MAGAZINE small business banking magazine
The Best Online Banking for SMEs in the CEE region 2019
Creating an Ecosystem for SME customers
Social Media strategy for banks
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Dear Reader, This issue of SBB Magazine is devoted to digitalization of banking services for SMEs. Though this is a subject we address on a regular basis and a permanent topic of discussion during the SME Banking Club Conferences in recent years, we decided to go into more detail in this issue. In April and May of this year, SME Banking Club did research on online banking solutions for SME customers in the CEE region, analyzing bank oﬀers in the following countries: Poland, Romania, Bulgaria, Hungary, Serbia, Slovakia and Czech Republic. With a set of 100 parameters, we are establishing a kind of benchmark for the main functionalities that banks should have for the SME segment (pp. 5-7). On June 10 in Warsaw we awarded banks having the best online banking solutions for SME customers in the CEE region. Creating an Ecosystem for SME customers – this is another topic we are actively pursuing this year. It was the topic of the Study Tour which took place in Warsaw in April this year (pp. 42-45). Non-ﬁnancial services became a must for SMEs in the region. Another pool of banks implemented VAS this year: PKO Bank Polski (pp. 22-23) and Santander Bank Polska in Poland (p. 27). Partner Hub is sharing their experience in implementing e-invoicing services with OTP Bank in Hungary (pp. 24-26). Digitalization of lending and other ﬁnancial products remains a core target for this and the coming years for banks in the region. QLana presents their concept for Knowledge-Based Lending for Small and Medium-Sized Enterprises (pp. 34-36). SMEO is a good example on the factoring market demonstrating how the usage of data by a ﬁnancial company can generate accurate decisions and provide factoring purely online (pp. 37-39). We’re very excited that banks have been very active in supporting and developing SME customers through various startup & scaleup programs (pp. 30-31) during Q1 of this year. We were also following the social media pages of commercial banks that service SME customers in the CEE region. It’s time to develop a social media strategy that is aligned with the annual marketing plan. We discuss these and other questions with Arjen de Boer and Charles-Alexandre Gamba from ITDS later in this issue (pp. 32-33).
I wish you pleasant reading!
Sincerely, Olena Gryniuk CEE Regional Director at SME Banking Club
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Value Added Services 22 Providing for SME Customers
3 5 reasons to read this issue...
5 Online banking for SME customers
Value Added Services 24 Providing for SMEs by the banks: E-invoicing Online Accounting 27 Launching services for SMEs engagement 28 Customer via Social Media in the SME segment Generale Bank in Serbia 30 Societe is running a program focused
MAGAZINE SBB Magazine Magazine of SME Banking Club SME Banking Club Team:
on digitalization of SMEs eisen Bank in Romania 31 Raiﬀ launched the second edition of factory by RAIFFEISEN BANK
32 Social Media Strategy for Banks
Andrey Gidulyan email@example.com @AGidulyan
— Knowledge-Based Lending 34 Q-Lana for Small and Medium-Sized Enterprises approach: How does 37 FinTech SMEO digitize SME ﬁnancing? SME Banking Club 40 Caucasus Conference 2019 Bank: 8 Alior Rebels in Digital Transformation platforms, 16 Trade smart contracts and IoT Group’s approach 18 Erste to the development of Social Banking management in a dynamic, 20 Strategic digital age — how to avoid chaos when faced with the risk of disaster
Finance Meeting 46 SME Bucharest
Olena Gryniuk firstname.lastname@example.org @olenagrinyuk
47 SME Finance Meeting Soﬁa SME Banking Club 48 CEE Conference 2019
SME Banking Club Conferences 2019
51 About the SME Banking Club
From Traditional Banking to Ecosystem — SME Study Tour to Poland
Alexey Sayapin email@example.com sayapin.alexey Guest Authors: Daniel Huszár Tomasz Sudaj Design, layout: Alexander Kryachko Sources: www.smebanking.club SME Banking Club operated by: Gidulyan Company Ltd, 61/31, Avtozavodskaya str., Kiev, 04114, Ukraine and GG Company Sp. z o.o. ul. Królewska 65a/1 30-081, Krakow, Poland www.smebanking.club www.smebanking.events For details of advertising please contact us at firstname.lastname@example.org
ONLINE BANKING FOR SME CUSTOMERS Functionality, Trends and Best Banks in the Region
aving received many requests from banks, this year we are launching a new study — one devoted to online banking solutions for SME customers. The scope of the study this year involves an analysis of 100 parameters of online banking solutions from 25 banks that work with SMEs in the CEE region (covering Poland, Romania, Bulgaria, Hungary, Serbia, Slovakia and Czech Republic). With this set of 100 parameters, we are setting a kind of benchmark for the main functionalities that banks should have for the SME segment. This list of 100 parameters will probably change from year to year as customer demands and expectations with respect to digital banking are changing rapidly. The parameters are grouped into the following modules: Main Dashboard, Accounts, LCY Payments, FCY Payments & FX, Cards, Deposits, Loans, VAS Integrations, Support, Factoring & TF, Security, Other Services. In addition to the study, we’re announcing the launch of Annual SME Online Banking Awards to acknowledge banks with the best solutions in the region.
The full study includes: • A comparison of 25 banks with respect to the 100 selected parameters • 80 pages describing the best functions • 130 extra documents (print screens, manuals and videos) Join SME Banking Club members to get access. For more details contact us at email@example.com
Awards: Best Online Banking for SME customers in the CEE region 2019 Scan QR code to watch the video
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What are the main conclusions and trends that we see on the market right now?
Availability of main services/scenarios for customers online What we see in the region is that main transactional operations and access to information about customer bank accounts, such as an overview of account balances, transfers in local currency and international and domestic transfers in foreign currencies, are implemented at most analyzed banks. Applying for extra cash management services like issuing a business card, cash withdrawal at the branch or applying for a POS are oﬀered by fewer than 30% of banks in the region.
The trendsetters are banks that oﬀer fully Online Customer Onboarding, and include 5 banks from the pool of analyzed institutions. This procedure is available mainly for existing retail bank customers. ING Bank Śląski in Poland also applies this procedure for new customers. The option to customize the main dashboard lets a customer view the main screen in accordance with their needs and preferences. An Integrated FX Module is becoming a very good advantage for banks that oﬀers beneﬁts to customers with, for example, export-import operations who work actively with foreign
currency transactions. Almost half of analyzed banks have implemented this module, which in addition to RTGS settlements also includes an FX Trader module enabling spot & forward transactions, a broad selection of tradeable currencies, an FX transaction history and the ability to place currency orders with an exchange rate limit. Creating an Ecosystem for SME customers is one of the biggest trends in the region. Three banks in Poland (mBank, PKO BP and ING Bank Śląski) implemented business
Innovations registration via the bank website with automatic opening of a business account. At the moment, it is available for sole entrepreneurs, giving banks a real advantage in acquiring new business customers before they register their business, and not after – when all banks approach this customer simultaneously. Piotr Teodorczyk, Director of the Business Customer Department at mBank, says 22% of their monthly customer acquisitions were generated due to this service (mPower Business Starter). (read the full interview in the previous issue of SBB Magazine, pp. 18-20). Integration of Value-Added Services (VAS) will become a must next year. 30% of banks in the region have integrated e-invoicing and online accounting services into their online banking systems. You will ﬁnd two case studies on that later in this issue (pp. 26-29).
Annual SME Online Banking Awards The winners: The Best Online Banking for Entrepreneurs 2019: • 1st Place: ING Bank Śląski (Poland) for the solution Moje ING • 2d Place: PKO Bank Polski (Poland) for the solution iPKO • 3d Place: mBank (Poland) for the solution mBank The Best Online Banking for Companies 2019: • 1st Place: ING Bank Śląski (Poland) for the solution ING Business • 2d Place: mBank (Poland) for the solution mBank CompanyNet • 3d Place: PKO Bank Polski (Poland) for the solution iPKO Biznes
From left to right: Adam Walendziewski (Global SME/MC Digital Platform Centre Director at ING Bank Śląski), Olena Gryniuk (SME Banking Club), Szymon Przybylak (Director of Centre of Expertise: Entrepreneurs at ING Bank Śląski)
Integration of a BFM (Business Financial Management) module gives SME customers the possibility to analyze their account and expenses but also to forecast cash ﬂow and manage a company’s liquidity. For the bank, this module ensures the possibility to cross sell working capital lending products and factoring precisely at the moment when a customer is in the red. KYC and Payment Authorization is an area that will probably change a lot in digital banking in the coming year. Banks in the region are searching for solutions to verify customers and open accounts and grant loans remotely without jeopardizing the customer experience, while ensuring compliance with local regulations. This is no easy task. While almost all banks in the region use an SMS OTP as the main method of payment authorization, mobile payment authorization has recently become a noticeable implementation.
In many banks, the user also has the option of choosing their preferred authorization method (the choice is mainly between SMS OTP and an e-token/ digital certiﬁcate). 25% of the analyzed banks have implemented pre-approved oﬀers for their SME customers within their online banking systems. A full online lending process in the region has only been implemented in ING Bank Śląski, which allows the SME customer to pass each stage of the process completely online: applying for a loan, signing the loan agreement, and – as part of loan administration – uploading all necessary documents to fulﬁll contracts (insurance, etc.). [More details are available in the Full Study] In this study, we focused exclusively on online banking solutions, leaving mobile banking and wearable banking solutions aside. These topics will be researched separately. 40% of banks declared that they apply an omni-channel approach for SMEs, ensuring a seamless customer experience when the customer switches between devices many times a day. This deﬁnitely provides added value to customers and empowers them with self-service banking, which will generate new revenue streams. Olena Gryniuk SME Banking Club
From right to left: Jarosław Pyszkowski (Head of SME Products at PKO Bank Polski), Olena Gryniuk (SME Banking Club), Krzysztof Łęgowski (Head of Digital Sales and Processes at PKO Bank Polski), Łukasz Czech (Product Expert at PKO Bank Polski)
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COOPERATION WITH FINTECHS
Alior Bank: Rebels in Digital Transformation In April this year, Olena Gryniuk (SME Banking Club) talked to Konrad Radzik (Alior Bank) about the 2nd edition of RBL_START — an Accelerator launched by Alior Bank in Poland, and how Alior Bank cooperates with startups. startups to invite, what kind of startups, what the program looks like. When we created the program, we thought about our processes and structure within the organization, so it’s strongly connected with our processes. Our program can help us implement the solutions more eﬀectively, including in cooperation with our business units.
