideas and business plans, and they will also be mentored by Raiffeisen Bank specialists throughout the program until their business becomes sustainable. Loans will be granted either in the form of overdraft or investment loans, with a repayment period of 12 months for overdraft and up to five years for investment loans. The loans will be granted with preferential interest rates. Also, the selected startup companies will not have to pay any upfront fees and will benefit from a grace period of up to six months. The platform also offers a selection of news, video tutorials from successful entrepreneurs, a dictionary of business terms, and answers to frequently asked questions about the Factory by Raiffeisen Bank financing program.
What is the scale of the Factory project? How many startups do you plan to support with financial and nonfinancial services within the program? The Factory platform is a broader initiative for SMEs, and financing startup projects is only a part of it. This type of financing is quite a novelty both for us and also for the Romanian market. Although the Bank has an extensive branch network, we an online platform available to allow starting entrepreneurs to have fast, easy access to the program. This way, we aim to capture as many innovative and value-added ideas as possible, in view of evaluation and financing. The only established parameter is the maximum financing allocated for an individual project, i.e. EUR 50,000. This level was set based on our experience in the local market and, according to our estimations, it is sufficient to cover both working capital needs and possible long-term investment needs for the majority of startup entrepreneurs. It is not our intention to limit or set a fixed number of winners before having the chance to see the volume and quality of submitted applications. We wish to attract as many entrepreneurial ideas as possible, but we will select those that propose delivery of products and services in an innovative way and that will add good value. The competition format makes it possible for us to prioritize and classify the projects, while the final round is designed for an open dialogue with the finalists.
All in all, we would be happy to be able to select as many winning projects as possible, but we do not expect to exceed 100 cases in this first edition. Many banks consider financial products for startups too great a risk. How is your bank mitigating the risk here? Traditionally, startup financing was not a banking business due to the higher risks involved. Statistics show that only 50 percent of startups survive the first three years (recent statistics for Romania by Coface). Consequently, in more developed markets, startups are mainly financed through business angels or crowd financing. Part of the financing risks are mitigated by the COSME partnership agreement signed with the European Investment Fund (EIF) in May 2017, worth EUR 177 million. This partnership offers us a solution for covering part of the risks by providing a 50 percent guarantee from the EIF and a reduced financing cost (e.g. 6% for local currency). We intend to address the risks of startup financing both in the analysis/ approval phase and during the lifetime of the loans. In the analysis phase, we rely on the credit application to ask for and receive relevant information both on the business plan and on the individuals supporting the idea. In addition, the final phase involves an evaluation committee mainly from relevant departments of the Bank for selecting viable, feasible plans. The available credit products are designed to cover both current working capital needs and also productive investment requirements, if needed. Of course, serious involvement on the part of the entrepreneurs is expected, both financially (in the case of larger businesses) and in terms of know-how. Once the loan is approved and used,
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Left to right: Teodora Petre – Head of SME Value Proposition, Monica Udrescu – Executive Director, SME Business Line, Bianca Chisulescu – SME Segment Coordinator, Alice Papa - PR
we provide transactional services by means of a current account package that is offered for free in the first year, with unlimited transactions in local currency through digital channels. We also aim to improve the entrepreneurial education of the winners during the lending period by offering consulting and a variety of workshops and meetings, making available to them periodical guidance so as to maximize their chances for success.
the Factory program? If so, how does it differ from the one for other SMEs?
Well, without the Bank’s infrastructure, team and experience, there would be no Factory! For example, without the specialized department that concluded the EIF agreement, we would have no credit product. On a daily basis, however, this is a SME project with PR support. We can say roughly that, in this phase, about 10 people are currently involved in the roll-out and in providing answers to questions from startup entrepreneurs. Remember this is an online-oriented approach!
Last year, we developed a current account package to accommodate the needs of small businesses, including startups, at a low cost. This is an allinclusive package with unlimited transactions via digital channels. Based on our experience and the specifics of the local market, this is aimed at businesses with under EUR 100,000 in annual revenues. When it comes to lending, however, startups “compete” with other established, consolidated businesses. The result, as already discussed, is banks’ preference for borrowers with a proven track record and that are already producing tangible and sustainable results. That’s why the Bank considered it necessary to set up a friendly yet professional platform where startups compete with one another and not with more developed businesses. We consider this to be the ideal way to research and experience the fastmoving startup environment, in an effort to find better ways to support their businesses.
Do you have a special product offer for other startups besides those in
Teodora Petre, Head of SME Value Proposition at Raiffeisen Bank Romania
How many people from the Bank are involved in the Factory?
Can a customer register a business with your bank? Banks are adding new functions to their online banking solutions for SMEs. Registration of business through the bank’s online banking system is one the latest implementations in Poland.
CUSTOMERS CAN REGISTER A SOLE PROPRIETORSHIP IN 10 MINUTES. THE PROCESS IS DONE COMPLETELY ONLINE. At mBank, the entire business registration process, from submitting the application to completing business registration, will be monitored by bank employees, which will enable customers to remain informed about the current status of their application and any further steps that need to be taken.
n February, another bank in Poland, mBank, announced that it is now possible to register a sole proprietorship through the bank’s online banking system. This follows other banks, ING Bank Śląski, BZ WBK, PKO Bank Polski, Bank Millennium and Bank Pekao which had introduced the same functionality earlier. This was made possible by integrating access to Poland’s eGovernment portal through online banking systems. To register a sole proprietorship through their bank, the customer first has to activate a Trusted Profile (eGo) via their online banking system. eGo is an electronic signature that confirms the identity of the citizen in electronic administration and makes it possible to submit applications via the ePUAP platform (electronic platform for public administration services in Poland), and this service is free of charge.
According to a press release from mBank, customers can complete the procedure in about 10 minutes by taking the following steps: Creating an eProfile via the online banking system; Registering their business;
Opening a business current account with the bank; Activating the online accounting service. In this case, the process is done completely online. This procedure is also available to individuals who do not have an account at mBank, though it will take a little longer since it will be necessary to visit an mBank branch or send signed documents and confirmation of identity via a courier.
Source: press release from mBank of February 27, 2018, Online Banking for SMEs Study by SME Banking Club Photo: mBank To learn more about the functionality of online banking implemented for SME customers in CEE countries, please contact us at cee@smebanking. com to request a copy of our Online Banking for SMEs Study.
To learn more about the functionality of mobile banking apps for SME customers, please contact us at email@example.com to get your own copy of the 100 SME Banking Mobile Apps Study more details on the page 17
Mobile Banking for SMEs Compared to last year’s 100 SME Banking Mobile Apps Study, analysis from the beginning of 2018 shows that banks have made progress in terms of the functionality available for small businesses in their mobile apps.
Payment templates Repayment of loans
ost large banks offer some sort of application for business customers. Usually, banks have two mobile apps: one for retail customers, which usually covers functionality for sole proprietors, and the other for companies, covering small businesses and corporate clients. Depending on their legal form, small businesses use one or the other. Compared to last year’s 100 SME Banking Mobile Apps Study, analysis from the beginning of 2018 shows that banks have made progress in terms of the functionality available for small businesses in their mobile apps. To get the full functionality out of a mobile application, however, small-business customers should have access to online banking first. Here are the main trends which we noticed in the region.
Trend 1: Similar functionality available for customers in online banking and mobile banking. More than 80 percent of the analyzed mobile applications have the following features for small businesses: Preview of the available balance in current accounts Transaction history
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Transaction authorization Transfers between a customer’s accounts Transfers to the third-party accounts (domestic payments and SWIFT transfers) Tax payments Some 60-80 percent of mobile apps offer the following functionality: Payments on a future date
Trend 2: Banks are adding functions to their mobile apps that make mobile banking more convenient to use compared to online banking, such as: Biometric access (Touch ID, Face ID) Customization of the start page and widgets to gain quick access to the most frequently used functions Automatic data input from an invoice by taking a photo or scanning a QR code Payments by phone. This functionality is being implemented via HCE, Android Pay. In Poland, this functionality is being implemented by BLIK payments operated by the Polish Payment Standard. To learn more about the functionality of mobile banking apps for SME customers, please contact us at firstname.lastname@example.org to get your own copy of the 100 SME Banking Mobile Apps Study.
How many micro and SME customers are active users of online and mobile banking? The usage of online (desktop) banking is pretty stable but very high. During the last 18 months, we have also seen a very sharp and rapid increase in the use of mobile banking, especially in the entrepreneurial segment. When we observe the everyday life of our customers, we see that the No. 1 tool they use is their mobile phone. So, if you want to be successful in banking for SMEs, you need to have a mobile banking application. The penetration of mobile banking among entrepreneurs at Idea Bank is 40 percent and it’s still growing. Internet banking is about 100 percent.
