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Challenges Facing Rural Banks

Challenges Facing Rural Banks. Presentation by: Atty. Arifa A. Ala 12 November 2013. Main Challenges. Stiffer competition Changing environment/market Building talents/expertise Building capital Strengthening management Common management issues. Stiffer Competition in the Market.

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Challenges Facing Rural Banks

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  1. Challenges Facing Rural Banks Presentation by:Atty. Arifa A. Ala12 November 2013

  2. Main Challenges • Stiffer competition • Changing environment/market • Building talents/expertise • Building capital • Strengthening management • Common management issues

  3. Stiffer Competition in the Market • Big banks start to serve rural areas • Economies of scale; wider network • More expertise in marketing/launching products • More innovative • More competitive interest rates • Impact on rural banks • Loss of customers • Lower margins

  4. Changing Environment/Market • Customers are more demanding • Technology is rapidly changing; increased IT risk exposure • More regulations

  5. Building Talents/Expertise • Difficulty in attracting and retaining pool of talents • Big players offer better compensation packages • Many professionals prefer to work in urban areas • Better career prospects in bigger institutions

  6. Building capital • Compliance with capital requirements • Expansions require additional capital • Challenges in attracting investors • Especially for financially-challenged banks

  7. Strengthening Management The need for - • More active board and management oversight • Establishment of appropriate risk management system

  8. Common Management Issues • In some, management is confined to family members • Limited technical capabilities and experience of people running the banks

  9. Management Issues Limited workforce results in- • Overlapping Function • Weak segregation of duties • Conflicting functions

  10. Thank you aala@bsp.gov.ph

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