Konrad Radzik, coordinator of the 2nd edition of RBL_START at Alior Bank (Poland)
hat do you call yourself: RBL or REBEL? Deﬁnitely REBEL! Rebel is a brand created by Alior Bank to name all innovative projects, and RBL_START is one of the initiatives branded by RBL_. RBL_ is connected with the Digital Disruptor Strategy of Alior Bank, and we try to ﬁnd the best projects to support our strategy. You started your ﬁrst accelerator program last September. And this year in March you launched already the 2nd edition. Before that, you were partnering with other accelerator programs in Poland. So, my ﬁrst question is what was the main reason for and objective in launching the bank’s own accelerator? Yes, we have quite a lot of experience in cooperation with startups, so launching our own acceleration program was just a natural step. Having our own accelerator oﬀers an important beneﬁt, which is independence: we can decide what kind of challenges to take on, how many
What were the challenges and lessons learned during the ﬁrst edition? The 1st edition was one big challenge for us! We had to build the whole accelerator from scratch, and we didn’t have very much time. At the same time, we were launching our new RBL_ brand that I mentioned, and we were opening our RBL_Space in the Warsaw Spire, which is the location of the accelerator program. I remember when we visited our space just a few days before the launch, and we were terriﬁed, because we saw that almost nothing was ready... But we made it! Also, we call the 1st edition our MVP of the program. We learned a lot of lessons. We met with our startups and mentors after the program, and we received some feedback that we want to use in the next edition. First of all, our accelerator is strongly focused on implementations and partnerships, so we decided to extend our program; now the 2nd edition will take up to 5 months. We resigned from some workshops which were not so useful for startups. The whole program is designed according to our model of implementing innovations, so we cooperate with startups in the same way as on other projects. We’ve made some improvements in communications, but that’s not the only area we’ve improved, so I hope that this edition of our accelerator will be better.
During your 1st edition, you selected 8 startups for the program. How do you cooperate with them now? And you also have an RBL_VC team within your structure, so is the bank ready to invest in startups? What are the criteria for that? Yes, as I mentioned, the 1st edition was the MVP of the program, so we have learned a few lessons. We only had three months, and these three months were not enough to make certain pilots with startups within the duration of the program, so we are still talking to them and working with them. I hope soon you’ll be able to hear about some of the pilots: I think in April or May there will some information published about it. We also invested in one of the startups, which was called PayPo. Our RBL_VC team invested PLN 4 million for 20% of the company’s shares. Moving on to the second part of the question, the RBL_VC team is responsible for investing in the most interesting startups. They mainly invest in FinTechs, InsurTechs and RegTechs, as these areas are strongly connected with banking and the ﬁnancial world. We are looking for solutions that we can potentially implement within our bank or PZU, but also we want to reach new groups of customers, so these kinds of solutions are also interesting for our Investment Team. They mainly focus on the CEE region. But if there’s an interesting startup outside of that area, we’re also interested in that kind of solution. Do you want the startups you cooperate with after the Accelerator Program to be exclusive partners for you? Or are you happy for them to collaborate with other banks as well? In most cases, we don’t expect exclusivity, because we believe that working with other banks helps startups to grow and improve their solutions. That’s very important for us, as we don’t want to implement solutions which will not be continuously developed and, in a few years, will become outdated. We are aware that other partners can provide added value for these solutions, so mainly we don’t expect exclusivity, and a great example of that is the
Kamila Wincenciak (Partnership Team) and Konrad Radzik (RBL_START), Alior Bank
fact we invited other banks to our Demo Day, to introduce startups to them and to help them gain new partners. However, in certain cases, exclusivity can have added value for us, and we can negotiate exclusivity accordingly with some startups, for example, for a certain period. But any such agreement deﬁnitely has to be accepted by the startup, as it can block a startup’s development. So, the RBL_VC team is interested in solutions on a larger scale; startups should have those ﬁrst few clients to validate their solutions on the market. Now, during the 2nd Edition: started in March and ends in November, right? Who are you searching for, and how many startups have applied already? Tell us more about that. In this edition, we are looking for startups to start cooperation with Alior Bank or PZU, so we are looking for FinTechs and InsurTechs. As we are focused on implementations, we invited startups in their early stages to take part in the program, but also, it’s good for major startups who already have their ﬁrst clients. We have four challenges: four areas that we are interested in
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for this edition, which are set out on our website (https://www.accelerator.aliorbank.pl/) for startups to browse. One of the challenges is data analytics. We are looking for solutions that can provide us with new data about customers, for example, using PSD2, social media or mobile phones. We are also looking for startups that can help us to analyze and use these data, for example, in customer scoring, preparing personalized oﬀers or predicting customer behaviors to improve our products. We’re also looking for solutions in the area of customer engagement, i.e. solutions that can help us to build better relationships with our customers in order to make them active users of digital channels. These can be ﬁnancial solutions, but not only: they can be somehow connected with the banking and ﬁnancial world, for example, e-commerce, loyalty programs, etc. The third challenge is related to security. We want to be a safer bank for customers without jeopardizing the customer experience, for example, by employing behavioral biometrics. We are strongly focused on the KYC process; we want to be able to open accounts, grant loans and oﬀer insurance to
customers remotely. We also have to be able to verify our customers remotely. And last but not least, New Distribution Channels: we want to be present where customers need us and our products. This doesn’t have to be only via our mobile banking app or Contact Center; we are also looking for new channels and are open to new ways of communicating with customers. How do you measure the success of the program? What metrics do you use? Do you have a target number of implementations per year? Or is this more about quality? Yes, like everyone, we have our KPIs. One of them is the number of implementations and pilots. As I’ve mentioned many times, we are strongly focused on implementations, so this is how we measure the success of the program, but we also pay attention to quality metrics. We don’t want to have only ﬁve implementations, but no one cares about that. We also want to measure incomes from a given solution or how the solution improves our customer experience and customer satisfaction. It would be great if we could implement all the solutions that we choose for the program, and we do our best to do that.
COOPERATION WITH FINTECHS
During the visit to RBL_Space within the framework of SME Study Tour to Poland on April 10-11, 2019
That’s the reason we don’t know yet how many startups we’ll have in the 2nd edition, because every startup is chosen by the business unit, and they decide if they want to implement a given solution or not. If they decide that they want to, we do everything that we can to implement the solution, but when you implement an innovation, you can’t be 100% sure that you’ll implement it and that it will be successful. How many applications do you have already for the 2nd edition? How many do you want to have in the program? The number is top secret right now. We have dozens of applications, and fortunately, many startups are interested in the program. In the previous edition, we had almost 100 applications, and I strongly believe that this time we’ll have more than 100. What would you say are the main preconditions both from the bank’s and startups’ side for making the implementation of a common solution possible and successful? That’s a very tough question. It’s really hard for big organizations like banks to cooperate with a small and very ﬂexible company like a startup. There’s no single best piece of advice for every cooperation, but I can oﬀer a little bit of advice. First of all, we have to remember that a bank is a big organization: it has its own structure, processes and many people that have to be engaged in the process, so it’s very important
(for banks) to have a special path of cooperation with startups, because they are totally diﬀerent and are not able to provide all the things that we want to have from cooperation with normal companies. So, for example, our accelerator is our special path for cooperation with startups, and it’s very helpful for both sides. On the startup side — it’s very important to explain the solution clearly, not to use buzz words. A startup should be aware that sometimes they will have to explain a solution many times, which is normal because in big organizations like banks we have many people that have to understand it and make the implementation happen. On the bank’s side, it’s very important to have one person who will be responsible for the project in cooperation with the startup. For example, in our bank, we have a project manager or business mentor who is dedicated to the startup and responsible for the project. This is the person who will help the startup to contact the right people in the organization and who understands how it works, what kind of documents we have to provide, what kind of data we have to provide and who we should contact. That’s the reason we decided to dedicate business mentors to the startups that we choose for the program. How big is RBL_? How many people are working with the startups on an everyday basis? RBL_ is quite big because we have a few initiatives. One of these is RBL_START, which I’m responsible for, but we also have the Partnership
Team, headed by Kamila Wincenciak, and she was also responsible for the 1st edition of the program. The accelerator program is one way of cooperating with startups, but we also have people responsible for scouting and cooperating with startups that have products ready to implement. We also have RBL_VC, the Investment Team, which is made up of 4-5 people who are responsible for analyzing startups and deciding which ones to invest in. We also have our Open Banking team, which is responsible for our testing environment and API sandbox, because we, as Alior Bank, have an open banking strategy. We also have people responsible for research with customers, designthinking workshops and the user experience. So, it’s quite a big team with around 30-40 people who are responsible not only for cooperation with startups, but also for empowering our business units in implementing innovative solutions within our company. Our employees also have brilliant ideas on innovations, and we also support that as RBL_. Thank you, Konrad! Good luck with the second edition! Thank you! Fingers crossed!
Scan QR code to listen to this interview on the SME Banking Club Podcast Series
Innovations Here are the startups selected during the 1st edition of the Accelerator Program by Alior Bank (Poland)
Investsuite Web: www.investsuite.eu Country: Poland / Belgium Investsuite is a European B2B digital retail wealth management and investment ﬁntech oﬀering a unique roboadvisor ‘as a service’ as its ﬁrst product. The main diﬀerentiating feature is a proprietary portfolio construction framework that seeks to minimize investment risk.
PayPo Web: www.paypo.pl Country: Poland PayPo provides a “buy now / pay later” service, thanks to which customers of online stores can conveniently pay for them after 30 days or spread payment into installments.
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COOPERATION WITH FINTECHS
Aazzur Web: aazzur.com Country: Germany / UK Aazzur is building an application integrating bank accounts from diﬀerent countries and ﬁntech solutions enabling travelers to use many services in one mobile application thanks to the development of one customer veriﬁcation process and Open API.
AI Busters Web: www.aibusters.com Country: Poland AI Busters creates a solution for customer service departments in the banking, ﬁnancial and insurance sectors. The company automates the process of veriﬁcation and customer service using bots and Open API.
Blockey Web: www.blockey.eu Country: Poland Blockey creates a solution enabling remote veriﬁcation of individual and business customers within a few seconds using Open API and blockchain technology. Blockey’s task is to reduce the time needed to correctly verify the customer’s identity while maintaining the highest security standards.
Spendee Web: www.spendee.com Country: Czech Republic Spendee oﬀers its clients a mobile application which, thanks to the Open API, aggregates the accounts of many banks and allows the management of personal ﬁnances in various portfolios in an exceptionally attractive way. Currently, Spendee is working on a B2B solution to generate personalized product oﬀers for bank customers.
Kekemeke / POSbistro Web: kekemeke.pl Country: Poland Kekemeke provides a loyalty program replacing traditional cards with stamps in the form of endto-end solutions for business and end customers, digitalizing and streamlining maintaining relationships with regular customers.
Bankzee Web: www.bankzee.eu Country: Hungary Bankzee creates a banking application for the “Z” generation, whose task is to educate children in the area of managing their ﬁnances, as well as the loyalty of future clients. The application “grows” together with the child, allowing him to discover new functionalities during its use.
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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
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Trade platforms, smart contracts and IoT • Reduction and possibly elimination of paperbased processes, since everything is stored on a shared ledger. • Triggering of automated events due to the use of so-called smart contracts, which can be leveraged further by using ‘Internet of Things’ (IoT) sensors. • The idea to use smart contracts together with blockchain is common to a lot of platforms. But what exactly is a smart contract?