Tomasz Górski, Board Member at Idea Bank (Poland)
RoBots – a digital revolution at BGZ BNP Paribas Bank The first robot is implemented to automate loan administration for entrepreneurs
GŻ BNP Paribas Bank in Poland built and implemented the first robot to automate loan administration for entrepreneurs in less than two months. Within eight months, the number of robots has increased to 20, which has improved work in 20 areas of Operations. The bank is thus the first bank in Poland to implement robotization of processes on such a large scale. By the end of the year, the Bank intends to double the number of robots and automated procedures. “Operations employees work closely with robots every day, which significantly optimizes their work. Robots take over the most labor-intensive tasks with high volume, which primarily ensures greater process efficiency and flexibility in responding to business development, and allows our employees to focus on complex tasks which require expert knowledge,” says Oktawiusz Kacza, Head of Operations at BGŻ BNP Paribas Bank. Faster loans “with a robot” - up to 300 percent Robotization of processes at BGŻ BNP Paribas Bank also has a direct impact on the customer. Robots support, among others, the lending process in the Bank in many areas, including lending to micros, SMEs, corporations and the Agri sector. Thanks to robotization, the final stage of the loan process, loan disbursement and booking, is fully automated. Involvement of robots at this step speeds up the booking process by up to 300 percent. Also, for some loan applications, robots make it easier for the customer to receive money on the same day a loan decision is made. Robotization delivers immediate results Since the program was implemented (May
2017), nearly 6,000 transactions involving robots concerning loan applications, agreement registration and loan disbursements have been completed in the micro segment alone. Robots have disbursed loans for more than 10,000 loan applications and booked 1,100 guarantees. Currently, robots undertake tasks in many areas of operations related to accounts, payments, execution processes, trade finance and financial markets. The execution time of transactions served in cooperation between people and robots has been reduced by a factor ranging from 30 to 70 percent. Currently, the work performed by robots corresponds to that of nearly 40 employees. Robotization saves time and improves accuracy The implementation of robots at BGŻ BNP Paribas Bank based on Robotic Process Automation (RPA) technology has significantly improved efficiency in operational processes. They provide higher quality because they do not make mistakes. Robots can work in continuous mode, 24h/7, processing large volumes of tasks. Their implementation process is relatively fast because they work with the same applications as employees, do not require additional changes in IT systems, and most importantly, operations are performed several times faster. Plans to streamline and increase processes Robotization at BGŻ BNP Paribas Bank, in terms of the scale of its implementation, is leading the market. From the very beginning, Operations have been fully assumed by robots, analyzing all the processes in which there is potential for the use of robots. Currently, thanks to this technology, 20 different processes are automated, from loan renewals, through generating customer certificates (e.g. mortgage release), handling execution processes, and sending e-mails to clients with an attached bank guarantee. Work to increase the number of robots and the processes they will manage is ongoing. The Bank plans to double the number of automated processes this year. By the end of Q3 in 2018,
robots will be present in all Operations units, and will subsequently be implemented in other areas, such as Compliance, Finance, Security and HR. Source: BGŻ BNP Paribas Bank, press release from 02/12/2018.
Oktawiusz Kacza, Managing Director, Head of Operations at BGŻ BNP Paribas Bank
here is no doubt that the era of artificial intelligence is coming. We live in a time of groundbreaking technological change. Automation and robotization are already everywhere, which can be seen in the example of BGŻ BNP Paribas Bank. The RPA solutions we use allow for precise, yet flexible work planning, creating broader resource management capabilities at peak periods. At the same time, we are improving the use of solutions that will be expanded in subsequent stages to include artificial intelligence (AI) mechanisms. We perceive an opportunity and potential in this area to gain a competitive advantage, which is why we want to use the latest achievements in this field. In the future, we would like to focus on the use of artificial intelligence (AI) and OCR mechanisms, among others, to analyze documents attached to a loan application or quickly deal with specific types of customer complaints.
Invoice Cloud – new e-invoicing platform launched by Idea Bank Group in Poland Poland are required to keep electronic records of this tax in the form of a Uniform Audit File (JPK), and from July 2018, each entrepreneur that pays VAT must send the Tax office all invoices in electronic format. “Invoice Cloud is an extremely friendly environment in which the entire life of an invoice, from its issue, transmission to a counterparty or accountant, to its archiving, remains in digital form. There is no reason for the entrepreneur to use paper at any of these stages,” says Adam Głos.
n February 22 in Warsaw, Tax Care, the largest accounting company in Poland and part of the Idea Bank Group, launched a new online platform called Invoice Cloud, designed to provide a free online platform for issuing, storing and sending invoices. Idea Bank Group’s mission is to connect all entrepreneurs in Poland on the platform. This is the first platform in Poland for e-invoicing, storage and transmission of invoices available for free to all users: entrepreneurs, accounting offices, consumers and public administration bodies. The goal of the new solution is to eliminate paper invoices in Poland. In Poland, 1.5 billion invoices are issued every year, and VAT revenue, estimated at PLN 166 billion in 2018, constitute the main source of budget revenues. Invoices are issued by almost 1.7 million companies. Despite the visible digitization of many areas of economic life in Poland, the issue and further processing of invoices are inseparable from paper. “Even if such a document is issued electronically and sent in this format to the counterparty, it is finally printed and then goes into a binder,” notes Adam Głos, CEO at Tax Care. Paper reigns in invoices Research carried out by the Idea Bank Group shows that 72% of entrepreneurs archive paper invoices in their accounting offices and another 26% declare that these documents are stored at the company’s headquarters. This despite the fact that 30% of
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invoices are issued online, and every fourth invoice is sent to counterparties electronically. Nevertheless, when so many business and private transactions take place online, the estimated 15 million invoices issued by hand on paper is shocking. With its Invoice Cloud, Tax Care, supported by the Idea Bank Group, has a plan to eliminate paper-based accounting documents from economic transactions in Poland.
The platform is extremely safe because it not only meets the IT standards of the banking transaction system but also creates an environment in which documents are sent to counterparties in the form of links protected by a password, not as attachments. The platform is integrated with public administration systems in Poland (REGON, national VAT register), which makes the invoice issuing process a few simple clicks, significantly increasing the security of doing business. New regulations force companies to digitize The timing of Invoice Cloud’s launch is not accidental. From January 2018, all companies that pay VAT in
Adam Głos, CEO at Tax Care.
The platform is available to everyone. “We invite all entrepreneurs, accounting offices, consumers and public administration bodies to use it. We believe that Invoice Cloud will become a unique network of entrepreneurs for whom digitization is an essential element of increasing efficiency and increasing business security. Once again, we confirm with this project that the main goal of the Idea Bank Group is to create groundbreaking solutions that support the development of Polish companies,” sums up Tobiasz Bury, CEO at Idea Bank. Idea Bank Group plans to have 50 thousands users of the platform until the end of 2018.
Tobiasz Bury, CEO at Idea Bank
The Platform is available under the link https://www.chmurafaktur.pl/
omasz Górski is a Board Member at Idea Bank in Poland responsible for innovations and new products. Before he joined Idea Bank in February this year, he was responsible for SME Business in mBank. My first question is about your announced strategy: among other things, you announced the launch of a new platform called Entrepreneur’s World, where you plan to integrate all the necessary tools for entrepreneurs. Is the launch date set already? When do you expect to implement it, and what will be its exact functions for customers? We want to create a kind of ecosystem, Idea’s Entrepreneur’s World, where small businesses can take care of all business matters in one place and within two clicks. So, we want to merge banking, accounting and other administrative matters, leasing and factoring and make a creative mix, so that entrepreneurs don’t need to look for anything beyond the platform. The release will be gradual. We actually released the first part of it in February, Invoice Cloud [a free online platform for issuing, storing and sending accounting documents launched by Tax Care, part of the Idea Bank Group; see p. 19]. We added there fiscal reporting
Interview Idea Bank’s Entrepreneur’s World Olena Gryniuk met with Tomasz Górski at Idea Bank’s Head Office in Warsaw in March. Tomasz joined Idea Bank in February this year. They discussed Idea Bank’s new strategy and plans for the near future. functionality, so that customers are able to send uniform audit files (JPK) to their tax offices. The next parts of our plan will be released in Q3 and Q4 this year. The first new function in Invoice Cloud will be connecting issuing an invoice with factoring, so, in one click, a customer will be able to finance an invoice the same day they issue it. Could you please also give us some more details about your program for customer activation called First 100 Days? What is it about? We have the first 100 days to make a customer love the Bank. When everything is fresh, everything is new for the customer, we want to instill a habit in them of using the Bank. We will introduce customers gradually to Idea’s Entrepreneur’s World. We will show them step by step the key functions of the entire ecosystem, and we will remind them of the most important dates for entrepreneurs: when they need to pay taxes, social insurance etc. And we commit to not selling anything to the customer during these first 100 days. This is only about getting to know the Bank, learning about its functions and building a relationship between customer and the Bank. The main tools that we’ll use for this are the Platform and our customer support line. How many of your customers come to you via digital channels and how many through branch offices? We have a pretty diversified mix. We can see that our primary customers from digital channels are freelancers, we have a lot of customers who work as IT contractors, so these are the customers that use mostly the digital platform. And young entrepreneurs and startup entrepreneurs prefer digital channels. Traditional industries like construction, production, transport and
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Tomasz Górski, Board Member at Idea Bank (Poland) with Olena Gryniuk (SME Banking Club)
trade, they prefer to visit a branch. So, we have this kind of mix. Can a customer open an account with Idea Bank online without visiting a branch? Yes, they can. We are soon going to introduce video onboarding, where we will confirm the identity of the customer by comparing the customer’s face with an ID that they show to the camera. This is going to be implemented pretty soon. Now, however, you can open an account without visiting a branch. And regarding loans: you have a lending product that a customer can apply for via your website: Kredyt z decyzją online. How many customers have applied for online credit via the Bank’s website since
WE HAVE THE FIRST 100 DAYS TO MAKE A CUSTOMER LOVE THE BANK. WHEN EVERYTHING IS FRESH AND NEW FOR HIM the launch of the product? What is the percentage compared to all incoming applications for SME loans? Now, one-third of our customers go through our self-service channel. The remaining sales are made by our call center and branches. But yes, we see that our digital channel is becoming more and more important.
Mariusz Zabrocki, speaking at CEE SME Banking Club Conference 2017 in Krakow, November 23-24.
