SDBL Growth Strategy

SUPPORTING SUSTAINABLE GROWTH FOR
SDBL BANK
ASPIRATIONS AND TRANSFORMATION AT SDBL
FIG Consulting Group, South Asia
15th May 2015

OVERALL MESSAGES
• SDB established a strategy for the period 2014-2017 to become the Apex Bank to the
cooperative movement in Sri Lanka
 Strategy envisages a quantum leap in performance if successful
 Major implications on the infrastructure and organisation of the Bank
 Major barriers remain at the outset before the strategy can commence implementation
• The Bank has already made significant progress in achieving the plan.
• However, IFC believes a further repositioning of the Bank is required to ensure long
term sustainable growth, particularly in terms of:
 Redefining the relationship between the Bank and the society network
 Developing a separate scalable business model for SME banking
 Achieving operational excellence
• Growth will need to be supported by further enhancements in risk management
framework and organization
• A portfolio of prioritized initiatives is going to be required to be implemented over the
next 2 years

SDBL IS A SUCCESSFUL COOPERATIVE BANK AND HAS SHOWN GOOD
RESULTS IN THE CURRENT YEAR
1717.8
1817.1 1902.9 1863.8
2449.4
FY10 FY11 FY12 FY13 FY14
Net Interest Income
848.28
691.58
613.16
415.74
941.45
Operating Profit
77.10
47.01
112.62
285.88
384.71
Non interest income
323.5
382.0
340.7
248.2
504.4
PAT

Key Strategic Pillars Description
• The shift from microfinance to SME banking will need
a considerable shift at the operational level, given the
strategy targeting cooperatives to promote SME
products a blend of banking skills and soft skills will
be developed.
• SANASA has a distinct advantage of belonging to a
large network work cooperatives network of 4500
active societies reaching over three million people.
Efforts will be made to leverage these societies
serve as agents / franchises to promote products and
services of the bank.
• Efficient roll out of products and services will be
achieved by the clever use of technology ; especially
the mobile banking network .
• Being a late entrant to the SME financing space it is
essential for SANASA to differentiate to stay ahead of
competition hence quality and innovation will drive
Strategic
Outcomes
• Unique delivery model using a brand loyal
cooperative agent / franchise
•The delivery model to be backed by
technology solutions to be efficient and
effective
• Reach rural MSMEs who often fall through
the cracks but connected through societies
• A strong Credit plus service
proposition
• Cross selling of products between the
SANASA group entities such as
insurance
• Maintain NPL within a high growth
environment
•Reduce cost to income ratio to be par
with industry levels.
The Vision that drives strategy:
‘Be the Apex bank of the
Co-Operative
Sector with commercial
banking status and to be the
leading partner of national
development with a global
focus’
Develop skilled HR to
suit business model
Introduce digital
channels
Leverage SANASA
Cooperative societies
High quality,
innovative
competitive financial
products and services
MANAGEMENT HAS ASPIRATIONS TO GROW THE BUSINESS FURTHER IN
THE COMING FIVE YEARS

IFC IDENTIFIED TEN KEY LEVERS THAT SDBL SHOULD FOCUS ON
TO ACHIEVE ITS VISION
Strategy:
To be the apex co-operative Bank in SL
with Commercial banking status
Creating a Sales focused branch network
1
2
3
SDBL and SANASA societies’ relationship model
4
Alternate Channel strategy
5
Women in Banking
6
Non-Financial Advisory Services
7
Develop MSME operating model
Customer Segmentation and CVP across all segments
8
Build a low cost scalable operations environment
Organizational Design9
Risk management enhancement10

6
DEFINING SEGMENTATION AND CVP: IFC IDENTIFIED THE BANK AS
“EMERGING” IN TERMS OF CURRENT CAPABILITIES
Customer Management Maturity Level: Emerging Observations
• Customer segmentation
and improving acquisition
as well as cross sell to
existing customers
represent the key priority
areas
• CRM along with data
management and
technology platforms needs
to be in place
• Significant 1 million base
along with indirect base of
4 million clients exists
providing multiple
opportunities for cross
selling
• No formal customer
management strategy in
place although organization
wishes to increase MSME
contribution
Emerging Standard Advanced Best in Class
Customer
Segmentation
Acquisition
Cross Sell/Up-Sell
Retention
Activation
Organization
Data Management
Technology &
Tools
Modeling