Daniel Huszár, Head of Sales at efcom, takes a snapshot view of three emerging technologies
Smart contracts The idea of smart contracts started in the 90s but didn’t come to fruition until the past few years. In theory it sounds utopian: contracts are set forth in computer code instead of paper and after the contract is digitally signed, it will selfexecute. None of the contractual parties need to manually interfere with the process — the code will facilitate the handling. Surprisingly, the concept of a smart contract should not be that foreign to us, because we use
them in our daily lives: e.g. a vending machine could be called a smart contract (although a primitive one). If you want to buy a chocolate bar (goods) at a vending machine, you need to insert a token of value (coin = funds). The machine will check, whether the token has a suﬃcient value and holds the goods in escrow during the process. If the funds are valid, the goods will be released. This “if = then” structure allows for more complex automatic processes triggered by real-life events, e.g. across a whole supply chain. Let’s look at potential uses of this technology within trade and receivables ﬁnance. Smart contracts and the Internet of Things To do more complex things with a smart contract, we will often need data from the outside world — either from third-parties (e.g. exchange rates), or sensoric data from real-life events (e.g. changes in GPS position through an IoT device). The Internet of Things is a network
lockchain in trade and receivables ﬁnance is not just talk anymore. There are multiple initiatives with real-life transactions, namely by diﬀerent bank consortia — MarcoPolo, we.trade and Voltron to name a few of the platforms that have been introduced. What these platforms have in common is their desire to further leverage the power of blockchain to digitise the trade process. As a technology, blockchain allows a simple and secure way of sharing trade-related data between diﬀerent (ﬁnancial) institutions. Potential beneﬁts include: • Reducing processing time, because all relevant participants are informed with transparency about the progress of the transaction. An audit trail also provides improved traceability.
Daniel Huszár during his presentation at the CEE SME Banking Club Conference 2018 in Warsaw (October 29-30)
of devices that have Internet connectivity which allows them to interact and exchange data. Data provided using this method can be used to trigger smart contract processes when predeﬁned conditions are met. For example, on a supply chain ﬁnance blockchain platform, the seller could publish the manufacturing status of a product. Other parties included in the transaction, such as the buyer and logistics provider, could track the transmitted status. When the product is close to completion, the logistics provider could send containers to pick up the ﬁnished product. These containers should contain IoT sensors, which broadcast the GPS location of the shipment to the blockchain. The advantage of this transparent monitoring would allow the diﬀerent steps of the process to speed up altogether by triggering actions within a smart contract, e.g. the execution of the payment terms of the contract upon delivery. A bank who is funding the transaction would have visibility into the original contract, the sales order, and the corresponding delivery status. This would allow them to validate the
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origin and authenticity of the service provided by a secure blockchain — reducing the funding risk. Trouble in Paradise Adding unprecedented transparency and security to transactions through platforms utilising smart contracts, blockchain technology and IoT sounds like a pretty good deal. Let’s have a look at some of the issues with real-life adaptation of these technologies: The lack of interoperability of platforms does pose a problem — it is a huge advantage for this technological concept to have access to a lot of data due to large numbers of participants. By a concentration of parties on one platform it also becomes easier to use standards. Luckily, this is a challenge that the market should solve, as it is likely that only a few platforms will be continuously used in the end. • It is still not clear whether smart contracts are valid without a written agreement in multiple jurisdictions. For example, in German law (at the time of writing), a written contract
would take precedence over a contract set forth in code. This of course, is very bad news if we want to increase eﬃciency through automation, because we have to fall back on manual paper trails to resolve disputes. • Lastly, the IoT has inherent security issues because so many devices have to produce reliable data. For one, there is the possibility of operational failure resulting in inaccurate data. Furthermore, devices could be tampered with, producing fraudulent data which could lead to bad decisions. As always, it will take time to reach the full potential of new technology. The technological basis to facilitate digitisation already exists, but it will be up to the market, adapting standards and regulation to shape the business of the future. efcom produces the proven and eﬃcient standard software for factoring: ef3. Since its foundation in 2000, efcom has grown to become a technological leader that sets new benchmarks for the trade.
ERSTE GROUP’S APPROACH
TO THE DEVELOPMENT OF SOCIAL BANKING
rste Group’s Social Banking aims to directly address the needs of traditionally underbanked groups in the societies of Central and Eastern Europe (CEE) and Austria, fostering job creation and prosperity beyond banking and supporting the needs of socially excluded groups by providing financial literacy training, tailored products and business mentoring. This enables the financial inclusion of low-income individuals, new entrepreneurs and social organizations, offering them fair access to basic financial products, sound money advice and ongoing business training and mentoring, so that these people can gain the financial confidence needed to improve their lives. Since its launch in 2016, Erste Group has supported over 2,500 new entrepreneurs, 6,500 small farmers from rural areas of Romania and 400 social organizations across Central
and Eastern Europe, as well as more than 17,000 people in ﬁnancial diﬃculty in Austria through its network of local banks and also in partnership with the ERSTE Foundation and other local organizations and NGOs. So far, total
Erste Group has supported over 2,500 new entrepreneurs, 6,500 small farmers from rural areas of Romania and 400 social organizations across СEE.
social banking ﬁnancing has surpassed EUR 170 million. “At Erste, we’re focused on being a healthy business, but also believe in empowering people in their ﬁnancial lives and helping to spread prosperity in our region. These principles have been at the core of what our bank has sought to do since it was founded two centuries ago. With our Social Banking program, we build on what we’ve already accomplished in this ﬁeld to expand our oﬀering of practical solutions that will make a direct impact in the lives of those people in our region who have been left behind,” said Andreas Treichl, CEO of Erste Group Bank AG. The ﬁrst Impact Report shows that Erste Social Banking has empowered those who otherwise had no or very poor access to the labor market to start their own micro business, be it a shop or a construction ﬁrm. The entrepreneurs also gained much-needed ﬁnancial conﬁdence and provided almost 5,000 jobs in their communities. In addition, Erste Group’s microﬁnance entity good.bee Credit provided microcredits to 6,500 small entrepreneurs from
Social Banking rural and small urban areas in Romania. The subsidiary granted nearly 10,000 micro-loans, mostly to farmers, amounting to more than EUR 70 million and resulting in 6,000 new jobs. The research showed that 92% of clients believe it was the right decision to start a business and 78% are economically better oﬀ than before. Besides business mentoring and e-learning for these clients, Social Banking provided ﬁnancing of more than EUR 60 million. “We are seeing a growing number of new entrepreneurs, especially among the youth, who are willing to start a business thanks to this program. Supporting small businesses is particularly important because they make a large contribution to all the new jobs that are created in the region. The positive result is that these jobs are mostly located in areas with high unemployment and poverty, often ignored by large employers,” stated Peter Surek, Head of Erste Group Social Banking Development. Social banking also supported around 400 social organizations across the region, helping them to grow and deal more eﬃciently with some of the most challenging issues in our society, such as youth unemployment, social integration and poverty. As a result, more than 3,100 jobs were created and 6,100 jobs were preserved in the social sector. 82% of the organizations reported that they can better fulﬁl their social mission; reach more people and start new projects. The ﬁnancing amounted to EUR 40 million and consisted of working capital loans that were used to cope with late payments on subsidies or grants; bridge loans for pre-ﬁnancing or coﬁnancing for an EU/local government project; and investment loans to support expanding services and activities.
SME Banking Club: What are the terms for ﬁnancing social entrepreneurs? How exactly are they diﬀerent from your standard products for business customers? In June 2018, the European Investment Fund and Erste Group Bank AG signed a EUR 50 million Social Entrepreneurship guarantee agreement to provide ﬁnancing for social organizations under the EU Programme for Employment and Social Innovation (EaSI). All seven Erste Group member banks can now grant loans at reduced interest rates and with lower collateral requirements to social businesses and non-proﬁt organizations that will enable local banks to reach out to social entrepreneurs and organizations that would not have been able to gain ﬁnance otherwise due to risk considerations. Erste Group is providing ﬁnancing to innovative, socially-oriented organizations active in the education, health and social services sectors, and those employing disadvantaged, marginalized, or vulnerable groups. Mirjana Šakić Erste Group Bank AG/ Social Banking Development
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STRATEGIC MANAGEMENT IN A DYNAMIC, DIGITAL AGE — HOW TO AVOID CHAOS WHEN FACED WITH THE RISK OF DISASTER Research conducted by Benefactor Consulting shows the current situation in this area:
“The forecast for most companies today is constant chaos with a chance of disaster. The challenge is — how to feel good about it.” dr hab. Piotr Płoszajski
Tomasz Sudaj, Senior Partner & Co-founder at Benefactor Consulting (Poland)
he digital revolution inﬂuences all areas of our lives. In business it has a multidimensional impact. Rapid technological revolution not only directly changes internal processes or determines a company’s eﬃciency — its inﬂuence is much wider. First of all, it indirectly inﬂuences the entire business environment, including: 1. legal provisions related to regulations 2. competition, which increasingly originates outside of the sector 3. employees, in terms of both skills and work standards, but primarily new generations which have diﬀerent expectations and requirements related to work 4. Clients, changing their behavior and expectations in a fundamental way The changes are becoming deeper and more dynamic.
According to Bengt Karloﬀ, strategy is: “A decision made today in order to obtain results in the future” This is still accurate, but the current reality redeﬁnes the two key elements in a signiﬁcant way. First of all, the result is not always deﬁned in terms of income, proﬁts and the resulting P&L, but as the survival of the organization on the market. Secondly, forecasts of the future in business planning have been reduced from 5-10 years to even 12-month periods, where prediction and forecasting are still valid. From this perspective, achieving success within an organization in the age of digital revolution requires major changes in the strategic management process. Transformation is how many companies respond. But are the actions they take the right ones? What do we actually mean by transformation? What does it look like in practice?
In developed organizations, the process of managing change is carried out at a fairly high level and has been tested and rehearsed many times. But even optimal change management in the digital economic reality doesn’t guarantee success. What is transformation and how is it diﬀerent from change? Transformation is a process whose main aims are to: 1. reinvent the organization, not just implement well-deﬁned change 2. discover a new or modiﬁed business model based on a vision of the future 3. create a set of initiatives, which may be independent or correlate in some way The fundamental goal and eﬀective way to develop is constant reinvention of the organization. When management takes on the challenge of transformation while creating and implementing a new strategy, they should pay more attention to a few potential mistakes which directly impact results.