IWOCA: Online Lending to SMEs Olena Gryniuk met Mariusz Zabrocki (iwoca Poland) in Warsaw in March. Here, they talk about online lending to SMEs and iwoca’s business model.
hat has been happening with SME customers in recent years in the markets where you operate? We’ve seen a lot of financial innovations in SME banking and lending, we’ve seen brand-new companies appear, but we still have small businesses that need money. So what are SMEs doing differently now and how are they evolving? I would say a lot of things have changed both
in the small-business lending space and beyond it. There have been a lot of innovations that somehow adapted to changes that people saw in other areas of their business. So, over the last couple of years, through things like the iPhone, the Internet, and various services, people got used to getting things very quickly, easily and seamlessly. But banking hasn’t really been on the cutting edge of innovation, it hasn’t been following trends in that area so much. Which is changing! Even if I look at what has happened
in the last two years, a lot has changed. There were no real alternative online-only lenders in Poland two years ago. And now we have not only working-capital lenders, but we have completely automated factoring, and leasing that is automated even for micro-enterprises. So, this area has evolved in an incredible way in recent years. In terms of market penetration, however, I think we are still at the very early stage; there is still a lot to do in terms of reaching customers because 80 percent of customers have never considered
Interview anything besides their bank to get financing. Regarding Poland, how do SMEs choose where to get a loan? You are saying they ask their bank first. What do they value more now: a quick decision or the price? It depends on their needs. Financing needs are very complex. If you want to build a new warehouse or buy property, then you need a mortgage. Or you may need to get money for your invoices faster, and you need a workingcapital loan, and all these needs have different priorities. So, when you need a long-term loan, then obviously the price should be your top priority, but sometimes there are situations where you can purchase stock at a very good price or you need bridge financing to start an investment and without that bridge financing everything stops and you are losing thousands of zlotys or euros every day, then the price
really doesn’t matter, what matters is that you get a reliable loan very quickly, and also that you can repay it very quickly when you don’t need the money anymore. So, at iwoca, we focus on this second area, where speed is far more important than the cost. Talking about pricing: can you compete with banks in terms of interest rates? I mean in terms of unsecured lending products? Banks are more competitive with pricing and can offer lower interest rates, as they have a lower cost of funding through their deposit base, but, at the same time, they have greater operational costs for personnel, office space etc., which you don’t have due to the automation of the credit decision process. You touched on two of the four biggest costs that you have when you are lending. So, there is the financing cost and operational cost, as well as the acquisition cost and risk cost. When you look at iwoca in comparison to banks, we obviously have much higher financing costs. They pay 1 percent for a deposit; we pay several times more for our financing. And this is one of the reasons why we have a floor that we cannot
avoid. Yes, our operational costs are only 5 or 10 percent of those of banks. When you look at acquisition costs, then this is something that banks also have in their favor because they have customers, they have branches, they offer tons of different products, so they can invest in large-scale awareness campaigns that pay back. And in terms of risk, we are quite similar. So, I would say that risk costs in relation to revenues are quite comparable between banks and us. And coming back to your question, it is possible if we resolve the acquisition question and the question of financing. So, if we have a partnership, and we have such partnerships where we have an outside investor, it could be an investment fund, it could be a hedge fund, it could be a bank as well, that wants to have certain revenues, a certain yield per year and that wants to enter that space, that’s how we can lower our prices. And on the other hand, we can find a partner, for example, it could be a trading platform, an accounting company, a bank—we work with the biggest accounting company in the UK, such as Xero, we work with PayU in Poland, we work with Commerzbank in Germany and many other partners—they can serve customers almost without any acquisition costs because they already have small business
Mariusz Zabrocki, speaking during discussion panel at CEE SME Banking Club Conference 2017 in Krakow, November 23-24.
80 PERCENT OF CUSTOMERS HAVE NEVER CONSIDERED ANYTHING BESIDES THEIR BANK TO GET FINANCING
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customers. And when you have three such parties together, then we can offer pricing that is competitive with banks. What percentage of your customers comes to you directly and what percentage comes from different kinds of partners? It largely depends on the country. In the UK, small businesses are really underserved, and the situation is much worse than in Poland, for example. Banks are very slow. We did some mystery shopping that showed that four to eight weeks is the time that you need to get a loan when you are a new customer at a bank,
which is ridiculous. Not to mention that smaller tickets are not interesting to banks. There is a similar situation in Germany. Commerzbank doesn’t want customers who want less than 50,000 euros because their processing costs are so high that it doesn’t make sense to serve such small customers. There are situations where banks are not able to provide services because of their IT legacy systems and other challenges that they face. That’s why, in the UK, we are investing more and more in direct acquisition. We have massive direct sales, paid searches, an online marketing channel, and also brokers and partnerships. We have around 8-9 percent of the small-business
overdraft market, which is comparable to the biggest banks. Our product is not entirely an overdraft, but this is the bank product that is the closest, because we obviously don’t have current accounts, but we offer flexible lending for 12 months, which you can easily top up, you can renew it frequently. This is our strategy in the UK. But in other countries, like in Poland, and in markets that we are considering for the future, we want to stay lean, as lean as possible. We don’t want to build operations, sales teams, that is a very long process, very costly. Our biggest advantage is automation. We can provide an automated process without building operations in a certain country. This is our strategy for Poland; this will be our strategy for other markets in the future. Which markets are you considering entering in the future? And what are the criteria? How do you choose?
IN THE UK, WE HAVE AROUND 8-9 PERCENT OF THE SMALL-BUSINESS OVERDRAFT MARKET, WHICH IS COMPARABLE TO THE BIGGEST BANKS
I won’t reveal exactly which countries we’re considering; we have some countries on our radar. The most important things are the regulations, which should be stable, predictable and should allow small business lending without a license, which is not the case in many European countries. The second thing, which is very important, are the partners who potentially could provide us with tens of thousands of customers. Poland is a good case, where you have a very strong concentration in e-commerce but, for example, in accounting, there are no players here with more than a couple percent of the market. We would really look at the markets where we could find partners that have a large share in different areas and have tens of thousands of customers that we could provide automatic lending to. The third factor is access to information. There are countries, like Poland, where access to information is pretty good: you have several databases, you don’t need a banking license to have access to those databases. There are other countries, such as France, where you need to be a bank to have full access to credit data. Or Spain. You might think that Experian and Equifax, they are both in the UK and in Spain, and you would expect that this would be the same thing, but Experian and Equifax have much more data in the UK: you have telco bills data, a vote registry, you have everything at Equifax and Experian, you have very good
Interview WE CONTINUE TO GROW 250 PERCENT A YEAR, SO IN OCTOBER WE HAD 15,000 CUSTOMERS, SO NOW YOU COULD EXTRAPOLATE ON THAT, AND NOW WE HAVE MORE THAN 20,000 CUSTOMERS AT THE MOMENT.
quality of data. In Spain, you don’t have this, it’s much more difficult to make a decision without good-quality data. So, these are the three things: data, regulations, and scalability through partners. You mentioned last year in your interview with our SBB magazine that you were in the process of several integrations as part of credit-as-a-service projects. Could you tell us more about that? Credit as a service is what we call our integrated partnerships, where customers can get a loan immediately without leaving a certain platform. We provide it with Tide, which is a bank in the UK, it’s a mobile-only bank, so you have a mobile app and on the basis of your bank statements and other data that this app has access to, you can get approved, and we have seen a lot of interest from Tide customers. That was already a couple of months ago, and we have seen a lot of people getting approved, checking how much they can get. We are in the process of other integrations with other bank and nonbank partners; it’s a very long process in general. After a couple of years of working at iwoca, I have to say it’s much slower than you’d expect. Do you offer branded or white-label projects here? We are open. Actually, in the case of Tide, it’s pretty much a white label. A customer is using the app, they see that iwoca is the lender because that’s the legal requirement and we are the lender of record, but there is really not that much iwoca branding. So, we can provide a white label to our partners, we also can have co-branded partnerships, and we can have partnerships where customers are redirected to our website, and our brand is visible, and the customer can build a relationship with iwoca. This is especially interesting for partners that are not
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banks, because when you are a bank, then you probably think that I want my customers to think that this is my product and I am the lender, and I have this great service and the decisions are automatic, while in the case of nonbank partners, they are more agnostic toward the visibility of our brand. Last November, during our conference in Krakow, you mentioned that you had 15,000 customers. What is your target for this year? Our traction is very good. We continue to grow 250 percent a year, so in October we had 15,000 customers, so now you could extrapolate on that, and now we have more than 20,000 customers at the moment.
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Is relationship banking going to deteriorate or improve in the digital age? Digitalization is everywhere and, of course, it is changing the way customers interact with banks.
Ozhan Orge, SME Banking Expert
igitalization is everywhere; it is changing the way we think, communicate and find solutions to our most complex problems. And, of course, it is changing the way customers interact with banks. According to a survey for businesses carried out by BCG, “digital capabilities” is one of the most important factors that businesses take into account when evaluating their relationship with their banks, along with business understanding, service excellence and financial stability.