EXISTING VIEW OF SDBL CUSTOMER/PRODUCT SEGMENTS
Neither a customer segment nor a product segment view of the portfolio is possible

GOING FORWARD, THERE IS A NEED TO FOCUS THE BANK AROUND
DEVELOPING STRENGTH IN 4 MAIN VERTICALS USING DIFFERENT BUSINESS
MODELS
Rural Banking
SME Banking
Retail Banking
Apex Banking
Potential Segments Potential Sub-segments
• Agri, farmers as producers and
consumers, women
Business Model
• Wholesale: Sanasa
Societies
• Retail: Branch
network based
• Small business, medium businesses,
middle market
• Small business: Retail
business model, alt
channels
• Medium: Relationship
based
• Youth, Women, senior citizens,
armed forces, mass
• Retail network based
• Alternative channels
• Cooperatives, SANASA societies,
NGO’s & other non-aligned
• Agent based
• Franchise based
Illustrative

SDBL NEEDS TO MOVE FROM PRODUCT TOWARDS DEVELOPING
VALUE PROPOSITIONS TO TARGET THESE SEGMENTS
CVP
Product
Pricing
Service
Channels
Affluent Middle Income Mass
• A loyal banking partner
that delivers
• A high quality banking
that goes the extra mile
• Full suite of transacting,
lending, investment and
insurance products
• Full suite of transacting,
and insurance products as
a simple bundle
• Bundle of small number of
asset and liability
products competitively &
simply priced
• Approximately 35% increase in pricing to match customer sensitivity to position bank
X in line with key competitors in affluent and middle segment
• Personalized relationship
banking
• Approximately 1:300 RM
loading
• Great service banking
through a central team of
virtual RMs
• 1:2000 RM loading
• Seamless branchless
banking experience
through alternative
channels
• Superior customer experience enabled by quick TAT on key customer journeys
• Enhanced multi-channel experience with
onboarding, sales and service through branches,
ATMs, mobile and internet banking
• Mobile banking, internet
banking and ATMs as
primary channels
• Simple & efficient banking
at your fingertips
Illustrative example

10
FOCUS THE ORGANIZATION AROUND THE CUSTOMER BY
DEVELOPING A CVP AND CUSTOMER MANAGEMENT STRATEGY
Refined customer
segmentation across
Bank
Develop customer
management
strategies
Establish strong data
analytics and MIS
unit capability
Activities
• Develop
understanding of
segments economics
• Perform detail
internal & external
CRM data analysis
• Understand where
to target at a
segment/sub-
segment level
• Develop refined
segmentation
approaches across
retail and
commercial banking
• Implement a
centralized analytics
organization
• Improve data
management and
data mart with
dedicated resources
• Perform market
research on retail &
SME segments
• Establish customer
experience needs
• Establish asset &
liability product and
pricing offering
• Establish distinct
sales and service
approaches for each
• Develop gap
analysis, pilot &
Implement
Goal
Develop Retail &
MSME Customer
Value Propositions
• Acquisition strategies
• Cross-sell and upsell
strategies
• Retention strategies
• Activation strategies
• Implement tests
("test and learn") to
optimize products,
services, and prices

12
20% of population is covered thru the SANASA movement. But the SDBL market
share in banking is only 0.5% today
8400 societies
THE SANASA MOVEMENTS SIZE AND OUTREACH OFFERS SIGNIFICANT GROWTH
OPPORTUNITIES IF A SPECIFIC TAILORED PACKAGE OF PRODUCTS AND SERVICES ARE
OFFERED
• ~8400 SANASA
societies.
• ~3600 active.
• ~450 borrowing
• Liability
contribution of
~25-30%