Innovations The most common mistakes made during the transformation process are: 1. strategy not translated into operations — people do the same things they did previously 2. the culture of careful management — small changes, small risks, lack of satisfying results 3. stiﬀ management system — lack of dynamism, slow decision-making 4. too many initiatives in progress — numerous projects without a single guiding thought 5. resistant managers — ﬁghting for their positions and the status quo 6. lack of employee involvement and commitment 7. lack of follow-through when implementing established goals Those mistakes appear if an organization fails to combine strategy with operational activity and implement that strategy through the daily tasks of the employees at each level of the organization. The conclusion is obvious: company strategies are not understood by people in the organization, so how can they be implemented eﬀectively? 78% of employees who have daily contact with the client don’t know or don’t understand the strategy of their own company, even though they represent it. It also makes sense to consider employees from younger generations. According to various studies, young people choose and identify with companies that not only meet their ﬁnancial and material needs, but also guarantee high organizational culture. One of the key non-ﬁnancial expectations of young employees is the sense of a higher goal and meaning. How can they fulﬁll those expectations and realize their ambitions without knowledge and understanding of the organization’s goal? Incompetent management is just the tip of the iceberg. Deeper analysis reveals alarmingly that only 15% of plans and strategic initiatives are implemented, with 85% never completed. In the meantime, resources are being consumed that are crucial in order to maintain a competitive position. So, how should an organization be managed in times of constant change, uncertainty and growing competition? Firstly, the way strategic management is perceived throughout the organization needs to be changed. Indispensably, in today’s business environment, constant changes should be part of a wider transformation plan and larger strategic goals — participation in them should be measurable. Decisions should be made on a strategic level and then implemented on an operational level, comprehensively inﬂuencing the whole organization. On the
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other hand, strategy should be redeﬁned based on a document created once every few years, which can frequently become obsolete. This is the result of the dynamic business environment and internal developments which can aﬀect the constantly dynamic process. Just like in the technology industry, processes need to be ﬂexible, and an increasing number of organizations work according to Agile principles. The digital reality requires companies from every sector to be agile in their management, activities and transformation. The answer to this challenge is Dynamic Strategic Management, which involves changing how we perceive strategy: from a static to a dynamic, complex process. Transformation in this model takes into consideration three key areas. 1. strategy — redeﬁnition of strategic thinking from a long document to a clear one-page map deﬁning everyday actions 2. processes — moving away from stiﬀ frameworks, which often limit development, and replacing them with tools that ensure goal achievement 3. teams — transitioning from rigid silos to a ﬂexible, living organism that can quickly adapt to market challenges The key element is changing the time perspective — from long-term periods to strategic thinking focused on one year and based on constant quarterly monitoring. By teaching the organization this kind of process,
we oﬀer agility and the ability to dynamically adapt in the era of digital revolution. As part of the process, the organization continuously: 1. monitors the market and internal situation. Based on reports and facts, the organization can identify both opportunities and threats. 2. modiﬁes its strategy. Changes in the market environment are evaluated and addressed in assumptions, and initiatives are based on their estimated inﬂuence on the implementation of key ideas and clear, measurable criteria. 3. optimizes and adjusts processes, ensuring their unity with strategy and utility in terms of implementing the chosen initiatives. 4. develops and adjusts team structures. The currently popular interdisciplinary teams are one of the key factors to success. The organization has to enable teams to constantly and dynamically adapt to keep up with the current situation, as well as achieve optimal communication and quality cooperation. The right selection of team members determines success. Tomasz Sudaj, Senior Partner & Co-founder at Benefactor Consulting (Poland) The tools and the Dynamic Strategic Management implementation process will be during CEE SME Banking Club Conference 2019 in Warsaw on October 21-22. Benefactor Consulting — a consulting company founded by Beata JacakDrabik, Tomasz Knitter and Tomasz Sudaj, brought about thanks to a passion for entrepreneurship and willingness to share knowledge and experience. We combine long years of experience in diﬀerent sectors, knowledge, and strategic and employee development skills in order to help organizations compete in a dynamic, digital reality, while creating attractive workplaces. We believe that people and their personal qualities are the key elements in the foundation of each business project. We believe that strategy is a complex process covering the whole organization at every level, and that technology is the tool that allows organizations to meet their goals and achieve success.
CREATING ECOSYSTEM FOR SMES
Providing Value Added Services For SME Customers In the last six months, PKO Bank Polski launched a range of value-added services for SME customers in Poland, creating an ecosystem for that segment. Olena Gryniuk (SME Banking Club) asked Łukasz Czech (SME Product Department Expert at PKO Bank Polski) about the details of the new services. Who are your Micro & SME customers? At PKO Bank Polski, Micro and SME clients are sole entrepreneurs, commercial-law companies, communities, cooperatives and developers. You have a whole ecosystem for entrepreneurs within the bank, starting from the very ﬁrst step: customers can start a business with you by registering it via the bank’s online banking system – iPKO, and then open a current account. You also deliver all banking products online and provide accounting services to customers. Could you please tell us in more details about the bank’s Ecosystem? Support for Polish companies and the development of the economy are part of the foundations of our strategy. We oﬀer our business customers a wide range of products. Micro enterprises can take advantage of revolving and investment loans. From December 2017, customers starting their own business can beneﬁt from dedicated ﬁnancing in the form of our Business Starter Loan and Leasing.
Łukasz Czech, SME Product Department Expert at PKO Bank Polski
It’s been over a year since we began oﬀering the opportunity to register a business and open a banking business account simultaneously via our online banking system. This process is entirely remote, and it takes just a few minutes to complete the application. Conﬁrmation of company registration and opening an account takes place through a Trusted Proﬁle. Importantly, the bank’s comprehensive product oﬀer is integrated with a wide range of additional services, such as e-Lawyer (remote legal consultations), e-Accounting (convenient invoicing, ﬁnancial management, quick access to payments, analysis of current sales and costs, and forecasting expenditure), BFM module (access to key data: cash ﬂows on the account, costs and revenues as well as reminders about impending payment dates for social security (ZUS) contributions or VAT return submissions), and ﬁnally e-Shop (enables set-up of an online store using transaction service iPKO. The platform is integrated with all the largest online payment systems as well as with many transport and courier companies). BFM module and e-Shop were launched in autumn last year. e-Accounting was launched this February, and e-Lawyer this March. How many of your new customers were acquired due to online business registration? Right after the launch of that service, the number of registrations amounted to several customers monthly. Today, this scale is much more signiﬁcant. We see that more and more customers want to open an account with the bank as quickly as possible without leaving their home or oﬃce, which is why the option to open a business account remotely via iPKO together while simultaneously registering the business itself enjoys so much interest today. Tell us, please more about BFM (Business Financial Module) and online accounting services (e-Accounting) for entrepreneurs. Is it free of charge for the bank’s customers? How does the bank beneﬁt from launching these services? Small and medium-sized enterprises expect from the banks not only a suitably tailored product oﬀer but also support in everyday business
Innovations operations. Business customers pay attention to both the price of banking services and the level of technology that we oﬀer them. Our goal is to facilitate and simplify business activity for entrepreneurs, which is why we regularly extend our package of free value-added services for entrepreneurs. These services are part of the digitization of both the bank’s oﬀer and the business environment in which our customers operate. We focus within this area on building positive customer experiences and increasing their trust. The main beneﬁts of the BFM module are the following: • Business owners have everything in one place as the module is integrated with the online banking system, and it gives customers access to crucial information about their business ﬁnances in conjunction with their company account at PKO Bank Polski; • Customers have online access to data on business ﬁnancial health, liquidity, and costs. • The event calendar is integrated with the payment schedule. Customers receive notiﬁcations by SMS or e-mail about obligatory tax or social security payments. • Business partners’ details are automatically saved in the system based on sent or received transfers. This service is free for our customers. e-Accounting allows customers to independently run their ﬁnances and accounting. The module is integrated with the online banking system and facilitates ﬁnancial management for customers: e.g. using available data, the system automatically ﬁlls out invoices, minimizing the time spent by customers issuing invoices. E-Accounting includes e-invoicing and the option to upload expense invoices. The system provides storage for documents necessary to close the accounting month and to create tax declarations, including VAT JPK, which you can quickly sign, send to the tax oﬃce and download proof of delivery. Thanks to integration with
the iPKO online banking system, the module allows access to payments made from business accounts, management reports (Revenue & Expenditure Report), sales proﬁtability summaries and analyses. You also oﬀer your e-commerce customers a solution to create an e-Shop via your online banking system in cooperation with e-commerce platform Shoplo. Do you track how many of your e-commerce customers are using it already? What is the cost for the customer? The ﬁrst online stores established with the help of our solution are already functioning. The solution can be tested for free for the ﬁrst 15 days of use. Package prices start from PLN 49 per month. How did you cooperate with ﬁntech companies or other third-party providers when developing new services for your customers? At PKO Bank Polski, we focus on innovation, and the implementation of this objective is facilitated by the platform for the development of modern technologies called “Let’s Fintech with PKO Bank Polski!”. With its help, the bank searches for and develops prospective solutions, engaging the startup and ﬁntech ecosystem. The bank has a full infrastructure enabling implementation: experienced experts, test environment, venture capital fund created in 2018 and an acceleration program for startups. An example of the implementation of a solution in cooperation with a startup in a bank was mentioned earlier: e-Lawyer. This solution was awarded in the FinTech & InsurTech Awards competition as an innovative and technological solution. What innovations for entrepreneurs should we expect from PKO Bank Polski in the near future? This year PKO Bank Polski, together with the National Cloud Operator, will provide the ﬁrst solutions for business customers to support them in their daily activities. This will be the Position of the Future, or virtual terminals with a new mailbox and new tools for communication within companies.
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CREATING ECOSYSTEM EVENT FOR SMES
PROVIDING VALUE ADDED SERVICES FOR SMES BY THE BANKS E-INVOICING
anks are increasingly looking for new ways to increase (or maintain) their added value for their customers. We see more and more banks announcing their collaboration with third-party providers to integrate e-invoicing, accounting, and ﬁnancial management services to better support the needs of small businesses. E-invoicing has become a hot topic with PSD2 and instant payments coming into force: by providing invoice-related services, the bank can leverage its regulatory compliance eﬀorts to innovation opportunities: invoice processing and payments — until now two separate administration processes — can now be connected and integrated within the internet bank. The solution we introduce below is diﬀerent from other instances of third-party cooperation in a way that enables the bank to become an e-invoicing service provider. Adding value for the SME segment: More than 90% of all invoices worldwide are still processed manually and the penetration of e-invoicing is the lowest in the SME segment. The underlying reason is that automatic receipt and processing of e-invoices is not solved due to the lack of invoicing interoperability. SMEs must use various systems (invoicing software, e-mail attachments and invoice portals of large service providers) each month to manage their outgoing and incoming invoices. Using this approach, even e-invoices are processed as paper invoices, because SMEs do not have the resources to digest various e-invoice data structures, as this would require several IT integration projects. Banks providing interoperable e-invoicing services will naturally become integration hubs for invoice data structures, as they have access to a huge number of SMEs. Once a bank starts
Partner HUB has developed a turnkey white label solution for banks to provide invoice related services for SME customers called Charlie-India Invoice HUB. The company is based in Budapest, Hungary. The team has 10+ years of experience in developing invoicing systems for both SMEs and large corporates. Partner HUB has completed a successful project with OTP Bank and is implementing its second banking project in Hungary. Partner HUB has a mission to include SMEs into interoperable e-invoicing, developing a solution which enables invoicing service providers — ﬁrst of all banks — to provide digital invoice-related services for their SME clients. Partner HUB believes that banks can strongly contribute to onboard SMEs into the interoperable e-invoicing space, while easing their administration burden, providing an outstanding payment experience and the option to build new services using digital invoice data.
Katalin Kauzli (Business Development Director at Partner HUB) speaking at the SME Online Banking Awards 2019 for the CEE region (Warsaw, June 10, 2019)
these enable data exchange between SMEs for sending and receiving invoice data.
Peter Malaczko, CEO at Partner HUB
Katalin Kauzli, Business Development Director
an e-invoicing service, third-party invoicing, accounting and ERP systems providers will integrate with the bank and contribute to the growth of the interoperable e-invoicing network.
invoice processing costs compared to paperbased invoice management.