Why do customers want to digitalize their banking relationships? Because they want simplicity, faster and hassle-free service and better control over their day-to-day transactions, factors that help them manage not only their finances but also their time more effectively. To deliver excellent service that meets customer needs, however, flashy smartphone apps and cutting-edge websites will not be enough; apps and websites are not going to drive the digitalization of the banking industry by themselves. To be well positioned in the digital era, banks need to develop a digital strategy to improve their client value proposition, reduce costs and improve risk management. To fully achieve vertical integration, the issues of organization and governance will also need to be tackled. While all banks acknowledge the importance of multichannel integration with a seamless information flow, they have not amended their internal organization and governance mechanisms accordingly. And this leads to a lack of operational excellence, which causes client dissatisfaction and poor sales-force productivity—such as turnaround times on loans, account opening times or the
How important are the following factors when evaluating your business banking relationship? Financial Stability
Location and regional coverage
Credit availability 0
6 9 12 18
Source: Digital in Corporate Banking Reaches the Tipping Point: Is Everyone Ready? https://www.bcg.com/publications/2015/financial-institutions-technology-digital-corporate-banking-reaches-tipping-point.aspx
breakdown of an RM’s time between selling and internal administrative activities. Banks need to adopt end-to-end innovation; only then can they truly enhance their customers’ digital experience. Once this is done properly, with end-to-end solutions, greater automation and integration will reduce administrative loads and speed cycle times, and will reduce the number of required full-time back-office employees. Moreover, the introduction of predictive risk models that analyse a customer’s transactional behaviour and other data to improve credit risk management and streamline processes will expedite loan processes and decrease banks’ risk level. Banks will also use analytics to make real-time offers with the help of digitalization. All these efforts will help relationship managers and sales teams spend less time on back-office, administrative jobs; speed up processes for customers; and spend more quality and efficient time with customers to understand their businesses in greater depth and to provide better and tailor-made solutions. Therefore, I believe that digitalization will not deteriorate relationship banking. With the help of digitalization, banks will provide faster service, better risk management and better, more personalized offers to their customers, as well as better relationship management through their sales personnel. What banks need to do is to invest in their relationship managers through intensive training programs to help them understand the needs of their customers properly, find effective solutions to their customers’ needs and be a part of their businesses. Digitalization is not going to replace relationships; it is simply a very strong and efficient tool for relationship management if you know how to implement and use it properly. Author: Ozhan Orge
Smart VAS (Value Added Services) = SMART REVENUE How to implement Value Added Services effectively
ore and more companies, including banks, are implementing (or are considering implementing) a set of value-added services into their offers. One might think that there are two dominant approaches to these implementations. The first one is spontaneous, the second is rational. The main differences between them are the scale and scope of potential benefits for the Bank or the company that implements them. The spontaneous approach is based on the lack of concrete relationships between the implemented added values and the basic offer of the Bank or company. Example: If a company whose main activity is telecommunications, its VAS offer includes preferential conditions for the purchase of household appliances such as refrigerators and washing machines. It is difficult to find the benefits for the core/basic business. Obviously, it should be assumed that a company can participate in part of the revenue/income generated by household appliances sales. However, it is difficult to say that they will have an impact on the permanent increase in revenue from the core business. The situation is different in the case of a rational approach. In this model, added services must actually support the growth of revenues from the core business. For example, the Bank’s offer includes elements related to clients – their training in skills and competences that they will benefit from - this can bring a number of benefits. Another example is the inclusion of services and solutions that support the recruitment of new employees. If the employer – a manufacturer, with bank support, increases its employment and the resulting increase in production capacity generates more sales, then we will certainly know how to use it. Simply speaking, assuming that the scale of production will be maintained in the long term, there is a greater probability of generating revenue than using the spontaneous approach. What features should Smart VASs have? I suggest that everyone should consider the following features:
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Versatility - having a customer base; it is worth looking for solutions that have a universal character, which allow for production in a short time frame, whether that is within the framework of cross-sell or up-sell base for this offer. The speed of implementation - my experience shows that implementing added services to your offer (to sales) can take up to 3 months. I definitely recommend searching for benefits, whose implementation is not complicated and can be spread over time. Why? The earlier you implement a solution, the faster you will see revenue growth. Potential for growth - I recommend looking for solutions that offer the opportunity not only for a one-off benefit, but for recurring opportunities to generate and grow revenue. Understanding services - the added service offer cannot be complicated, either in terms of the potential customer or our sales force. If our consultant cannot effectively point out the benefits to the customer, there is no chance for productivity. Flexibility of the offer/partner - this is a very important feature. A great deal depends on the tendencies of the partner and the flexibility of its offer; to make it an even better match to the needs of our client. I remember one implementation, where customers expressed initial interest in one of the proposals, but they also suggested the need to implement an alternative. Thanks to the flexibility of the partner, it was possible in the short term and this service was the most interesting in the category. The distribution process - today the highly recommended VAS delivery process should be online remote channels. Alternatively, the ordering process may be online or delivery (depending on the VAS specification) in an offline form. One of the most interesting examples of Smart VAS Alior Bank in Poland has different “Special offers” available for entrepreneurs on its digital portal Zafirmowani.pl. In addition to different discounts, some learning courses are available. Among them are sales topics such as “Designing a growth strategy for sales revenue, even by 20%”. What are
the potential benefits of implementing this type of VAS for customers and the Bank? From the perspective of the customer, an increase in sales revenue does not require a special comment. From the perspective of the Bank, there are many benefits. Here are some examples: Increased customer loyalty – the customer is connected to the Bank longer and the revenue stream it generates is more durable, The increase in revenues and sales is the basis for increasing potential credit exposure, which leads to an increase in interest income and non-interest income, Prospects for longer operation of the company, which also translates into stable income for the Bank.
Author: Wojtek Dembinski, CEO at WspieramySprzedaz.pl Connect with the author Biuro@WojciechDembinski.pl
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Digitalization of SME Finance Overview of digital SME finance in the CEE region
espite the fact that the SME finance space has been evolving in recent years, and that we’ve seen some innovations, the appearance of brandnew companies and the implementation of digital strategies, we still have small businesses that need money, and the CEE region is no exception. The SME credit gap remains one of the most significant constraints to the growth, productivity and even survival of SMEs. And this is both a customerand lender-side problem. On the customer side, many SMEs cannot access credit because they cannot provide lenders with all the required documents. And the process is very time-consuming as well. Lenders, and especially traditional banks, continue to consider small businesses a high-risk segment.
The potential demand expresses the amount of financing that SMEs would need, and financial institutions would be able to supply if they operated in an improved institutional, regulatory and macroeconomic environment. Source: IFC
From March 5 to March 15, 2018, the SME Banking Club conducted a study in the CEE region by checking banks’ websites and by calling banks to find out whether it was possible for micro and SME customers to get a loan quickly and online without leaving their home or office. Here are some of the results: Poland Five of 15 commercial banks that work with SME customers offer the possibility of applying for an unsecured loan online. This service is mainly available to sole proprietorships. Two banks (ING Bank Śląski and mBank) offer existing customers a completely online process of decision-making and loan disbursement without having to visit a bank branch and/or to sign hard-copy documents. All the banks surveyed allow users to see an overview of their loan agreement details and payment schedule via online banking, as well as to pay normal instalments on their loans.
ING Bank Śląski The Bank offers both sole proprietorships and other companies the possibility of applying online. Name of the loan product: Kredyt Obrotowy. Type: working capital loan. Term: up to five years, unsecured. Both existing customers and new customers can complete the entire application process online. Existing customers can apply via the online banking system. In the event of a positive decision, the customer can sign a loan agreement with the bank via online banking (ING BusinessOnLine), thus not having to visit a bank branch to sign a hard-copy agreement. New customers have to apply via the bank’s website. 65 percent of loans to micro customers were sold via online channels in 2017, double the results from 2016. 93 percent of loan applications from corporate customers, including SMEs, were processed online in 2017.
he following banks offer sole proprietorships the possibility of applying online in Poland: Idea Bank (Kredyt z decyzją online), Alior Bank (Pakiet Kredytowy) and mBank (Kredyt w rachunku bieżącym). BZ WBK offers only new customers such a possibility (Kredyt MSP Online). Romania TBI Bank is the only bank in the market that has an online application for its Credit Online product. We asked Florentina Mircea, Chief Business Banking Officer at TBI Bank, about details of the product. Read the conversation below → Bulgaria ProCredit Bank is the only bank in the market that has an online application for micro and SME customers via its website. Serbia No banks allow small businesses to apply for a loan online.
Extra questions from SME Banking Club How many customers have applied for online credit via the Bank’s website since the launch of the product? FM: We launched the product in autumn 2017 and have already had over 800 credit applications. Although this is still a small proportion of all the SME credit applications that we receive, the percentage of online loans is rapidly increasing month by month. The main difference is that, while onboarding is difficult for offline applications, as clients are contacted, visited by our sales team, and they apply after numerous discussions; for online loans, the application is much easier, [as it can be completed] directly on our platform. Online leads are generated in a more retail-like process, through partnerships with equipment suppliers and dealers and online merchants, as well as through digital marketing. Is the process entirely online until the very end? Does the customer need to visit a branch or sign a hard copy of the agreement to actually receive the loan?
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What we see generally in the region is that the online process is available mainly to sole proprietorships, while it is still not common for companies, such as limited liability companies. The benchmark for TTY (time to yes) is one working day. Therefore, there is a lot of room for digitalization here, and not only in the front end (meaning an online application form for customers). There is room for more widespread usage of alternative data in the decision-making process and in assessing the creditworthiness of small businesses. The increasing usage of online banking, mobile banking and mobile phones in general, as well as cloud-based services, big data, and the use of social media will lead to an increase in the global stock of digital data. It has been predicted that, by 2020, the global stock of digital data will double every two years. It is important to note that, by 2020, 60 percent of the global stock of digital data will
be contributed by developing economies. And this is something that alternative lenders will be able to take advantage of. And banks should do the same. And, moreover, we are starting to see new partnerships between banks and fintechs in Europe (see pages 22-25 for the example of iwoca). These partnerships allow banks to offer innovative products and to better serve their SME customers. Banks will be able to offer their customers a better experience with lower capital expenditures if they can learn how to plug fintechs into their ongoing operations. Fintechs will also benefit, as they will gain access to banks’ large customer base, existing infrastructure and lower costs of funds. The full Digital SME Finance Study is available to SME Banking Club members (see page 35 for details). Olena Gryniuk
FM: The entire application and underwriting processes take place online. Due to KYC and AML regulations, the contract has to be signed in person. However, the customer doesn’t have to visit the Bank. Instead, our sales force is available to visit customers wherever it is most convenient for them in order to sign contracts. This can happen at cafés, restaurants, a customer’s office or even at their representative’s premises. Whatever it takes in order not to waste our customers’ time. What was your primary target when launching credit online? FM: Initially, we were targeting small businesses, which were underbanked or underserved by other banks. This category has the largest weight in the overall Romanian SME market in terms of numbers and includes companies that get the least attention from banks and financial institutions in general. They also don’t have the necessary time to deal with bureaucracy and complicated loan application processes, as they are generally sole proprietors or family-owned companies, and the owners are involved in all the company’s functions. Most of the applications
Florentina Mircea Chief Business Banking Officer at TBI Bank (Romania)
come from this category. However, we were surprised to notice that larger businesses were also interested in our online loans due to the very fast response and convenience of the application process. They usually use it for occasional cash flow deficits in order not to delay payments to suppliers or to make trade advance payments to get a discount.