13
THERE ARE A NUMBER OF POTENTIAL OPTIONS IN TERMS OF
CHANGING THE RELATIONSHIP BETWEEN THE SDBL AND THE
SOCIETIES THAT NEED TO BE EVALUATED
SDBL Branches:
Societies become
full fledged SDBL
branches
Exclusive SDBL center
• Societies sell only SDBL
products
• Get a share of income
generated
• Societies do not sell
their products
Distribution center
• Societies continue
selling their own
products
• SDBL assists in
standardizing products
across societies
• Societies sell SDBL
products to upgrade
their customers
Referral
• Societies have
a formal
referral
mechanism for
their
customers
• SDBL could float Shared Services company to manage IT and other shared services for all
societies
• Have common core banking platform and technology for all societies
• Manage data analytics for all societies to build customer acquiring and management strategies
Level of difficulty/ strength of relationship
High Low

APEX CASE STUDY: BANK ANDARA, INDONESIA- AN
APEX VALUE PROPOSITION EXAMPLE
Direct loan • Working capital
• Investment loan for MFI
• Lines of credit at
preferential interest
Deposits • Fund placement services
• Deposit guarantee
• Competitive interest
rates
• Time deposit and flexible
savings A/c
Electronic
banking
• On-line banking system to
enable MFI customers to
deliver E-Services to their
customers
• Domestic remittances
• Cash to cash
• Monthly bill payments
14
Andara
Bersama
BPR
• Andara serves as
coordinator of rural
banks to maintain
liquidity
• Training provision
• Andaralink installation
• Fund placement
• Easy credit access
Andara
Smart
• Comprehensive
training program for
MFI staff
• Example: ALM
management
• Peer to peer learning
events network

16
0.83
1.81
2.79
2014 2013 2012
New savings sourced/
branch/day
0.02
0.12
0.22
2014 2013 2012
New time deposit
sourced/branch/day
PRODUCTIVITY OF SDBL BRANCHES THOUGH IS A
WORRY – POINTS TOWARDS A SLOWDOWN
3.04
0.02
4.09
2014 2013 2012
New advances sourced/
branch/day
1.58
4.06
6.42
0.04
0.27 0.51
5.8
0.1
9.4
2014 2013 2012
new
savings/employ
ee/month
new
time/employee/
month
new
advances/empl
oyee/month
Assumed 280 working days per year

17
THE BRANCH STRUCTURE TODAY IS NOT AMENABLE TO SALES
Branch Manager
ABM
TellersPL
Credit Recovery
Pawning
Leasing
Recovery SANASA
Society
Legal Officer
Field Officer Ledgers
Secured
lending
Cash backed
loans
Leasing
Remittances
1. OPERATIONS - Many activities can be
centralized at RO or HO
2. BRANCH FORMAT - The branch space can be
better utilized as customer meeting points
3. ALTERNATIVE CHANNELS - Aim to move
routine customer transactions to alternate
channels
4. SALES TEAMS – currently no field sales team.
With only 82 branches, an out branch sales
team is mandatory. Process reengineering will
release headcount to create a sales team
Product based
roles rather
than segment
based
Bulk of the
staff in branch
is in Credit.

THE NEW SALES TEAM CAN DELIVER SIGNIFICANT PROFITS
Annual Targets for New Client Acquisition
Relationship Manager
Gross Margin
Delivered (in
Million LKR)
Deposits MAB 2 Million 0.14
Advances - Limit Utilization 50 Million 3
Fee Income 1 Million 1
Cross-sell 2 products Additional
TOTAL 4
Additional Gross Margin delivered by 200 RMs in year 1 80
Additional Gross Margin delivered by 600 RMs in year 2 240
Equipping the Sales team with the right products and processes can deliver bumper profits
The number of Sales RMs can increase further post a successful Year 1
Higher avg tkt
size. Margin of
6%

