slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Charles B. Wendel Finance Forum June 21, 2002 PowerPoint Presentation
Download Presentation
Charles B. Wendel Finance Forum June 21, 2002

Loading in 2 Seconds...

play fullscreen
1 / 16

Charles B. Wendel Finance Forum June 21, 2002 - PowerPoint PPT Presentation


  • 157 Views
  • Uploaded on

Financial Institutions Consulting. Winning Strategies for SME Finance. Charles B. Wendel Finance Forum June 21, 2002. Today’s Focus. Why small business is highly attractive The importance of segmentation Delivery options Minimizing costs Related key success factors.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Charles B. Wendel Finance Forum June 21, 2002' - arnoldo


Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

Financial Institutions Consulting

Winning Strategies for SME Finance

Charles B. Wendel

Finance Forum

June 21, 2002

slide2

Today’s Focus

  • Why small business is highly attractive
  • The importance of segmentation
  • Delivery options
  • Minimizing costs
  • Related key success factors
slide3

Why small business is highly attractive

The SME segment generates above market returns

U.S. Market Size and Profitability

800

Insurance

Consumer

Finance

200

Small Business

Revenues ($Billion)

100

Mortgages

Credit Cards

50

Mutual Funds

10 20 30 40

ROE (%)

Source: FIC Analysis

slide4

Lending is necessary, but profitability is largely deposit driven

U.S. Bank Small Business Profit Distribution

Small Business

Profitability

100%

All Others

5%

Loans

10-15%

Deposits

70-85%

Source: FIC Analysis

slide5

The deposit/loan ratio largely determines small business ROE

Small Business Profitability

40%

20%

0%

Bank B

Bank C

Bank A

Small business unit ROE

1:1 2:1 3:1 4:1 5:1

Deposit-to-loan ratio

Source: First Manhattan Consulting Group

slide6

The importance of segmentation

  • Profitability
  • Customer
  • Competition
  • Differentiation
  • Resources

All customers are not created equal: different customers offer different profit potential

Customers want to be recognized as “different” with distinct needs

The best competitors will pick-off the best customers; banks need to improve retention

Decommoditizing the bank offering demands segmentation

Segmentation allows banks to align the right resources with the right opportunities

slide7

“If you don’t use segmentation, you are spending too much money trying to be all things to everyone.”

Senior Vice President

Bank One

“Everyone is our customer.”

Executive Vice President

Retail Head

U.S. Regional Bank

slide8

All customers are not created equal

Disguised

Client Example

Profit Contribution by Decile (%)

Top 20% contributes 85% of total profit

Bottom 30% destroys 15% of total profit

Source: Bank One

slide9

Different segments require different approaches; not all segments merit equal attention

Illustrative

Customer Segmentation Matrix

Source: Novantas

slide10

Segmentation examples

  • Zions BankWomen-owned businesses
  • Capital OneContractors
  • American ExpressWhite-collar microbusinesses
  • ICICILending against large company payables
slide11

Delivery options

Most small businesses want branch access, but use multiple channels

Small Business Channel Use (%)

Use

Do Not Use

Channel Not Available

Source: FIC Customer Analysis

slide12

Non-branch performance has yet to catch up with aspirations

“I get great service from my branch. They are willing to help. When I use the phone, I get a lot of rules and regulations. It’s even worse online.”

Small Business Owner

slide13

Minimizing costs

Nearly all aspects of selling SMEs should be re-engineered

  • Products and documentation: standardized
  • Underwriting, servicing, and collections: centralized
  • Information requirements, application process, and credit policies: simplified
  • Credit decisions: automated and credit scored
  • Portfolio management: exception-basis only

50-60% of savings

One indication of impact: origination costs drop by 75%

slide14

Customer contact time can double by centralizing service and support functions

100

50

0

Other tasks

Other tasks

Percent of time spent

54%

26%

Customer

contact

Customer

contact

Before

Centralization

After

Centralization

Source: Key Bank

slide15

Related key success factors

  • Achieving account retention
  • Gaining wallet share/improving cross-sell
  • Leveraging the branch channel
  • Repositioning the bank as small business friendly
  • Using compensation to incent a small business focus
slide16

Financial Institutions Consulting

Winning Strategies for SME Finance

Charles B. Wendel

Finance Forum

June 21, 2002