Working with Farmers: Relationship model, Digital Technologies, and Challenges Olena Gryniuk talked to Bartosz Urbaniak, Executive Member of the Management Board of BGZ BNP Paribas and Head of Agri Hub at BNP Paribas
he Agency for the Restructuring and Modernization of Agriculture (ARMA) in Poland has published statistics on preferential loans granted to the agricultural sector in 2017: 4,000 loans were granted for a total amount of PLN 900 million. Cooperative banks make 60 percent of that. Among commercial banks in Poland, BGĹť BNP Paribas is the leader in terms of engagement with agribusiness customers. What are your figures in terms of lending to the
agricultural sector? And BGĹť BNP Paribas makes 40 percent of that amount. Our clients are producing from 60 to 70 percent of agricultural products in Poland. What is your target agribusiness customer? Which sub-industries do you focus on the most? We have been in this market for around the last 100 years. And we are the bank of choice for the upper echelon of agribusiness
Interview WE PROVIDE FINANCING WITH AN EXTENDED REPAYMENT PERIOD WITH NO SPECIFIC LOAN PURPOSE, SO WE OFFER A LOT OF FREEDOM IN HOW THEY SPEND THE FUNDS Bartosz Urbaniak, Executive Member of the Management Board of BGŻ BNP Paribas and Head of Agri Hub at BNP Paribas
customers. We finance the larger companies, those that are more innovative and those that are developing. Of course, we track which segments are more risky or less risky during each period, because it’s agriculture. What are your core financial and nonfinancial products for this segment? Loans. Working-capital loans for farmers. We provide financing with an extended repayment period with no specific loan purpose, so we offer a lot of freedom in how they spend the funds, which is not the case with many products for micro and SME financing. It’s secured, collateralized. The main collateral we take is agricultural land. We don’t take as collateral other commercial land or land with houses on it – that is for people to live in. We take agricultural land only; we treat it as a production asset. What is your relationship model with agribusiness customers? For me, they are the most conservative segment among business customers, and they prefer traditional banking, meaning an RMbased relationship model and servicing
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at their bank branch. It doesn’t seem like they are going to become digital anytime soon despite being located long distances from a bank branch. How do you see this? That is a very good question. The model
WE HAVE BEEN IN THIS MARKET FOR AROUND THE LAST 100 YEARS. AND WE ARE THE BANK OF CHOICE FOR THE UPPER ECHELON OF AGRIBUSINESS CUSTOMERS
for our relations with farmers is still very traditional. They prefer a regional manager, preferably from the area, preferably speaking their language and with the same accent. If they’re from the same school, that’s even better. This is one side of the coin. The other side is the vast use of the internet by farmers.
Ten years ago, only 13 percent of farmers in Poland had access to the internet. Now more than 90 percent of farmers have access to the internet. And they use the internet a bit differently than other customer segments. They look for business information on the internet, and that’s mainly what they use it for, not entertainment or whatever, but strictly business. What’s more, we have a lot of haters on the internet in Poland, people who post negative comments in various forums. Farmers are very peaceful people. If someone tries to say something ugly, there is an immediate reaction, saying “we don’t behave that way.” They are gentle, supportive. And for them, the internet means more than it does to other people. Naturally, farmers are isolated from each other, so the internet is a sort of market square for them, they can talk, exchange information among themselves. So if they have access to the internet, they have digital banking. It’s interesting for Poland as well that, compared to other markets, farmers in Poland are younger and better educated, and they use the internet for everyday activities. But still, if they would like to take out a loan or make an important
decision from their point of view, they need to have a relationship manager they can visit in person and agree on what they want to do. At the same time, these people are incredibly loyal. We have farmers who have had current accounts with us for about 100 years, so their grandparents opened an account with us in the 1930s, and they don’t have an account in another bank. When we have an audit, they can’t believe that it’s possible. They say, “This is the wrong account opening date.” And we say, “No, that’s the date.”
BGŻ BNP Paribas has launched Agri Hub, and you are heading it. What are your targets now? This is a new initiative within the Group. I’m very proud to have been appointed to start it. BGŻ Bank has a 100-year history working with this segment. BGŻ Bank joined BNP Paribas Group a little more than three years ago. And during this period, the Group carefully observed how we were conducting business in this sector, how sustainable the business is, how safe. And finally came to
the decision that we would like to replicate this model in other markets. We conduct this business using a very sustainable model, one that is very customer-friendly and also very risk-friendly. We can say that we are a bank that has survived by being specialized. In the meantime, we became a universal bank, but we remain specialized in the agricultural business. So, the Group will extrapolate this model to countries where agriculture is important for one reason or another: Ukraine, Turkey and North Africa. In Poland, the agricultural business is important because it is an important part of Polish exports. A large section of society has a connection to the sector, with more than 25 percent of the population living in rural areas. And even if you are not a farmer, in rural areas, you are connected with the sector anyway. Ukraine – a sort of Saudi Arabia in agriculture due to its significant bank of black-soil land – is the best country for agricultural. Maybe you wouldn’t notice it at first glance, but Turkey is a number 5-8 on the list of the producers of the agricultural production in the world. This is a huge country in a very strategic location, the last country where you can produce food on an industrial level. After Turkey, the desert begins. And Africa, I insisted that we should go to Africa for social reasons as well. We will mainly. These countries have tremendous potential in agriculture, which is usually connected with irrigation and new techniques. And we as a bank are in instant contact with companies that are delivering modern solutions to the market. Ten years ago, for example, it was very hard to grow anything without water. Now we are closer making it possible to grow crops with only a relatively small amount of water. At the moment, in a small field but, nevertheless, you can already grow some crops with limited water resources. Unfortunately, these are GMOs. How many people will be involved in Agri Hub’s activities? Now, on a permanent basis, 40-plus. Including those who are partially engaged in the project, we have more than 50 people. This is quite a serious approach. And there will be another phase where we have separate teams in each of those countries. We don’t want to deliver this service without the participation of local teams.
In your opinion, how can banks cooperate with agrotech? These companies are small, and they usually deliver certain small elements for farmers. We work with two or three such agrotech companies. Our insurance partners use drones. But the usage of drones on a larger scale is essential for Ukraine, for example, where 500 hectares is considered a small farm. In Poland or, the Netherlands let’s say, a farmer can walk around his farm in 15 minutes, having 10 hectares on average. For monitor the collateral remotely, we use satellites, as they provide higher-quality pictures so that you can get more information about the field. Generally, a lot of exciting things are happening in this area. For example, I can tell you the name of one of the companies we are cooperating with, HiProMine from Poznan. They are trying to establish food production from insects at an industrial level. And this is not only food for people; by the way, around 80% of people eat worms. It’s only in Europe that we think that this is strange behavior, but in Africa, Asia, Latin America, they don’t have any issue with this. But this is about preparing feed for animals like chickens and
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fish. It’s a fantastic idea. Because you can use this to feed fish. And, in fact, this is what fish are used to eating every day, this is natural feed. Thus, we can stop the devastation of the natural environment. These worms are fed by waste from groceries. So, they also
IN POLAND, THE AGRICULTURAL BUSINESS IS IMPORTANT BECAUSE IT IS AN IMPORTANT PART OF POLISH EXPORTS. A LARGE SECTION OF SOCIETY HAS A CONNECTION TO THE SECTOR, WITH MORE THAN 25 PERCENT OF THE POPULATION LIVING IN RURAL AREAS
clean the environment, they don’t use water. Water usage is an extremely important issue, or it will be in the future. To put it another way, the energy required to produce food for human consumption is high. It takes four calories from plants to produce one calorie of chicken and 14-15 calories to produce one calorie of beef. To produce one kilo of meat, you need 10,000 liters of water. With worms, it takes two calories to produce one calorie of chicken protein, so it costs half as much from that perspective, and water usage is reduced around 90 percent. This is a revolution in terms of food production. So when somebody talks about hunger and similar issues, these guys can answer those questions. GMOs have not been accepted by society in general; we rejected it. But GMOs provide a lot of answers in terms of hunger or how to feed the world. So, this is another suggestion for how to solve the problem, which is, in my opinion, much better than the previous one; it could save the world. Bartosz Urbaniak will be speaking at the CEE SME Banking Club Conference 2018 in Warsaw, October 29-30. See pages 48-49 for details.
Leasing - one of the primary sources of investment financing for farmers in Poland In 2017, agricultural machinery worth a total of nearly PLN 4.4 billion was financed through leasing. The leasing market is benefiting from the bullish agricultural sector figures, with forecasts pointing to a continuation of this positive trend in 2018.