19
WORK WILL BE REQUIRED ACROSS MOST OF THE SFE DRIVERS
FOR AN EFFECTIVE SALES FORCE
Sales Strategy
Customer focused
strategy with
differentiated and
mutually valuable
offerings
Sales Force
Design
Customer
Engagement
Process
People and Skills Motivations
Effective and
efficient coverage
of universe with
best fit to value
proposition
Customer focused
and expertly
executed sales
processes and
planning
Sales Staff with
knowledge, skills
and attributes
required to excel in
their roles
Sales staff focused
on getting it done
and getting it right
 Market Insight
 Segmentation
 Growth
Priorities
 Value
Proposition
 Pricing
 Sales and
Marketing
Collaboration
 Leadership
Commitment
 Structure
 Account
assignment to
teams
 Sizing and
Allocation
 Territory
Design
 Sales Process
 Targeting,
Territory and
Pipeline
management
 Account
Planning
 Sales Tools and
Enablers
 Competency
Model
 Selection and
Hiring
 Training
 Coaching
 Performance
Reviews and
Actions
 Culture
 Metrics and
Dashboard
 Goals
 Incentives and
Rewards
Sales Operations Highly Efficient support
capabilities equipping
the sales force with
information, expertise,
speed to market
 Data Management
 Analytics
 Lead Generation and
Management
 Pricing and
Contracting Support
 Reporting and
Administration
 Platforms and
Systems
SFEDrivers

THE COST TO INCOME HAS IMPROVED, HOWEVER IS STILL VERY
HIGH
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2010 2011 2012 2013 2014
Cost to Income
Cost to Income
C/I ratios respond better to income increases than cost reductions.
A 50% C/I implies increasing income by ~25% keeping costs constant
Work is required
across cost
optimization and
income increase

CREDIT AND OPERATIONS BUSINESS PROCESS – MATURITY MODEL
Branch
Based
Centralized
Streamlined
Image
Enabled
Enterprise
Wide
Processes
Straight
Through
Processing
► Process driven by customer
► Direct input by customer
► Customer Self Help
► Uniform experience across all channels
► Automated / self help for routine processes
► Branch recognized as sales and service point
► Workflow and image enabled
► Forms redesigned
► Storage and retrieval automated
► Standardized processes
► Streamlined and simplified
► Productivity enhancement
In the next 12 months where do we wish to be
► Branch processes centralized
► Production management introduced
► Turn around time maintained as per SLA’s
► Branch based processes
► Each branch self contained
► Largely independent of each other
1
2
3
4
5
6
Basic
Best Practice
SDBL today
What is the role of the Bank branch

23
Credit reengineering will be required end-to-end to make the
SDB model scalable and efficient
• Credit decisions are committee based at the branch level with all members reporting
into the BM.
• Credit underwriting criteria are not program based, hence there is scope for
subjectivity
• Credit administration is largely paper based and decentralized, which will typically
warrant very high turn around time.
• Presently there is no document management and storage systems. Combined with weak
data capturing capabilities increases reliance on manual record keeping.
• There is no credit or customer sector knowledge repository within the bank that can be
used for getting customer insights during credit appraisal process.
• SDBL to review and update the credit processes to cover, i. loan origination and sales,
ii. credit appraisal, limit setting and iii. credit administration, monitoring & reporting,
NPA management, collections, recoveries & remediation.
CreditRisk
Governance
Committee
based
Program
based
Reengineering

24
OVERVIEW OF CUSTOMER LENDING PROCESS ACROSS RETAIL
AND MSME – IN A COMMODITIZED ENVIRONMENT
Require:
1. Product
Program
Templates
2. Loan Origination
System
3. Credit Scoring

SCORING WILL NEED TO BE IMPLEMENTED ACROSS THE SDB
PORTFOLIOS - ENABLING STRONG PORTFOLIO MANAGEMENT
Cut-off Point A (Score:160)
•6.5% NPL ratio
•69% Approval ratio
•Aggressive strategy –
Portfolio growth
Cut-off Point B (Score:180)
•4.5% NPL ratio
•Reasonable strategy –
Profit maximization
Cut-off Point C (Score:200)
•2.5% NPL ratio
•Conservative strategy –
Market exit
Illustrative
Scoring keeps out the customers who are the major contributors to Loss
No of good
customers in each
score band
Customers
contributing to
Loss
No of bad
customers in each
score band