Interoperable invoicing integrated into the internet bank will give SMEs the convenience of having a single digital invoice inbox and a 1-click invoice payment experience without the hassle of entering supplier invoice data. Furthermore, payment transactions and invoice data can be matched automatically, which saves a lot of time on accounting. The introduction of e-invoicing saves approximately 60-80% on
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The key to high penetration is simplicity and data exchange enabling in an open invoicing network: The success factor for onboarding SMEs into e-invoicing is to provide an e-invoicing service, which is very simple to adapt to SME needs, while providing the technology background for a seamless electronic invoice data exchange with other invoicing service providers. In our envisioned market model, each bank as a service provider provides invoice-related services tailored to its customers’ needs under its own brand, but
Additional value for the bank from invoice data assets: Invoice-related services open new revenue streams and cost saving opportunities for banks, giving them access to business transaction level data: • tailor-made and well-timed ﬁnancing oﬀers can be made, as the cash ﬂow of the company can be forecasted based on outgoing and incoming invoice data, • a cash-ﬂow projection tool can be oﬀered to SMEs, which always struggle with liquidity issues • credit scoring models can be based on realtime business transaction data instead of annual ﬁnancial reports • invoice ﬁnancing (factoring, working capital or supply chain or export ﬁnancing) service processes can be digitized based on invoice data Turn regulatory obligations into business opportunities with e-invoicing: PSD2 obliges banks to open their interfaces and provide banking information to third-party providers, which increases competition in payment services and forces banks to provide value added services to SMEs and corporations. Instant payments
CREATING ECOSYSTEM FOR SMES
turn invoicing into a natural add-on service, as the invoice is in fact a request-to-pay: if there is an e-invoice available, a request-to-pay can be generated automatically from the invoice. If the bank provides invoice receipt services and the invoice can be paid conveniently (i.e. the payment transfer is generated automatically from the invoice), the payment transaction will stay at the bank and prevents it from being sent to third-party payment providers even after the start of PSD2. Charlie India Invoice HUB for banks Invoice HUB for banks is an 80% ready-made white label software product, which can be integrated into the internet bank to provide invoice-related services.
1. It has complete functionality for customer and supplier invoice management 2. It ensures easy integration with the bank’s payment system; embedded payment features include: a. 1-click supplier invoice payment generated from invoice data b. matching invoice data with payment data 3. The solution has all the required back oﬃce functions (registration, subscription management and authentication) to launch an online e-invoicing service. The product has been speciﬁcally designed to meet banks’ needs while complying with all banking IT security and architecture requirements. The bank
can customize the ready-made functionality based on its individual needs: new processes can be built up in the system that are compatible with existing processes in the bank. We have been working to minimize implementation eﬀorts and risk on the bank’s side both in IT and product development. There is an opportunity for prototyping, which happens on a dedicated system online for each bank, guided with personal consultations from our side. The prototyping process may be completed within 8-12 weeks together with banking integrations. The result of a prototyping project is a fully functioning MVP solution that can be launched for user acceptance tests.
CASE STUDY: OTP EBIZ OTP Bank Plc was our very ﬁrst banking client. The service was launched in March 2017, following a prototyping project and an 8-month implementation period. Since then we have been in close cooperation with them developing both business concepts and IT requirements for building an interoperable e-invoicing network. OTP eBiz is a digital ﬁnancial assistant for SMEs, providing services that help SMEs manage their ﬁnancial administration and cash ﬂow management digitally. These services include invoice-related services (issuing and sending invoices), a ﬁnancial dashboard for revenues and cost categories, estimation of payable taxes and a cash ﬂow forecast based on invoice data. The solution serves as a co-working digital platform for all participants of the SME’s ﬁnancial administration processes, enabling SMEs to move from paper-based to digital processes. The system is connected to the bank’s OTP transaction system through a banking middleware system to enable direct transfer payments initiated in OTP eBiz. In addition to payment services, the solution enables clients to see which invoices have been paid in their internet bank and send reminders for payments due. The Charlie-India platform is the backend for the OTP eBiz solution. This means that all features are serviced by the Charlie-India platform: the platform’s capabilities were used to set-up registration, master data management and document management functions. OTP eBIZ implemented the banking middleware integration for payment services, the subscription management system and the customization of invoicing processes deﬁned by business requirements. Use of the Charlie-India platform decreased time-to-market signiﬁcantly. Open and connected invoicing network enables the bank to become a data and payment hub Invoices may be generated and delivered within the OTP eBIZ solution electronically among their users, together with accompanying invoice data in a standardized structure that enables automatic processing of
invoice data with integrated ERP systems, as well as matching invoice and payment data. However, the same invoice delivery applies to all other invoice networks serviced by Charlie-India. This means that users of other Charlie-India based invoice networks may deliver their invoices on a peer-to-peer basis with the same data compatibility — even though invoice structures may vary among individual users. For example, Budapest Sewage Works (a utility company) is able to present its invoices within the OTP eBIZ system to its SME customers, where they can be approved and paid with a single click. Invoices are stored on the platform to comply with tax regulations. Integrated ERP providers may process invoice data automatically, making manual input of invoice data unnecessary. The structured invoice data may be used by the SME for accounting purposes and serves as an input to the system’s cash ﬂow forecast. Having the invoice on the platform and a seamless payment experience (1-click payment) ensures that the business payment happens on the bank’s platform with a direct debit transfer and not through a third-party payment provider. For invoices delivered outside the platform, a 1-click card payment link is placed on the invoice, with the bank being the payment service provider. This way the bank retains the payment transaction and realizes a higher margin on the payment transaction as if it had to rely on third-party payment service providers. Furthermore, the bank may use the invoice data to provide well-timed and tailor-made ﬁnancing oﬀers to SMEs based on the cash-ﬂow projection derived from both issued and received invoices and other historical costs (wages, taxes, etc.). Having invoice data contributes to a complete ﬁnancial picture about the enterprise, which enables the bank to build its scoring model on business transaction data, not only payment data. This will lead to more precise scoring models and result in lower risk cost at the bank and lower ﬁnancing cost for the SME. Thus, the invoicing HUB solution not only helps SMEs to do their business administration more eﬀectively, but also creates an ecosystem with banks, enterprises, SMEs and diﬀerent ERP service providers.
Innovations Launching Online Accounting services for SMEs This year, Santander Bank Polska in Poland in cooperation with inFakt, Polish Fintech, launched online accounting services (eKsiegowosc) for entrepreneurs. Olena Gryniuk (SME Banking Club) asked Adrian Kaczmarek (Head of SME Strategic Partnerships and Value-Added Services at Santander Bank Polska) about the details. Adrian Kaczmarek, Head of SME Strategic Partnerships & VAS at Santander Bank Polska
antander Bank Polska recently launched online accounting services (eKsięgowość) for entrepreneurs, which is integrated into the Online Banking system, and customers can do everything via a single login. Could you please describe in detail what modules it includes? Each SME customer who uses basic online banking services has access to the e-Accounting platform, which includes all modules: invoicing, adding expense invoices (including via mobile app) and, of course, accounting. Is the service free of charge for the bank’s customers? Santander’s SME customers can easily access e-Accounting from their electronic banking account, without having to log in again. In e-Accounting, they have access to a package of their choice. The oﬀer includes three packages: Invoicing Program, Accounting Program and National Accounting Oﬃce. Subsequently, the invoicing program is dedicated to businesses with simpliﬁed accounting registered in Poland.
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The free version is intended for entrepreneurs who issue up to three invoices per month. For entrepreneurs with broader needs, the Premium Plan is recommended, where you can issue an unlimited number of invoices for a monthly fee of PLN 12 net. The accounting program is aimed at entrepreneurs who want to do their own accounting. Similarly to the invoicing program, under the accounting program, customers can choose from the Free Plan (issue up to 3 invoices and add up to 3 expense invoices per month) and the Premium Plan. The National Accounting Oﬃce is an attractive solution. This package includes a dedicated accountant responsible for conducting a customer’s accounting. The entrepreneur is in direct e-mail and telephone contact with his or her supervisor. Santander customers enjoy special lower prices under the Santander Mini and Santander Standard plans. Customers using the e-Accounting service have technical and accounting support from Monday to Saturday, from 7:00 to 22:00 via online chat, email or phone.
How does the bank beneﬁt from launching these services? We care about providing an excellent oﬀer for customers and their satisfaction with our services. We believe that good relationships are built when customers see the beneﬁts of cooperation, and therefore, we oﬀer solutions with added value for customers. How did you cooperate with ﬁntech companies or other third-party providers when developing these services for your customers? Everything depends on the service. For mature services on the market, we check the functionality, the number of users, the company’s performance and customer opinions. For innovative, fresh services on the market, where we have doubts, we work with ﬁntechs to test them with customers for UI, UX and usability in our customers’ dealings. We are currently working in parallel on a couple of solutions this way. e-Accounting services are provided by the bank in collaboration with accounting company inFakt, which provides accounting services to our customers via our online banking platform. What innovations for entrepreneurs should we expect from Santander Bank Polska in the near future? We are hard at work looking for new solutions for our SME customers. We conduct research and interviews to ﬁnd out what would really be useful for them. I can tell you that the main problems aﬀecting entrepreneurs are the recovery of receivables, obtaining invoice ﬁnancing and a lack of accurate knowledge of the law. We want to address these needs and propose solutions that our clients will be happy to use. We create everything with them and for them.
CUSTOMER ENGAGEMENT VIA SOCIAL MEDIA IN THE SME SEGMENT Having surveyed banks servicing SMEs in the CEE region, we have identified an increase in social media activity. Within this region, most banks have a common social media page for all segments they communicate with, primarily targeting private individuals via social marketing channels. SME customer engagement (or engagement of business customers in general), on the other hand, still looks week.
uring Q1 of this year, here at SME Banking Club we were following Facebook pages of commercial banks servicing SME customers in the ﬁve main countries of the CEE region (Poland, Romania, Bulgaria, Serbia and Hungary). We chose Facebook because it is the most popular social media site and a great place to build a community, educate, and share events and ideas, and can be the most eﬀective social media channel for ﬁnancial services marketing. We noticed that Linkedin is much less popular than Facebook among banks for targeting business customers. We think there is a huge opportunity here, as when people use Linkedin, they are thinking particularly about business, so they’re in a good mindset to grow their ﬁnancial knowledge base and engage with ﬁnance professionals. So, we see 4 banks in the region with their share of content targeted at SMEs close to or even more than 50% during Q1 2019.
TOP5 banks in the CEE region by the greatest % of posts in Facebook targeted at SME customers
‘A Good Voice for Companies’ campaign by ING Bank Śląski
Idea Bank in Poland is a specialized bank for entrepreneurs, so it is obvious that the main portion of their content would be targeted at that segment. The majority of posts on Societe Generale Serbia’s Facebook page for SMEs were devoted to the ongoing Generator 2.0 Program, the main phases of which (workshops for semiﬁnalists and online voting) were run exactly during Q1 2019. The Program is aimed at helping small businesses digitalize their businesses. All 26 of the bank’s post during that period were in promotion of the program and semiﬁnalists. (see more details on pp. 32). In Poland during Q1 2019, ING Bank Śląski ran a campaign called ‘A Good Voice for Companies’, aimed at promoting SME customers. In collaboration with famous singers, the bank encouraged customers to leave positive opinions about small businesses on a special page created for the campaign,
www.glosdlaﬁrm.pl. At a later date, singers involved with the campaign will sing selected opinions, and SME customers will be able to post it on their Facebook pages to promote themselves. Most of the bank’s content targeted at SMEs was devoted to that particular campaign. OTP Bank Hungary was running its OTP Ambassador Program during Q1, so again Facebook posts were targeted to promote this program speciﬁcally, the main goal of which was to provide business customers with expert and personalized answers to their ﬁnancial questions. For the OTP Business Ambassador Program, the bank selected nearly 50 companies as OTP Business Ambassadors, with whose participation a series of events were organized to discuss market trends and processes, to understand their business needs and share their experiences.