THE NUMBER OF PIECES OF AGRICULTURAL MACHINERY AND EQUIPMENT FINANCED THROUGH LEASING INCREASED FROM 18,468 IN 2016 TO 27,098 IN 2017, UP 47 PERCENT YEAR-ON-YEAR for farmers. As obtaining an EU subsidy is complicated and time-consuming, financing through a loan, farmers can expect a fast decision, and in the case of leasing, arrangements can be made Tomasz Sudaj, directly with equipment Managing Director of Market suppliers. In fact, equipment Strategy at BZ WBK Leasing (Poland) is usually ready to be picked up and used within a few days. For this reason, an ever ccording to research conducted by increasing number of famers are using leasing the Collegium of Economic Analysis services. In 2017, leasing companies financed at the Warsaw School of Economics, agricultural machinery worth a total of nearly the situation in the agro-sector is expected PLN 4.4 billion, an increase of 45.4 percent to remain positive. The confidence index in compared to the previous year. The number the last quarter of 2017 was +11.9 points, of pieces of agricultural machinery and i.e., up 0.4 points from the previous quarter equipment financed through leasing increased and the sectorâ€™s best result since 2007. This is from 18,468 in 2016 to 27,098 in 2017, up undoubtedly a cause of optimism, especially 47 percent year-on-year. Some 7,001 units since the winter downtime in the market is were financed by BZ WBK Leasing, the largest about to end. Farmers had a prosperous year in number among leasing companies in Poland. 2017, and are expecting bumper yields again Just as investments opportunities for Polish in 2018. This should translate into increasing farmers are expanding, so are the financing investments. Leasing and loans remain the offers available to them. Our experience easiest and most effective forms of financing shows that the most effective option is
direct cooperation with manufacturers and dealers, who can mediate the sale of vehicles and equipment through factory financing programs. For example, BZ WBK Leasing has been supporting Kubota tractor buyers for years, offering five options for interest free factory financing. The exclusivity of this cooperation and the attractive conditions (in the case of Kubota equipment, the repayment period can be from 18 to 60 months, with a down payment of 20-40 percent, and four to nine payments) translate into benefits for all parties: the lessor, the producer or dealer and, above all, the customer, who can purchase equipment without additional interest. Seeing this potential, we are constantly expanding our offer in this direction. Currently at BZ WBK Leasing, we offer factory financing for Kubota, Kverneland, Akpil, Expom, Stiga, Metal-Fach, Metal Tech, Krukowiak, Wood Mizer, ZasĹ‚aw, Farmtrade and SaMASZ products.
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Agile way of working in SME Banking ING implemented an agile way of working to deal with customer demands more quickly. This new way of working gives the teams end-to-end responsibility for a customer functionality.
NG Netherlands introduced an agile way of working in 2015. ING Bank Śląski in Poland was one of the first banks to implement agile methodology on the Polish market. Olena Gryniuk asks Marcin Kryszeń, Executive Bank Director responsible for SME/MC Digital Transformation at ING Bank Śląski, how the agile approach is working at the Bank. How did you arrive at this transformation? And what are its primary goals? The world is changing faster than we could have imagined a few decades ago. Technology has a greater impact on our lives than ever before. Uncertainty and complexity in our
Interview environment are growing at an exponential pace. If we want to keep up with that pace, we have to learn to change and adapt. I believe that continuous education and improvement are crucial elements of not only modern organizations but also in each of our lives. At ING our purpose is to empower people to stay a step ahead in life and in business. We want to help others navigate that complex environment, providing our customers with the most effective solutions. To do so, we have to be more flexible. The agile transformation started a couple of years ago as a way to help us achieve those goals. One of the first projects in SME/MC based on the agile way of working involved internet and mobile banking system development – ING Business. Interdisciplinary teams, consisting of both business and IT, worked together on a daily basis sharing common targets and responsibilities. After its successful implementation, we decided to move forward with the agile way of working on a larger scale. In June 2017, we implemented it in our SME/ MC Division. How do you define agility? The rapid development of digital technologies has changed all of our behaviors and expectations. To meet those expectations, we have to build an organization which is able to continuously improve. The ability to quickly create solutions tailored to the needs of our clients and the pace of implementation are the key. Make your clients the central priority. Try to understand and address their problems. Experiment and modify your hypothesis as fast as possible. Do not be afraid of failures, but learn from them. This is where agility comes in. Agility is about people, their entrepreneurial spirit, cooperation and empowerment to change things. The ultimate goal of the transformation is to influence organizational culture and peoples’ mindset. How many people use the agile approach at the Bank? Can you describe how many people work in each “squad” within the
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tribes and what their functions are? At ING Bank Śląski, over 1,000 people work in an agile way right now. But it’s a process of continuous change. Since last year in the SME/ MC, we have five tribes, including business, IT, operations and financial representatives. Tribes are organized around a specific subject and internally are divided into squads of about 7-10 people. Each squad has a dedicated product owner and works on a separate backlog. Apart from that, we have chapters responsible for areas like e.g. user experience and customer intelligence which support the whole structure. The transformation process is supported by agile coaches who help us on a daily basis with this new way of working.
ONE OF THE FIRST PROJECTS IN SME/MC BASED ON THE AGILE WAY OF WORKING INVOLVED INTERNET AND MOBILE BANKING SYSTEM DEVELOPMENT– ING BUSINESS
How exactly is agile working in SME banking within the Bank? Could you please give us an example of the products implemented as a result of the agile approach? For me the most impressive example of the success of the agile way of working is our internet banking system for SME/MC development – ING Business. All parties,
including business, IT and an external vendor, are organized in one Agile Center (tribe) and within it 7 scrums – small autonomous teams with end-to-end responsibility for the specific functionalities of the system. But right now you can find examples everywhere, from internal systems like the CRM to the new product implantations like internet sales of insurance products to SM/MC. What are the main steps or elements of the agile transformation? Like with every transformation, the most important thing is to answer the question “why are we doing this?” That should be the main focus throughout the process. Agile is very helpful but it’s not a magical cure for every challenge we face. You have to align with your strategy and goals. Decide what part of the organization should be included. Verify whether your current process and IT infrastructure are ready. Focus on transparent communication and team education. Make sure to involve people from the very beginning. Finally, give yourself time to adjust and make space for errors. You will learn and improve as you go along. How do you measure the impact of agile implementation? Agile is a way of working that is as good as the results it brings. It is difficult to find clear and straightforward performance indicators. I can list a couple of areas when I think about successful agile implementation. From my perspective, these are customer satisfaction, personnel engagement and satisfaction and the pace of delivery of new product/services. We have been closely monitoring them for years and we saw better results within the first months after implementing a new way of working. But these do not change overnight. A lot of effort, continuous learnings and adjustments are still needed. Transformation is a process, but I’m convinced that we are on the right path.
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CEE17 INSIGHTS & KEY TAKEAWAYS
Alior Bank: Digital strategy for SMEs and cooperation with fintechs During the CEE SME Banking Club Conference 2017 in Krakow, Olena Gryniuk talked to Marek Soltysiak, Head of Business Banking Products, and Kamila Wincenciak, FinTech Partnerships Manager at Alior Bank (Poland) about Digital Disruptor Strategy, SME Banking and cooperation with fintechs.
Left to right: Marek Soltysiak (Alior Bank), Kamila Wincenciak (Alior Bank), Olena Gryniuk (SME Banking Club)
Olena Gryniuk: Alior Bank has announced its “Digital Disrupter” strategy to be implemented by 2020, for SME as well. Today, we are speaking a lot about the digitalization of processes in banks and for SME customers and how banks can help them. Does the “Digital Disrupter” Strategy at Alior Bank cover cooperation with fintechs, giving micro enterprises more access to lending? Marek Soltysiak: Yes, in our strategy for coming years, we have stated that one of our primary targets is to cooperate with fintechs. And when it comes to lending, there is always room for such cooperation. At the end of the day, depending on
what type of loan is required by our customers, having the right product at the right time is key. So, as far as lending is concerned, there will always be a need on the market for instant access to money, and this is where fintechs can contribute with impressive innovation approaches to, for example, risk assessment or fraud detection. And we definitely want to be a part of this journey and cooperate with them to somehow address this issue for our customers as well. OG: You launched Zafirmowani.pl – a digital portal for SME customers. What were your targets when launching and what key features are available for customers?
Marek Soltysiak: Yes, we believe that digitalization is the future for SMEs, not only in terms of banking but also in terms of how they run their daily operations. So, we wanted to deliver an integrated ecosystem to help them run, grow and facilitate their daily business. Therefore, the key features are built around daily operations: we offer online accounting with tax statements, HR documents, registers, reporting, etc. In addition, we have combined many additional features that help save time and money, normally spent on offline activities, for example, how to get the knowledge you need to run your business, how to operate within EU funding, how to run HR registers and operations, and we can even run your reception.