Credit
Culture
/Policy
Link to
Marketing
Effort
Credit
Analysis/
Grading/
Pricing
Credit
Approval
Loan
Monitoring
and Problem
Identification
Problem
Manage
ment
Portfolio
Analysis/
Management
Defines what
information is required
and how it is to be used
in credit evaluation
Ensures effective
identification and
evaluation of risks
Provides
improved
decision
making
Assigned risk grades
enable close tracking of
high risk loans, allowing
early detection of loan
deterioration
Provides effective pre-
screening tool for
more focused
marketing efforts
Enables loan pricing
to be linked to the
individual risk
characteristics of a
particular transaction
Assigned risk grades
enable more effective
management of risk
concentration and
returns
Dynamic
Provisioning
Ensures
prioritization
of collection /
recovery
efforts
WE BELIEVE THAT RISK RATING / SCORING WILL HAVE A POSITIVE
IMPACT ALONG THE ENTIRE CREDIT LIFE CYCLE AT SDBL

27
SDBL’S CREDIT POLICY NEEDS TO BE FURTHER ADAPTED FOR MSME
None
exists
Exists, but needs
some adaptation
Satisfactory
Key Significant
adaptation required
1. Risk tolerance and appetite statements
2. SME definition and target market
3. Organisation and responsibilities
4. Limits and authorities
5. Evaluation, documentation, risk grading
6. Product categorisation and programs
7. Pricing guidelines
8. Risk Acceptance Criteria
9. Remedial Management
10. Portfolio Management and EWI’s
11. Regulatory and internal reporting
12. Provisioning policy
SME Banking Credit Policy Requirements
IFC High Level
Assessment
IFC Analysis
SDBL
• Credit Risk policy has very
brief content on
Governance, portfolio, risk
management across credit
life cycle and Credit policy
provides broad guidelines on
credit appraisal
• Upgrade the Credit Risk
Policy in the areas of setting
up risk and exposure limits,
credit risk management
process including risk
identification, measurement,
monitoring & control and risk
reporting
• Revisit approval matrix and
incorporate approval powers
based on position rather
than people.

NEW PRODUCT PROGRAMS WILL BE REQUIRED TO
BECOME THE SOLE BANKER ACROSS ALL 4 VERTICALS
Salaried
Lending
• Credit Cards
• Car Loans
• Higher Education Loan
• 2 Wheeler Loans
• Gold Loans
• Personal Loan
• Loans against FD
• Secured Personal Loans
• Housing Loans
• Property Loans
• Savings
• Overdraft
• Loan linked Savers
• Term/Recurring deposits
MSME +
Agri
Lending
• Secured Business Loan
• Unsecured Business Loan
• Working Capital Finance
• Value Chain Finance
• Agriculture Loan
• Commercial Vehicle loan
• Farm equipment Loan
• Loan against Property
• Supply Chain Products
• Sector based lending
products
(Healthcare/Restaurants..)
• Savings Account variants
to mimic Current Account
features
• Term deposits
Fee-based
Products
• Insurance Distribution
• Pensions
• Remittances
• Debit cards
• Pay order/demand draft
• Bill Payment Solutions
• Bill Discounting
• Forex
• Derivatives
• Brokerage
Product Programs + LOS + Credit Scoring = Credit Factory

30
GROWING THE MSME PORTFOLIO: IFC IDENTIFIED THE BANK AS
“EMERGING” IN TERMS OF CURRENT CAPABILITIES
MSME Maturity Level: Emerging Observations
• No formal customer
management strategy in
place although organization
wishes to increase MSME
contribution
• Measuring and managing
the business as a separate
division is critical
• MSME customers present
across all product lines. A
unified view of these
customers is critical to
better service them
• No specific liability
products exist for MSMEs
Organization
Structure
Customer
Segmentation
Lending Offerings
Liability Offerings
Credit & Risk
Framework
Acquisition
Retention
Technology &
Tools
Analytics