Marketing Types of posts in FB targeted to SMEs
TOP5 banks in the CEE region in terms of the total number of posts on Facebook targeted at SME customers
Banca Transilvania is a very bright example of really active usage of social media channels for both private individuals and SME segments, and holds ﬁrst place in the CEE region in terms of its total number of Facebook posts for all segments, including SMEs, at which the bank targeted more than 1 post per day with very diverse content. Banca Transilvania has the most engaging social media content, mainly publishing posts that combine educational content with banking product promotions, and also posting about virtual manager Raul, who is happy to answer any questions about the bank’s business products, thereby engaging entrepreneurs to interact with the bank via Facebook.
Raiﬀeisen Bank Romania during Q1 was ran the second edition of Factory by RAIFFEISEN BANK, with the main purpose of the program being to encourage the development of new businesses, to support entrepreneurs that have solid plans to successfully start their business and to provide them with ﬁnance (see more details on pp. 33). We’re very excited that banks in the region are so active in supporting and developing SME customers through various programs. This is a very visual trend for the beginning of this year, and these are activities which can engage customers both online and oﬄine, and which afterwards will deﬁnitely transform into sales. But it’s important to remember that social media sites themselves are not platforms for direct sales.
Moving forward, banks should oﬀer content that is relevant and interesting to their target audiences. The more information they provide, the more interaction it will generate. It’s time to develop a social media strategy and calendar that is aligned with the annual marketing plan, which should: • Deﬁne main target audiences for the bank: SMEs are likely to be a diverse population, so it’s important to understand which subsegments you are targeting the most, • Set goals and KPIs: the top three marketing priorities for ﬁnancial institutions are: Crossselling, loan growth and increasing adoption of digital channels, • Evaluate existing content and develop valuable content for target audiences: educational content is the tool through which you can best engage with consumers, ideally creating a two-way dialogue that encourages users to become more deeply invested in both the bank and the oﬀer, • Choose the channels: having deﬁned the target audience and the content needed to engage them, now it’s time to decide how to deliver that content to the deﬁned audience, • Gain employee buy-in: before going public with new content, it’s critical to launch it internally ﬁrst and get everybody inside the company involved. Olena Gryniuk SME Banking Club
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SOCIETE GENERALE BANK IN SERBIA IS RUNNING A PROGRAM FOCUSED ON DIGITALIZATION OF SMES Two years ago, Societe Generale Bank in Serbia launched Generator — a platform dedicated to support entrepreneurship and innovation. After the enormous success of the ﬁrst Generator competition in 2017, which awarded 40 entrepreneurial innovations, in November last year Generator 2.0 was born, this time with the ambitious goal — to help small businesses digitalize. In a world changing rapidly thanks to the new digital revolution, in which startups and tech companies are taking the lead while corporations play catch up, the Bank wants to empower the SME sector to transform and grow. The mission of the Generator 2.0 program is to raise awareness among SMEs about the importance of digital transformation and to proactively support the further development of SME through tools and knowledge which will help them to evolve their business in a digital economy. The program was divided into the following phases: 1. November — December 2018 — Application phase and countrywide campaign — 116 applications received. To further raise awareness about the program and the importance of the digital transformation, a series of events for entrepreneurs was organized throughout Serbia. Small businesses had the opportunity to register on the program website generator.rs and provide an overview of their business, identify the segment in which they need support and where they saw the most signiﬁcant barriers to digital transformation in their business. They also had to indicate what distinguished their business, the most signiﬁcant innovations that they had already implemented and subsequent results. The participants answered a question about their role models, how they saw their business in the future and in what segment they would invest in if they decided to invest in the digital transformation of their business. 2. January-February 2019 — Design Thinking Workshops. 20 semiﬁnalists were selected for this stage to take part in creative workshops and work with the Generator 2.0 team of experts (both the Bank’s representative and third-party providers from the creative startup ecosystem) to further deﬁne the
direction of their business, identify new business opportunities and acquire diﬀerent skills to develop businesses in the digital economy. 3. March 2019 — Online voting for the businesses. For each semiﬁnalist, the Bank provided video material which was presented on the program website and shared on the most visited news portal in the country. During the voting phase, more than 23,000 votes were recorded, and the winner chosen by the public was a goat farm — Carpe Diem. Their business underwent digital transformation. 4. April 2019 — Final event and announcement of the winners — 10 ﬁnalists were selected in the next stage with two more winners selected by jury, and will also undergo a digital transformation during the second quarter of this year. Societe Generale Bank will support companies in implementing digital solutions in their companies by: • Oﬀering consulting support in business transformation using digital technologies — analysis of the current situation and preparation of a set of recommendations along with an action plan; • Assistance of up to EUR 5,000 in implementing one of the proposed recommendations in partnership with the digital solution provider Digital Transformation Team; • Assistance in carrying out a marketing transformation and media campaign for the company’s customers.
SME companies — the semiﬁnalists represent the following sectors of the Serbian economy, including both traditional and innovative economic sectors: • Agriculture — production of the ﬁnest fruit and vegetables for end customers • Dairy farming • Equipment supply • Production of recycled polyester for sport clothing • Beauty salon • Production of water heaters • Gluten-free food • Packaging • Textiles • Production and engineering of electrical materials and LED lighting • Publishing house • Proper nutrition and preventive medicine • Dental clinic • A distribution hub for vegetarian product suppliers • Ketchup production • Natural cosmetics • Production of children’s clothes. Each company will also enjoy opportunities to increase sales or optimize costs, or both, due to the digitalization of their businesses. Societe Generale Bank in Serbia is ranked 4th on the market in terms of total assets with 8.5% of the market. The SME segment is one of the priorities set by the Bank for the nearest future. Source: Bank website, https://generator.rs
RAIFFEISEN BANK IN ROMANIA
LAUNCHED THE SECOND EDITION OF FACTORY BY RAIFFEISEN BANK
aiﬀeisen Bank in Romania has launched the second edition of Factory by RAIFFEISEN BANK, a startup lending program. The main purpose of the program is to encourage the development of new businesses, to support entrepreneurs that have solid business plans, to develop and implement viable business projects with added value for the economy. This in turn will lead to the implementation of innovative ideas that will improve the position of SMEs on the market and increase competitiveness in the ﬁeld. The startup project competition takes place via the platform www.raiﬀeisenfactory.ro, where in addition to the terms and conditions of the competition and the application form, entrepreneurs can also ﬁnd a series of useful resources designed to guide or inspire them in running their own businesses. Video testimonials from some of the entrepreneurs funded in the ﬁrst edition of the program are also available and provide new recommendations and ideas. The submitted projects will be assessed by the bank’s specialists between April 1 and April 21, after which jury sessions will be held from May 3 to May 30 in order to select the most innovative and viable business ideas, with the chosen projects then receiving up to EUR 50,000 in ﬁnancing. The loans will be provided through the COSME program, with a guarantee from the European Investment Fund. The program is addressed to companies in their ﬁrst year of activity or to those with an operating history of up to 5 years but which have not exceeded EUR 1 million in net annual revenue that also have an innovative product or service. The program is aimed at Romanian entrepreneurs and companies that may or may not be clients of Raiﬀeisen Bank when they submit their projects. If selected for funding, ﬁnalists will have to open an account with the bank to receive the ﬁnancing. During the ﬁrst edition of factory by RAIFFEISEN BANK, which took place in March — June 2018, 27 new businesses received funding. Out of the 84 applications submitted in the ﬁrst edition of this program, 52 reached the ﬁnal stage, and 27
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were selected for funding in the amount of up to EUR 750,000. Through this initiative Bank has ﬁnanced many interesting business ideas, including: businesses that are creating new software tools for the design of novel, advance, nano-materials and pharmaceutically active materials as well as for the pharmacological and toxicological assessment of the same; businesses that apply
augmented reality in teaching children science, geography and history and allow them to play together and socialize; businesses that grow lavender plants and manufacture added-value products — dried lavender bundles, lavender buds, aromatherapy products, skin-care products, sachets and herbal pillows; a factory that has a production line for bone broth; diﬀerent mobile apps, etc.
Extra questions from SME Banking Club to Factory Team: 1. What are the lessons learned after the ﬁrst edition of factory? Have you changed the criteria for the second edition of the competition? We have learned a lot after the ﬁrst edition, and we’ve recognized the need to convert this learning into action. Therefore, we planned the second edition carefully in advance. We adjusted our media campaign, we tried to smooth out the application process through a new, user-friendly platform and a simpliﬁed application form, we expanded the application period and, most importantly, we improved the deﬁnition of a startup. We have realized that there are active companies on the market that reach the limits of their addressable market and want to expand into new markets with the proper ﬁnancial support. These companies are eligible under the program if they use the loan to innovate in terms of their product oﬀering, services provided or internal processes. Usually they are perceived as startups, due to the intrinsic risk of technological or industrial failure associated with innovation. We believe that by introducing the innovation criterion, we can test tolerance for risk and distinguish between companies driven by proﬁtability and long-term value versus top-end revenue and growth potential — a startup characteristic. At the same time, companies which have potential for rapid growth (for example, IT businesses) and develop solutions that can expand rapidly at a global scale can be considered startups, in contrast with companies with limited growth potential, irrespective of the age of the business. For these reasons, we have improved the deﬁnition of a startup applied under the program, so that we have a ﬁnancial solution for this untapped market. 2. Who is makes up the jury under the program? We split the assessment between a “credit committee”, where representatives from business, risk and other departments within the bank join forces with entrepreneurs from the business environment, who are experts on the local market. The short-listed candidates pitch their business ideas to the jury, and Raiﬀeisen Bank specialists and experienced entrepreneurs that make up the jury then select the projects to be funded by Raiﬀeisen Bank. Participants have the opportunity to defend their business model, discuss with experts from diﬀerent industries and receive feedback and pro bono business advice. In fact, these interviews proved to be of paramount importance for the ﬁnal decision last year, so this will be an important step also in this year’s program. 3. Did you continue to support the winners of the ﬁrst edition after the contest ended? Yes, we’ve kept in close contact with the ﬁrst edition ﬁnalists. They become brand ambassadors, and we believe that the impressive number of applicants this year is due to the fact that many other entrepreneurs reacted to their stories and the advice they gave via testimonials. The ﬁrst year of business poses many challenges, and we tried to help them with the strategic and ﬁnancial issues they were likely to face by developing a workshop curriculum that covers subjects like digital strategy, pricing and business models, cash ﬂow management and leadership. Also, we allocated them a dedicated relationship manager who can oﬀer banking services that best meet their needs. 4. What is the scale of the second edition of factory? How many applications do you expect to receive and, how many projects do you intend to ﬁnance at the end of the program? We expect to receive about 300 applications, although we are prepared for many more. Out of these 300, we want to select 100 ﬁnalists to beneﬁt from our startup oﬀer. Source: Press release by Raiﬀeisen Bank Romania from February 12, 2019, www.raiﬀeisenfactory.ro
Social Media Strategy for Banks
Arjen de Boer (ITDS)
Charles-Alexandre Gamba (ITDS)
Olena Gryniuk (SME Banking Club) discusses why and how banks should get social with Arjen de Boer and CharlesAlexandre Gamba from ITDS.