CEE17 INSIGHTS & KEY TAKEAWAYS
So, being an active user of Zafirmowani gives you access to the main daily features, but also additional benefits and business opportunities. The first thing is that you can build up a database of contractors, partners and potential partners because each company has an opportunity to make its business card available to all users. The second thing we are working on intensively is building a pool of special discounts for our users, so we invite other companies to cooperate with us on the development and maintenance of the platform and then to offer their services to our users and customers. So, we expect our customers to benefit not only from the digital aspect of the platform and the easiness of daily operations but also from the value-added services that will be presented to them, embedded in our processes and offered directly to our business customers when and where they need those services. Kamila Wincenciak: And this is actually an interesting synergy that we have between the FinTech Department and SME Business Unit. We are focusing on looking for interesting solutions that we can offer as value added services on the Zafirmowani portal for SMEs. OG: Kamila, tell us please about the new FinTech department created at Alior Bank? What are your aims and goals? KW: The FinTech department was established just two months ago, so it’s a new thing. Our main goal is to scout for the most interesting fintechs to bring added value and speed up innovation process at Alior Bank. So, now we have two departments – one is the Innovation Center, which is mostly focused on creating innovation within the company, and the FinTech department, which is responsible for scouting and bringing innovation from the outside. We have a very ambitious goal – to have 20 valuable partnerships by 2020. To meet this goal, we first need to create tools, which is why we are now in the process of implementing an open API platform that will help us to easily to integrate with fintech companies to provide additional products to our customers. Part of the open API platform will be a sandbox, which is a portal for the startups that we want to cooperate with, where they can simply plug in and test their technology on the anonymous data that we provide. So this is mutually beneficial: startups can test their solution in a real business and testing environment, and we can see whether a solution is something we actually need at the moment. We will also have a new physical
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office for our Innovation and FinTech departments, which will also have a dedicated space for startups, because we believe that cooperation with startups on a daily basis will bring the best results. OG: Could you give us some examples of successful cooperation with startups? KW: Yes, we have already implemented interesting projects. For example, last year we launched HAIZ with the young fintech company named One Way. HAIZ is a mobile banking platform for customers with different innovative features like a communicator, and within the communicator, our customers enjoy P2P transactions with chatbot functionality and an m-commerce platform where we offer additional products and discounts for our customers. Our cooperation with One Way is a great example of how a large
THERE WILL ALWAYS BE A NEED ON THE MARKET FOR INSTANT ACCESS TO MONEY, AND THIS IS WHERE FINTECHS CAN CONTRIBUTE WITH INNOVATION APPROACHES TO, FOR EXAMPLE, RISK ASSESSMENT OR FRAUD DETECTION. corporation and small startup can work together in an exclusive partnership to create a totally new product. Another example of cooperation with a startup is our partnership with VoicePin. We have launched a Dron which is an AI agent designed to communicate verbally with our customers. This is actually an example of how technology, which is disruptive, can be assimilated into real business. We use Dron in our daily activities in processes like debt collection, FATCA statement collection and marketing interviews. I’d also like to mention another type of cooperation with startups, which is our acceleration program. The program was set up in March this year; it’s a one-year program divided into two editions. We’ve just finished the first edition, and we are starting the new one. This is a program in cooperation with Huge Thing Venture Capital, where we accelerate at least 20 startups. Each startup can get a financial donation thanks to the PARP (Polish Agency for Entrepreneurs
Development). They can receive up to 200,000 zlotys (approx. 50,000 EUR) for their project, take part in a lot of interesting workshops and travel to London and Berlin to see the environment and the market in these cities. Another key element of this program is mentoring. Alior Bank is engaged in mentoring, and each startup has a mentor from Alior Bank that works with the startup to develop a product that will be suitable and applicable to Alior Bank. So, we are working to develop something that could be implemented in Alior Bank. And I can say that during the first edition we already identified startups that we will probably want to work with. At the beginning of the next year, we will have the first test of these concepts, and probably the first one will be a startup that has product we could add to the Zafirmowani portal for our SMEs. OG: Do you have some special offers for startups as customers? MS: When it comes to fintech startups, we have a great offer – an acceleration program Kamila talked about – rather than a product offer as the product needs to be tailormade to the specifics of the area they want to work in. When it comes to regular new businesses, new startups, they have access to the full offer that we provide to SMEs. And to help them grow, to help them to start their business, we offer them our eKonto Business current account which is totally free for startups. We can even give them cashback of up to 1500 zlotys yearly, so they can additionally benefit from their growing business. OG: What are your short-term plans and targets in terms of products and services for SMEs? MS: In two words: digitalization and innovation across our full product range, services and processes. This is what we are focusing on. We have identified more than 70 innovation and development initiatives in 10 product areas, and we intend to accomplish the implementation process by 2020 and be where the market is going. We are trying to address this issue right here and right now and be prepared for the moment when digitalization, which is inevitable, happens. So, that’s the key focus and target for us in the nearest future.
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CEE17 INSIGHTS & KEY TAKEAWAYS
CEE17 SME Banking Club Conference in Krakow (November 23-24, 2017)
Elina Räsänen (Holvi)
Holvi: a digital business account to e-residents Holvi provides entrepreneurs in Finland, Germany, Austria, and e-residents of Estonia with an entirely online current account and business management app made by entrepreneurs experienced the pain points of building and managing a new business.
uring the CEE17 SME Banking Club Conference in Krakow (November 23-24, 2017), Elina Räsänen (Head of Marketing at Holvi) presented a digital business account to e-residents launched by Holvi last year within the E-Residence program in Estonia. Here we publish key messages of Elina’s presentation.
Anyone around the world can apply to become an e-Estonian. The benefit when you become an e-resident is that you can also easily establish an EU-company without ever going to the EU or Estonia.
Key reasons to become an e-resident E-residency - a new digital nation for global citizens Estonia is the first country to offer e-Residency, a government-issued digital ID available to anyone in the world E-Residency offers the freedom to easily start and run a global business in a trusted EU environment
Digitally sign documents and contracts Verify the authenticity of signed documents Establish an Estonian company online Administer the company from anywhere in the world Conduct e-banking and remote money transfers Access online payment service providers
CEE17 INSIGHTS & KEY TAKEAWAYS
In practice this means that as an e-resident you can operate anywhere. Let’s say you are a freelancer in Columbia and you want to sell in Europe. You need an easy way to sign documents with your European vendors, a bank account that you can operate in euros, and a certain kind of reputation. So, with e-residence you can open an EU company and a bank account in the EU without ever having to step foot in the EU. It is a revolution because we can give an equal access to everyone around the world to banking and the chance to run a business. So, it’s as easy for Swedish designer as for a Columbian designer to run their business in the EU, a global business without borders.
Company founded in 2011, HQ in Helsinki Built by Entrepreneurs for Entrepreneurs A payment institution authorized and regulated by the FIN-FSA of Finland Services offered online only, cross border to target markets - now also e-residents Part of BBVA’s New Digital Business Unit since March 2016
Our core product is the bank account – a current digital business account for entrepreneurs and attached to Mastercard. And that’s the foundation of what we do. On top of that we have built management tools for entrepreneurs. So, an entrepreneur can: Invoice customers Do bookkeeping Carry out online sales And everything is integrated into the account. It’s a one-stop-shop for finance. From a business perspective, you can collect income, pay your expenses and manage your finances. Full cashflow management for business is what we are aiming to do, not only banking but end-to-end financial relationships for our customers. What e-residents need to get a Holvi account When you become an e-resident, you get an e-Resident ID Card and the ID Card reader, so that you can attach it to your computer. Our
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systems are integrated with this, so to verify your identity we only need the ID Card and your passport: color photo, name page. And the next doc Business registry extract from Estonia which confirms that your business is officially in Estonia. That’s it! The process of opening an account takes only a few minutes. The verification process takes from one hour to one day at most. Normally, you are operational within the next business day and fully verified to run your business.
Extra questions from SME Banking Club Estonia’s target is to have 10 mln e-residents in seven years. How many have already registered and how many are using a Holvi account? ER: I think until last month or so, it was 27 thousand e-Residents. Of course, 10 mln is a very bold goal to achieve. E-Residence has been possible for three years, so we will see big growth coming from there. Out of 27 thousand e-Residents about 5 thousand have registered a company. At the moment, at Holvi we have about 25% of all e-Residents who have a business. This is still a very new partnership and the figures are still quite small, but we see huge potential, and this is a very strong channel for growth for us in terms of customer acquisition. There are two other banks that offer current accounts to e-residents – Swedbank and LHV bank (Estonian bank HQ in Tallinn). How is Holvi different? ER: These banks still require a visit to Estonia to open an account, so that’s not an e-Residence friendly option if you have to travel from Bangladesh to Estonia to open the account. This is the biggest difference. And then of course, Holvi is not only a bank account, it also offers other features. So our customers, also e-Residents, can use an online shop and start selling online. They gain contracts with Visa, Mastercard, many local bank partners and American Express, for example. What is the cost of servicing a current account in Holvi? ER: In Holvi we have two models. Basically, we are subscription-based banking. Normally our fee is 8 EUR per month, which includes the account, card, invoicing and bookkeeping. For e-Residence, we have a larger package for 35 EUR. The reason is that this is new territory for us and what happens in the background – verification, fraud prevention and things like that - are something that we are learning and that means more expenses for us. So, the cost for an e-Resident is higher than for our other customers who register in Germany, Austria or Finland. The second model is a transaction model, when you get an account for free, but then you just don’t get a card, and you can carry out transactions for 50 cents. Notes kept by Olena Gryniuk
Scan QR code to watch this presentation during the CEE17 SME Banking Club Conference in Krakow (November 23-24, 2017)
CEE17 INSIGHTS & KEY TAKEAWAYS
OTP eBiz allows SMEs to manage their business on a single digital platform One of the elements of OTP Bankâ€™s digital transformation strategy in Hungary is the implementation of the digital platform for SMEs, called OTP eBiz. Olena Gryniuk asked Tamas Josvai (OTP eBIZ) about the details of the project. Tamas Josvai (Managing Director at OTP eBIZ), speaking at CEE SME Banking Club Conference 2017 in Krakow, November 23-24.