CRITICAL WILL BE THE DEVELOPMENT OF A ROBUST MSME BANKING
PLATFORM TO SUPPORT THE VISION OF MSME PENETRATION
•MSME/Agri segment is not managed as a
specific vertical today in the Bank
•No segmentation as in micro, small,
medium….
•Not possible to identify current MSME
portfolio
• Lack of specific liability products to
counter non-availability of CA
• 2 SME Products, though not as product
programs
•No product bundling or cluster based
offerings
•NFS offerings not linked with business
•Limited sales responsibilities and
capabilities in place to target MSME today
•Credit officers in branches with a degree
of specialization
•Majority of credit goes through full credit
assessment with no LoS capability
•TaT >30 days
•Limited use of template approaches
Information
Services
Segmentation
Products
Sales &
distribution
Credit
infrastructure
Component IFC Findings Key Requirements
•Refined bank-wide segmentation
•Specific vertical established for MSME
Banking, asset and liability
•Tiered offerings for Micro enterprises
and Small businesses
• Specific customer value propositions
for MSME & Agri
•Develop specific liability, transaction
and program lending products
•Develop non-financial advisory strategy
and offerings (building upon fin
inclusion strategy)
•Establish specific cluster bundles
•Develop new multi-product MSME
Banker/ Advisor/ RM
•Create new sales model to drive
volume growth + training
•Bring in LOS and CMS to cover MSME
with instant in-principle approvals
•Establish an MSME factory across the
network for scale

LIKELY REQUIREMENTS IN DEVELOPING A SCALABLE MSME
PLATFORM AS A NEW VERTICAL IN THE BANK
Strategy
&
business
model
Segmentation confirmation Market research/ internal
Analysis/sub-segment
MSME Business Case & Plan MSME Branding
Sales
&
delivery
Hunters and Farmers Marketing support Sales Re-engineering
Partnerships
MSME Internet
/Mobile banking
MSME hotline
Credit
risk
Management
Credit Scoring Service Level AgreementsModified rating tool for MBBehavioural Scoring
Credit reengineering Early Warning Indicators Credit policy for SB and MB
Product
&
services
Product programs for SB Product programs for MB
Product &
customer profitability
Small business bundle
Product & segment mgt Risk based pricing
Training Programs Sales Skills assessment
Training programs credit MSME Organisation model
Loan origination System
Customer Rel. Mgt
Scoring engineHR and
IT
MIS (credit and sales)
Collection Management
System
Collection Reengineering
= an initiative
SB – Small Business, MB – Micro Business
Non Financial Services Micro business bundle

KEY BENEFITS OF DIGITAL FINANCIAL SERVICES
• Decongest branches
through agent network
• Capture additional
revenue: by cross
selling products to new
and existing customers
• Access to the easier
payment solutions,
affordable & secure
financial products
• An opportunity to
build financial history
• Reduce operating
costs through a more
cost-effective
delivery channel for
financial services
• Lower cost of funds
by mobilizing lower
cost deposits
• Expand customer
base to include new
and remote areas
• Expand outreach to
new market
segments including
unbanked
Market
Expansion
& Scale
Reduction
in Costs
Operational
Efficiency
Benefits to
companies
and
Individuals

Branchless Banking - In Context
Bank
Channel
ATM InternetBranch
Agent
Branchless
Banking
MobilePOS Acq
Enabler
Customer
LC
High Cost Low
SDBL SHOULD LEVERAGE BRANCHLESS BANKING THROUGH SANASA
SOCIETIES TO REDUCE COSTS AND PROVIDE BETTER SERVICES TO THE
COMMUNITY
This will improve C/I, free the branch space and reach out to more customers
Phase 1:
• Cash In
• Cash Out
• Balance Enquiry
• Mini Statement
• Bill Payments
• Airtime
Phase 2:
• Remote Account Opening
• Other (relevant financial
services)
• Remittances (could be in
phase 1)
• Full Payments Ecosystem