hy should banks have a social media strategy? The answer is not why but how. The ﬁrst misconception with social media is that people usually tend to associate it with Facebook and are afraid to get bad reviews or public complaints. The essence of social media is ﬁrst and foremost to communicate, engage and share ideas, materials and stories with a community that shares a speciﬁc interest. A lot of large ﬁnancial brands usually see these platforms (like Facebook) as a channel for marketing campaigns, and rarely measure any ROI from them. It usually turns into an
ineﬀective and expensive endeavor that nobody really cares about. “It’s not about numbers anymore, but about starting a dialog with your customers.” Why you should become a social business: • Since we are digitizing processes to oﬀer a better customer journey, Banks should rethink how to engage and dialog with their consumers, since they are no longer interacting with the traditional network (branches). • Consumers are Online, Mobile and Social, e.g. in Poland, people spend on average 2.5 hours per day using social media tools (messenger
apps, Facebook, LinkedIn…) — you simply need to be where your customer are • Listen to the customer to improve your services and provide better service (as part of your digital strategy) “Banks should not have a social media strategy, but instead a social business strategy.” How would you deﬁne an eﬀective social media strategy for banks? Can you give us some tips on that? An eﬀective social media strategy for banks is a strategy in which you describe how social media can contribute to achieving your overall business goals. It is not a strategy in and of itself. Social media is reinventing the entire customer lifecycle. Social activities must be embedded in the banks’ core activities. So, fully integrate social channels within your organizational structure and culture.
Marketing You also need a good “management-proof” dashboard. The degree of social media must be measurable on the dashboard and that’s only possible if you have a strategy with clearly defined objectives. Moreover, having a clear perspective provides a better focus when analyzing data, so that it is not immersive. “You have to start internally to be successfully externally.” What are the best practices of ITDS experience? • Involve the management and all the diﬀerent business lines • Make your goal to engage in a diﬀerent way with your ONLINE consumers. • Set up KPIs and targets: plan, implement, evaluate, replan, etc. • Think big, start small… How can banks use social media to engage entrepreneurs? Social media must not been seen as an extra; it must be part of the organizational culture.
Banks should be present to listen and learn on the most popular social media channels. You’ll learn more about your brand and services on social media than you will through a call center. To engage entrepreneurs, the deployment of social media is not enough. Steps have to be taken to make social business an integral part of banks’ marketing and communication strategy. “Beyond a nice campaign, authenticity counts.” What content should banks use to involve diﬀerent segments of business customers across main social media sites? Be authentic and human. Everything is related to content. It’s about conversation management. Content starts with meaningful connections. It must engage your target group. Nowadays, visuals and videos are key to good content marketing. Share positive, people-centric content, co-created with your customers, easy to absorb. Pay attention to user-generated content. This opens the door
to a real community, where real discussions take place. “Stop selling and start talking.” How can you convert followers on Social Media into real banking customers? Can you provide some good examples? Social Media can be used for many diﬀerent reasons. In my opinion, it’s not only about selling. Social media can be very meaningful in an era of services and engagement. WhatsApp and Facebook Messenger can be fully integrated as a contact channel for customers and that will increase customer satisfaction enormously. In addition, social media can play a huge role in customer engagement. If banks are sincere, honest and authentic, (the right tone of voice) they can engage very fast via social media. So, get to people in the moments that matter to them. And understand the purpose of every platform, how best to engage, and with whom. And at the end of the day, get them to your own website or app. “Bring customers into your space.”
Charles-Alexandre Gamba during his presentation at the CEE SME Banking Club Conference 2018 in Warsaw (October 29-30)
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Q-LANA — KNOWLEDGE-BASED LENDING FOR SMALL AND MEDIUM-SIZED ENTERPRISES Q-Lana, a US based Fintech company, managed to complete its first implementations in 2018 and is ready to present its solution to the banking sector in Central and South East European countries.
lena Gryniuk talked to Christian Ruehmer — Co-founder and Director, and Svetlana Zikic — Q-Lana Representative in Europe to tell us more about Q-Lana’s concept of Knowledge-Based Lending for Small and Medium-Sized Enterprises. Christian Ruehmer: We founded Q-Lana in 2015 as professionals with decades of experience in ﬁnancial services and technology, and used our skills to develop the concept of Knowledge-Based Lending due to identiﬁed challenges which limited banks for broader MSME lending: — First, there is signiﬁcant demand for loans from Micro, Small and Medium-Sized Enterprises (MSME), but banks often lack the tools and skills to assess the credit risk of those companies to approve and monitor the loans. According to a recent study by the IFC , there is a funding gap for loans to MSMEs of at least USD 5.2 trillion for formal and USD 2.9 trillion for informal companies. Therefore, globally, millions of MSMEs are constrained in terms of appropriate lending support as banks have been and continue to be reluctant to ﬁnancially support this sector. We started within this context. Furthermore, looking at European economies, the importance and impact of the MSME sector is considerable and growing in terms of GDP or employment contribution. — Second, Fintech companies already challenge the business model of traditional
Christian Ruehmer and Kurt Vandebroek, Q-Lana
Svetlana Zikic, Q-Lana
banks. Very often, these companies select niche markets, oﬀer their products through an eﬃcient, low-cost approach and are not subject to the same regulatory constraints as banks. While they are technologically advanced and more radical in their approach, they are also interested in joining forces with successful banks. On the other side, banks have access to a broad range of clients demanding speciﬁc products and are able to develop professional client-bank relationships. Hence, there is a great
opportunity for cooperation between banks and Fintech companies. — Third, looking back, banks have been approached to digitization of certain part of business operations, but the lending process has remained more traditional. Digitization generally requires better IT skills among staﬀ and the ability to migrate to a more digital business model. This goes beyond the traditional tasks of change management and requires a lot of guidance by Fintech solutions,
Figure 1 — Components of Knowledge-Based Lending
from staﬀ inhibitions to handling technology in the workplace, to complying with existing banking Digital Strategies and may contribute to their optimal formation. By addressing all three challenges, we wanted to show how the Q-Lana Knowledge Lending methodology can be an ideal base for banks as traditional ﬁnancial institutions to apply a structured approach to digitization, oﬀering enhanced ﬁnancial services and implement successfully by supporting the staﬀ in the digital migration.
Knowledge is the key to successful MSME lending Knowledge of MSME business in the target markets is the most important factor for successful lending. Information is mainly collected through the work of bank’s manager, who knows clients the best, and by using alternative sources of data to evaluate potential clients as well. The challenge is to structure the knowledge and to capitalize on the vast amount of information, most of which is qualitative. Diﬀerent instruments, technologies and statistical tools can help to support the collection and analysis of information. This includes multiple versions of scoring and data analysis tools for risk assessment and monitoring. Information about clients is crosschecked and analyzed. Further, the overall workﬂow should be automated. This allows the bank managers to
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focus on value-added tasks, such as interaction with clients and decision-making. Our digital lending platform allows integration of other services through an API concept and is placed at the core of the banking system. It provides support for Front-End activities as well as Back-End areas, such as operations and risk management. The workﬂow functionality of such a platform covers ﬁrst contact, loan application, approval, monitoring and collection. It also covers management of collateral, documents and impact measuring. The platform can be used to assess the value of qualitative and quantitative information and feeds analytics back to users in a contextsensitive manner. This allows the bank to fully replicate existing processes and procedures, and provides opportunities to upgrade lending methodologies, where new instruments are suggested.
Components of Knowledge-Based Lending Knowledge-based lending is built around several innovative tools and concepts to support the various stages of lending processes with clients. Those concepts enable the bank to service clients better while minimizing risk exposure. The components relate to: - Business Assessment: these tools help bank managers to understand the business model of the client better. Using SWOT Analysis, Business Assessment Questions, Porter’s 5 Forces Model
or the Business Canvas allows knowledge of a client’s business to be structured. Having a library of this information about a number of clients allows for comparison and benchmarking. - Rating and Scoring Models help in the assessment of borrower risk in a structured manner. Credit assessment is both an art and a science, which means that on the one hand, qualitative analysis should not be neglected, but on the other, rating and scoring models have a clear role in structuring information. - In the Loan Application Process, tools such as the analysis of the 5Cs and conﬁgurable ﬁnancial modeling to project a company’s ﬁnancials over multiple periods help highlight key risk factors. - An Early Warning System identiﬁes clients with potential payment challenges before they actually default. Through questionnaires and quantitative analytics, alerts can be created to remind bank managers of potential problems related to credit quality. - Collaboration and knowledge sharing is essential. The platform facilitates collaboration and communication across teams and integrates with core banking systems.
Placing Q-Lana platform at the Core of your Digitization Strategy Most ﬁnancial institutions have expanded into digital business due to client demand and threats from FinTech companies. Speciﬁcally,
Figure 2 — Steps in the Digitization Process
the latter create fear and confusion among traditional banks, and experts are warning that the traditional business model for banks is already outdated and will soon be replaced by mobile wallets, peer-to-peer lending and loans that are auto-approved/declined through scoring models. Banks’ management and governing bodies feel pressure to adjust and are afraid of “missing the boat”. On the other hand, banks need to be conscious that they have a business model that is generally successful business model but that needs to be upscaled and adjusted in light of clients’ current needs and trends for upgrading clients’ user experience. When it comes to digitization, a shortsighted patchwork approach of combining new products with partial process improvements mixed with fashionable tactics needs to be avoided. It is not necessary to revolutionize the business process and product portfolio all at once. A step by step approach, deﬁned by the Digitization Strategy, is recommended, as long as steps are taken towards a clear vision of the
One more beneﬁt of the platform is the ability to gradually implement digitization in line with the three steps mentioned above: the replication of the existing processes happens as a ﬁrst step. Improvements and the need for new tools becomes obvious through experience in this step. Once the institution successfully establishes the second step, the integration of new, innovative products is easily incorporated via the platform. indicated structure. The steps of the Digitization Strategy are: Those steps are: - Digitize — start with digitizing existing business processes, decision support and structuring of data collection. Taking small steps when entering the ﬁeld of digitization improves the adoption rate among staﬀ. - Improve — business processes can be improved through the addition of digital tools such as rating and scoring, early warning systems, monitoring and structured collection. - Launch — with data about existing clients in place and workﬂows that are optimized, it is easy to adopt new products or products that are in use by Fintech companies.
Added Value for the bank Svetlana Zikic: While the Q-Lana platform guides banks through all the steps and advances credit portfolio management, it enables banks to create new business opportunities with MSMEs, reﬂecting added value expected by clients.
Navigating through pitfalls during execution Even with the best strategy in place, ﬁnancial institutions often fail when it comes to execution. There is a signiﬁcant need for consulting before decision-making. The Q-Lana team is prepared to work with management teams and to prepare the necessary materials for the boards of directors. A decision process about digitization can be lengthy and needs to cover all concerns voiced by the management and the board. Q-Lana consulting and advisory support should be on-site for an extended period to navigate potential pitfalls, such as complexity of processes, fear and resistance from staﬀ members and issues related to data integration. There is usually at the management level a signiﬁcant diﬀerence between strategic expectations and operational details. A consultative approach to those problems is usually appreciated by banks and considered a key factor for the success of the digitization eﬀort.