uring our conference in Krakow last November, you presented the OTP eBiz solution for SME customers, which is a digital platform that connects all the following functions in one place: online onboarding, e-invoicing (receiving and uploading incoming invoices, storage of invoices for eight years), access to online banking and the possibility of carrying out transactions without logging in to the online banking system, a financial dashboard, online accounting, detailed financial analysis and setting different alerts. Please tell us in more detail: how long did it take you to launch the platform? How many people are involved? I first had the idea back in 2015 when I was working for OTP Bank as Head of SME and Corporate Sales. I felt that it took a lot of time and effort for SME owners to carry out everyday administration and to gain general understanding of financial issues, which in most cases hamper their core operation. So, in December 2015, we started to put together the first concept of how we could make the life of an average SME easier. The first half year was about management alignment to get every stakeholder involved and to reach a collective understanding of the concept itself. Finally, having the concept, the business case, the organizational structure, and all the details approved by the Bank, in June 2016 OTP eBIZ ltd. was established and the implementation phase has taken place. We set the scope of the minimum viable product (MVP) to that functionality level that
was doable in six months (by December). These were challenging times, and the team didnâ€™t get much time off that summer. In January 2017, we rolled out the MVP to a narrow customer base for three months to test and learn, and we started our first campaign countrywide in March 2017. Under such a time pressure there is only one organizational set-up works fine and it is agile. In the conceptual design phase, there were around four or five full-
WE HAVE NOW NEARLY 3,000 COMPANIES REGISTERED AND AROUND 4,000 USERS. IT IS DIFFICULT TO BENCHMARK AGAINST ANYBODY ELSE, SINCE THERE IS NO OTHER SOLUTION OF THIS TYPE IN THE HUNGARIAN MARKET
CEE17 INSIGHTS & KEY TAKEAWAYS
time workers from various banking backgrounds, and we scaled up organically. Now, there are more than 30 people working for OTP eBIZ Ltd. We are still going agile and at the same time apply lean startup methods, especially in the core product and IT development areas. Is this platform available only to OTP Bank customers or to everybody? What was your target when you launched the platform? And what are your short-term targets for this year, let’s say? Originally, the target segment was SME customers with an account at OTP Bank, but after the first couple of months, we expanded our service to every SME. Now, a non-OTP client can have fully functional, free billing software to issue and receive bills. Of course, if a SME client has an account with OTP Bank, then the platform’s functionality is much broader. In terms of targets and aspirations, it is very difficult to make predictions for an innovation that creates a new category in the market. Still, we have KPIs that the owner (OTP Bank) uses to evaluate our performance, which is based on the number of users. At the very beginning, we expected much steeper client ramp-up, but we soon realized that it needed time. Now I think we are where we thought we should be. How many users do you have already, and what is your benchmark here? After the first year of operation, we now have nearly 3,000 companies registered and around 4,000 users. It is difficult to benchmark against anybody else, since there is no other solution of this type in the Hungarian market, but we are keeping our eyes on large international fintech companies, following their performance and trying to adjust that with their market size. I think we are now on a very good track. Can you tell us more about the functionality: how exactly is the onboarding process going? How is OTP eBiz integrated with online baking? We have always aimed to implement very simple and seamless functions where the number of
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WE HAVE REAL-TIME INTEGRATION WITH OTP BANK’S CORE ONLINE BANKING SYSTEM clicks and data entry by the user should be at a minimum level. For example, the onboarding of eBIZ shouldn’t take more than two minutes. First, the user provides an email address, then sets their username and password and adds the details of the company under their supervision. All data entry is supported by publicly available databases and autofill functions. For example, when you start typing in the name of your company, we autofill the rest of the company details (address, bank account number, etc.). Finally, you add your bank connection to your eBIZ account. For this step, we ask you to submit the online banking credentials that you use with OTP Bank, and that’s it. From then on, you can see all your banking transactional data in eBIZ and also have the option to initiate a money transfer, reconcile your issued invoices with your bank account transactions, receive all the
related notifications (e.g. if somebody has paid the amount of an invoice that you issued) that helps you understand your business. The last step is to give the proper user rights to your co-workers and accountant, so that they can work together with you on the same platform. We have real-time integration with OTP Bank’s core online banking system, from which a limited number of functions are offered for our users now. Do you plan any additional functionality in the next release? Yes. We are soon going to expand the functionality with a couple of very exciting functions using machine learning and the opportunities offered by PSD2, but we’ll keep the details to ourselves for the time being. I’ll let you know when they are on. Are there any similar solutions available in the Hungarian market? How are you able to compete? In most cases, users first see eBIZ as an online billing software, but then it turns out that it is much more. We call it a Digital Financial Assistant, which is unique in Hungary, with no real competition. According to our research, when a user decides to use eBIZ, they check other billing software to compare with so for want of better, we compete in that segment. Anyway, it is easy to position eBIZ among those competitors since we deliver banking and invoicing in one platform and much more.
The first day of the conference started with an onsite visit to Krakow Technology Park
CEE SME Banking Club
n November 23-24, SME Banking Club gathered together more than 90 SME bankers, representatives of leasing and factoring companies and fintechs
Thibaut Rouquette (The Heart Warsaw) gave real arguments on why and how to cooperate with fintechs
Michal Miszulowicz, BGĹť BNP Paribas
in Krakow at the 3d Annual SME Banking Club Conference for Central and Eastern Europe (#CEE17) to discuss modern trends in financial services for SME customers.
Kamila Wincenciak (Alior Bank) explained how Alior Bank collaborates with fintechs
Krakow, Poland Ł
ukasz Dyląg, Monika Kania and Wojciech Czajkowski, as representatives of fintechs, shared their experience of developing a fintech start-up in Poland and cooperation with corporations. During the discussion panel. Left to right: Thibaut Rouquette (The Heart Warsaw), Wojciech Czajkowski (Fandla.com), Monika Kania (Xchanger.io), Kamila Wincenciak (Alior Bank)
Olena Gryniuk (SME Banking Club) was the conference host for the day
Scan QR code to view more photos from Day 1
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Scan QR code to watch the video from the conference
Andrey Gidulyan (SME Banking Club) Day 2 of the conference kicked off with a keynote presentation by Stefano Valvano (BCG) on how to get big in SME Banking
Fabio Maffioli (SizeUP) and Stefano Valvano (BCG)
One more example of digital business account opening was presented by Elina Räsänen (Holvi).
Izabela Całusińska and Ewa Szerszeń presented the digital account opening process for business customers launched by ING Bank Śląski in Poland
Milena Videnova and Mihaela Yuzirova (Coface Bulgaria)
Tomasz Sudaj (BZ WBK Leasing)
A separate Panel was devoted to leasing and factoring to SMEs – Alternative SME Finance Panel
uring the discussion panel. Left to right: Milena Videnova (Coface Bulgaria), Tomasz Sudaj (BZ WBK Leasing), Mariusz Łukasiewicz (Raiffeisen Bank Polska), Marcin Grodowski (LeaseLink), Tomasz Biernat (Polish Factors Association), Michal Pawlik (SMEO, panel host).
Krakow, Poland Krzysztof Pulkiewicz talked about banqUP
Left to right: Fabio Maffioli (SizeUP), Katarzyna Krolak-Wyszynska (Innovatika), Marek Sołtysiak (Alior Bank), Lukasz Rozynski (Opportunity Network)
Left to right: Olena Gryniuk (SME Banking Club), Dimitris Petrilis (Capital Banking Solutions), Mariusz Zabrocki (iwoca Poland)
Left to right: Aleksander Widera (Kredytmarket), Marek Chlebicki (PwC Polska), Masahiko Yoda (Crowdcredit)
Mariusz Zabrocki (iwoca Poland) and Marek Sołtysiak (Alior Bank)
Scan QR code to view more photos from Day 2
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CEE18 Mercure Warszawa Centrum, Złota 48/54 Warsaw, Poland
A Conference will focus on some hot topics: • Digitization of Payments and Innovations in Transactional Business Banking • Agricultural Finance: Trends, Digital Technologies, and Challenges • SME Risk Management: Innovative tools & best practice strategies • Digital Transformation of SME Finance https://events.smebanking.club/cee Organizer: SME Banking Club
REGISTRATION FORM ATTENDEE’S INFORMATION Mrs. Ms. Mr. / First 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 a welcome drink on Monday 29 October at 14.00 and will end on Tuesday 30 October at 20.00
01st of October 2018. 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 The Heart Warsaw - October 29 Mercure Warszawa Centrum Hotel - October 30
REGISTRATION FEE €600 for representatives of non-members €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.
PAYMENT Bank Transfer Credit Card Date____________ Signature_____________
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 email@example.com Or register online at https://events.smebanking.club/cee/
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Organizer’s contacts: Olena Gryniuk, +48733404985, e-mail: firstname.lastname@example.org
SME Banking Club Conferences 2018 Conference: Caucasus18 Date: 17-18 May Place: Tbilisi, Georgia Twitter: #caucasus18 IV annual SME Banking Club Conference 2018 the Caucasus region [Caucasus18] gathers international experts and local bankers as to discuss trends and innovations in micro-, small and medium business segment.
Conference: BUM18 Date: 20 -21 September Place: Kyiv, Ukraine Twitter: #bum18 Banks showed significant net profit growth last year! This year senior bankers and SME experts from Belarus, Ukraine, Moldova will meet during VII Annual SME Banking Club Conference 2018 in Kyiv [BUM18] to discuss the opportunities for sales and cost efficiency.
Conference: CA18 Date: 18-19 October Place: Almaty, Kazakhstan Twitter: #ca18 Following the tradition of supporting local banking industry, the SME Banking Club organizes the first annual SME Banking Club Conference 2018 for Central Asia [CA18] as to share best banking practice and knowledge in the region.
Conference: CEE18 Date: 29-30 October Place: Warsaw, Poland Twitter: #cee18 During upcoming IV Annual SME Banking Club Conference 2018 in Central and Eastern Europe [CEE18] business bankers and fintech experts will meet as to discuss the latest digital transformation trends in SME banking segment and a role of new players in SME financial servicesâ€™ market.
International and regional banking conferences dedicated to micro-, small and medium business segments JOIN US!
For more information go to www.events.smebanking.club APRIL 2018
the SME Banking Club
The SME Banking Club was established by a team of former SME bankers in 2010. The SME Banking Club organizes regional SME banking conferences on an annual basis (one regional conference in each region where it has a presence) that bring together financial institutions, technology companies and development finance institutions to share knowledge, spur innovation and promote the growth of SMEs in the region. For details about our regular events, featuring expert professional guidance and exclusive panel discussions, visit https://events.smebanking.club/. SME Banking Club members benefit from access to detailed analytical market reports and annual studies. This information is not available anywhere else in the market. Regions of operations: Central and Eastern Europe, CIS countries, the Caucasus region and Central Asia. Representative offices in Ukraine and Poland. We invite you to stay in touch and join our online platforms: our website, www.smebanking.club; our LinkedIn page; and our Soundcloud page, which offers unique knowledge resources. Join the SME Banking Club network for events and ideas that connect and inspire.
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