SDBL COULD CONSIDER DEVELOPING A VALUE PROPOSITION FOR
WOMEN MARKETS
 Female customers have a higher propensity to save both as business and personal customers
 Deposits from female customers typically grow at higher rate and stay with the Bank longer
 Net funding surplus as a segment likely
 Provides source of market differentiation in competitive retail, and MSME markets
 Establishes reputation as an innovator
 Entry and differentiation in specific sectors where concentration e.g. retail, mobile, youth,
health
 Creates strong community-based advocacy and enhances CSR
 Leverages existing large women customer base
 Once main banker status achieved, higher cross-sell ratio’s (between 1 and 2 times)
 Higher revenues obtained per relationship and higher fee generation
 Respond well to relationship management-based models and willingness to pay for it
 Demonstrate stronger retention rates in many clients
 Take the business relationship, high likelihood that will take majority of family wallet
 High advocacy creates strong conversion rates for husband business and personal FS
 Up to 85% of family financial decisions influenced by the women globally
Market Share
Growth
 Female customers have lower risk tolerance as both business and personal customers
 Women-led businesses outperform those led by men, including start-ups
 Stronger business plans can create higher acceptance rates and reduced processing costs
 Default rates are either the same or better than male counterparts depending upon market
Higher Cross-Sell
and Loyalty
Strong Savings
Propensity
Positive Risk
Behavior
Information
ServicesLinkage to Family
Wallet
What is the Rationale for SDBL to target the Women segment?

CASE STUDY: GARANTI BANK, TURKEY: SUCCESS OF THE
WE BUSINESS RESTED ON 3 KEY PILLARS
2
Education Encouragement
31
Financial Support
Women Entrepreneurs
Support Package
Women Entrepreneurs
Gatherings
Trainings/mini-MBA
Turkey’s Women
Entrepreneur Contest
• Women make profitable SME customers
• Gender difference in profitability is strongly
positively correlated with the size of
entrepreneur
• WEs found to consume more financial
services based around product usage
• WE also respond well as customers to a
dedicated RM model, with single point of
contact
Women SME Women SME
Efficiency
Ratio 2.31 2.16
Av.
Profit
per SME
TL3,539 TL3,440
Medium 4.36 3.71 Medium TL12,467 TL9,213
Small 3.29 2.93 Small TL3,706 TL3,165
Mass 1.91 1.74 Mass TL1,512 TL1,427
Source: Garanti Bank, October 2013 (results of data analytics exercise)
Garanti: Customer Efficiency and Profitability: Women vs. SME

We Initiative - BLC bank- animation.mp4

NON-FINANCIAL ADVISORY SERVICES CAN PROVIDE ADDITIONAL
SOURCE OF DIFFERENTIATION FOR SDBL
• Organization of
training workshops /
seminars on:
(physical-online-mobile-
blended)
- Business planning
- Financial
management
- Accounting
- Taxation
- Trade & Export
- Policies & regulations
- Government schemes
- Sales & Marketing
• Web-based / online
platforms and toolkits
• Call centers
• Publications related to
various industries,
economic condition of
target export markets
etc.
• TV /radio/ print
media
• Advice by in-house
and/outsourced
consultants/mentors
on:
- Business (e.g.
business plan)
- Operational
- Financial (e. i.
account
management,
tax )
• Trade fairs / SME
expos
• Road shows
• Discounted buying
• Business Clubs/SME
Clubs
• Excellence awards
Networking
Capacity
Development
Information
Dissemination
Consulting /
Mentoring
41