ABOUT Q-LANA: Q-Lana has been developed as an integrated platform to provide knowledge-based lending to MSME clients. It fully digitizes operations and allows other providers to connect. It is paired with consulting services to facilitate the important steps along the digitization path. It has been developed with a focus on emerging economies due to the importance of the SME sector for overall economic growth. Nevertheless, thanks to its characteristics and general trends and needs, it is equally needed and useful in developed countries. So far, Q-Lana has been launched or is in the process of launching with seven customers across Europe, Africa and the Caribbean. The experience of this work has further shaped the company’s approach to sales and implementation, and has received very positive feedback across the industry. We introduced our product at a few International events, including the Global SME Finance Forum in Madrid last year, and have become a respected member of their network.
Q-Lana was founded by 3 partners, combining diﬀerent skills and expertise: Christian Ruehmer, has 30 years of experience in ﬁnance and working for several large international banks in the areas or Risk Management, Credit Portfolio Management and Investment Management; Kurt Vandebroek has a very strong background in technology for ﬁnancial institutions and has launched several companies; Bharath Kumar is the managing partner of the software development company that developed Q-Lana. He has successfully managed multiple products in that space across many continents. Our representative oﬃce in Belgrade is managed by team member Svetlana Zikic, who has a wealth of expertise and experience in microﬁnance. She is our ﬁrst contact within the company and is able to provide more details on the ways in which Q-Lana can become the solution to your digitization eﬀorts for SME lending. Contact Information: http://www.q-lana.com; email@example.com; oﬃce@seﬁni.rs
FinTech approach: How does SMEO digitize SME financing? SMEO is an independent FinTech invoice factoring company providing flexible financing services for the small and medium enterprise sector. How does the cutting-edge factoring company make the whole process digital? How are machine learning and blockchain used by modern financial institutions?
MEO was founded in 2018 but is already a mature startup. The factoring company has ﬁnanced over 73.8 million PLN (approx. 18 mln EUR) worth of invoices. There are two things that set SMEO apart in the crowded invoice ﬁnancing market — its focus on small and medium enterprises and the state-of-the-art, fully digital process that stands behind it. The company’s target group — SMEs — is not often considered to be of interest by the banking and ﬁnancial sector. They, however, make up 97% of Polish companies and create over a third of the country’s GDP. “The fact that it is diﬃcult for SMEs to get ﬁnancing causes a number of issues for them. According to our research ‘Financial security of Polish small enterprises’ (‘Bezpieczeństwo ﬁnansowe małych ﬁrm w Polsce’), in the case of ﬁnancial diﬃculties such companies often turn towards the owners’ private funds (34%), borrow money from friends or family (20%), or use high-interest, short-term loans (21%),” says Michał Pawlik, SMEO CEO.
Data is key Incumbent banking institutions consider SMEs high risk. They do not create high proﬁts, and on the other hand often have no credit history to be used by banks in their scoring systems. SMEO, which has been created by experienced banking and ﬁnance industry professionals, has managed to merge their know-how with modern tech to create a scoring system that meets the speciﬁc needs of their clients. First of all, SMEO uses Big Data and Machine Learning systems — its scoring system scans
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all the sources available, pulling information from sources ranging from the ones used by banking such as debt registers, but also public registers, the customer’s electronic banking and even social media accounts and behavioral data. The use of data from social media allows SMEO to get to know the credibility of customers, to which there is no access by standard data. This information is later used by AI models to generate more accurate decisions and allows SMEO to establish credit histories for so-called “thin ﬁle” credit-seekers. “Our process is fully automated and allows for a decision in 19 seconds. With full automation, we can provide service, as well as banking transfers 24/7, both through the website and mobile app. It also allows us to completely avoid the banking bureaucracy, as we are inputting all data for the client based on the NIP tax identiﬁcation number provided,” says Pawlik. SMEO’s machine learning technology also correlates large amounts of data (taking into consideration almost 700 rules and 18,000 terms) — and the mechanism works so well that the company, since the beginning of 2019, manages to ﬁnance invoices for the companies starting the day they register.
White Label solutions to partners that use the technology,” says Pawlik. Blockchain allows for SMEO’s system to receive data from partner institutions and send them back in an absolutely safe way, with all data protected cryptographically and stored in an unchangeable register, ensuring their inviolability. This way the client enters data on the partner’s page, it gets sent to SMEO and analyzed there, while the partner system delivers approval of ﬁnancing to the ﬁnal client, all in a completely safe way.
Blockchain is not a buzzword
A true FinTech is not complete without one word — blockchain. SMEO, of course, uses it. In another innovative way too — it’s a white label solution. “Blockchain oﬀers virtually unbreakable encryption and full transparency. We oﬀer
The company is currently working in Poland only, but plans international growth. It has applied to join a regulatory and technological sandbox platform-service — LBChain — to be created by the Bank of Lithuania and looks towards other CEE markets.
Michał Pawlik, CEO at SMEO
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16-17 May, Tbilisi, Georgia Boris Dyakonov (Tochka Bank) Oksana Leonova (Alfa-Bank Ukraine)
Julija Kislukhina (PrivatBank)
Arpine Mayilyan (Ameriabank)
Andrey Gidulyan (SME Banking Club) Tamuna Zhizhilashvili (TBC Bank)
Oksana Kutsokon (Raiffeisen Bank Aval)
Natalya Butkova-Vitwitska (Oschadbank)
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From Traditional Banking to Ecosystem — SME Study Tour to Poland
n April 10-11, ﬁfteen SME Bankers (representatives of commercial banks and micro-ﬁnancial institutions) from nine countries came to Poland to learn about the best practices of banking solutions for small business companies. SME Banking Club hosted a tour and visits to Polish banks working with SMEs as well as some ﬁntechs. During the visit to the ING Bank Śląski Head Oﬃce in Warsaw, Ewa Szerszeń presented the bank and its results for 2018. Adam Walendziewski presented ING Business, an omnichannel digital platform for SME, Mid Corp and Wholesale customers, as well as an impressive example of the success of the Agile way of working at the bank. ING Business is an omnichannel digital platform which the bank treats as a single access point for all the products customers have with the bank. Via this platform, users can start a process in one channel and ﬁnish it in another.
Ewa Szerszeń (ING Bank Śląski)
Adam Walendziewski (ING Bank Śląski)
Michał Tusznio (ING Bank Śląski)
Michał Tusznio presented the process for lending SMEs: both the accelerated process with fully digital onboarding and decision-making processes, and also the traditional lending process with human involvement from the bank’s side and the possibility of customized decisions. During the visit to RBL_Space, where Alior Bank, together with startups from the ﬁntech industry, is implementing new solutions under its RBL_START acceleration program, Łukasz Mańkowski and Małgorzata Filipowska presented how in Poland cooperates with startups within the framework of the RBL_Start Accelerator program, and also what conditions need to be met for the bank to invest in startups via RBL_VC. Cooperation with startups is one of the pillars of the bank’s digital banking strategy — its so-called “Digital Rebel Strategy”, announced by the bank to be in eﬀect until the year 2020. This is also how the bank plans to increase the number of implementations of innovative solutions for all segments, including the SME segment.
During the visit to RBL_Space
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Katarzyna Wielgosz and Łukasz Czech presented Agronomist — a platform with value-added services for the food and agricultural sector launched by BNP Paribas Bank Polska at the beginning of April in Poland. It is a comprehensive and modern platform created in collaboration with ﬁve innovative startups from three diﬀerent countries in cooperation with farmers. The main purpose of Agronomist is to help Food & Agri customers scale up and manage their businesses more eﬃciently. In 2018, BNP Paribas Group created in Poland an Agro competence center (called Agri Hub) for Poland and the Group’s banks in CEE and Africa.
Katarzyna Wielgosz (BNP Paribas Bank Polska)
Krzysztof Pulkiewicz from banqUP shared how a bank can provide more tailored solutions to SMEs and help them run their businesses more eﬃciently by using BFM tools. Business Financial Management empowers SME customers to better forecast and manage their cash-ﬂow by aggregating accounts from diﬀerent banks and invoices into a single platform. Michal Pawlik demonstrated how they provide online factoring for SMEs in SMEO, purely online and with an automated decisionmaking and disbursement process. SMEO is an independent FinTech factoring company in Poland, providing ﬁnancial services to SMEs 24/7 through the website and mobile app.
Krzysztof Pulkiewicz (banqUP)
Łukasz Czech (BNP Paribas Bank Polska)
Michał Pawlik (SMEO)
Event During the visit to the mBank head oﬃce in Lodz, Daniel Pindor and Eliza Działak shared their experience in building the bank’s Ecosystem for SME customers: from starting a business with the bank via mPower Business Starter to the automatic opening of a current account, with all banking products delivered online. Daniel Pindor and Eliza Działak (mBank)
Agata Kaźmierczak presented mAccounting — online accounting services oﬀered by the bank to SME customers. Maciej Kubalski presented how the bank grants loans to entrepreneurs via mobile channels. Izabela Jankowska presented how the bank motivates entrepreneurs to accept cashless transactions by providing POS terminals free of charge for 18 months under the Cashless Poland program.
Scan QR code to view more photos Agata Kaźmierczak (mBank)
Maciej Kubalski (mBank)
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Izabela Jankowska (mBank)
SME Finance Meeting Bucharest (November 28, 2018)
Olena Gryniuk (SME Banking Club) together with Daniel Huszรกr (efcom) held the SME Finance Meeting in Bucharest to share with Romanian bankers the key trends and digital solutions for SME lending, factoring, and customer onboarding.
Olena Gryniuk (SME Banking Club) and Daniel Huszรกr (efcom)
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Event SME Finance Meeting Sofia (March 26, 2019)
Olena Gryniuk (SME Banking Club) together with Daniel Huszár (efcom) held the SME Finance Meeting in Soﬁa to share with Bulgarian bankers the key trends and digital solutions for SME lending, factoring, and customer onboarding.
Olena Gryniuk (SME Banking Club) and Daniel Huszár (efcom)
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CEE19 Warsaw, Poland
A Conference will focus on some hot topics: • Creating the SME Banking Ecosystem • Best Online Banking solutions for SMEs • Digital Transformation of SME Finance • Digitalization of the Customer Relationship • Fintech Pitches https://smebanking.events/cee/ Organizer: SME Banking Club
REGISTRATION FORM ATTENDEE’S INFORMATION Mrs. Ms. Mr. / First name
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PRACTICAL INFORMATION DATES The Conference will begin on Monday 21 October at 14.00 and will end on Tuesday 22 October at 19.00 VENUE The Heart Warsaw (38th floor of Warsaw Spire Building, plac Europejski 1, Warsaw (Poland) 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.
01st of October 2019. 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. REGISTRATION FEE €700 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. 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 firstname.lastname@example.org Or register online at https://smebanking.events/cee/
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Organizer’s contacts: Olena Gryniuk, +48733404985, e-mail: email@example.com
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 www.smebanking.events. 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.