SDBL CAN DIFFERENTIATE WITH MSME OFFERING BY BECOMING
ADVISOR OF CHOICE
• SME Academy Workshops
- Business planning
- Marketing & sales
- Foreign Trade
• SME Hotline 444 0 667
• SME TV
-Ask the Expert
- Data screen to
monitor fin. markets
- Translation platform
• SME Consultants
Program
• Start-Up House
• Incubation Center
• SME Club
• Alibaba.com
membership
Networking
Training/Capacity
Development
Information
Dissemination
Consulting /
Mentoring
Impact……
• SME Clients increased from 20,000
in 2005 to 800,000 in 2014
• SME loans in total loans increased
from 25% in 2006 to 45% in 2014
• 21,000 participants in SME
academy in 47 cities
• 6,300 videos and 17M visitors in 7
years
Example: TEB Bank, Turkey: “Change the rules of the game and become ‘the Consultant
Bank’ of our clients”

SDBL ORGANIZATION STRUCTURE IS NOT BUILT FOR FOCUS OR
SCALE
No separate Sales structure Lacking in desired checks
and balances
• Credit and Business
reporting common
• Division of credit is a
mix of product and
customer segment

ILLUSTRATIVE BEST IN CLASS ORGANIZATION STRUCTURE
Distribution Support
Head of
Business
Head BBHead Sales
Retail
Products &
Segments*
Head
Marketing
Regional
BB Heads
Branch Mgr
Remote
Delivery
Channels
Sales & Relationship
Mgt. (for all products)
Pre-approval credit
activities
Direct Sales
Team
Corporate
& Retail
Recovery
Retail
Operations
Corporate
Operations
Legal
Regional &
Centralized
Ops
COO
Head
Credit
Product
development and
initiatives
Portfolio
Monitoring
CRO
Portfolio
Analytics
(new)
Risk
Infra
IT
SME Prod.
Mgr.
Retail
Assets Mgr.
Retail
Liabilities
Mgr.
Credit
Under-
writing
Credit
Admin
CEO
Teller
Customer
Service
Sales
Team/R
M

Risk Governance
ICAAP
Credit Risk
Market Risk
Liquidity Risk
Interest Rate Risk
Operational Risk
GROWING THE MSME PORTFOLIO: IFC IDENTIFIED THE BANK
AS “EMERGING” IN TERMS OF CURRENT CAPABILITIES
Risk Maturity Level: Emerging Observations
• Key improvement
areas include:
• Credit processes,
including
methods and
limits
• Interest rate and
liquidity risk
measures, and
FTP
improvements
• Operational risk
assessments and
KRIs

INTEREST RATE RISK MEASUREMENT AND LIMITS TO BE
EXPANDED AND FTP MORE ADVANCED
• Interest rate risk in banking book (IRRBB) covered in both ALM
policy and Market Risk policy. Should be consolidated in consistent
ALCO policy framework, either as specific IRR policy or upgrade
within Market Risk policy section
• IRRBB measures for Net Interest Income sensitivity and Economic
Value sensitivity should be further developed and integrated into
regular risk reporting with limit structure.
• IRRBB should be measured under various scenarios and shocks.
• ALM, Market Risk and Stress Testing policies do not define
parameters. The NII at risk is reported in ALCO papers, but there is
no limit guideline. EV is only being calculated in ICAAP. These
measures should be conducted using 200 basis point shock at
minimum and have limits
• Funds transfer pricing is based on single pool cost of funds method.
It should be developed to provide FTP rates aligned to maturity
profile to more accurately measure the interest rate risk.
• Very manual processes to perform these activities, SDB should
consider a well-designed ALM system that integrates IRR, Liquidity,
FTP, FX and Market Risk data, analysis and reporting in order to
develop beyond current basic standard
48
Policy
IRRBB
Measurement
FTP
ALM
Automation

OPERATIONAL RISK MANAGEMENT FRAMEWORK NEEDS TO BE
DEVELOPED
• Operational Risk Management policy should provide detailed risk
identification, measurement, control, mitigation, monitoring and
reporting processes. Include risk appetite/tolerance limits and
details of specific responsibilities
• Fully implement the OR framework across all business units at
head office.
• Establish bank-wide risk register incorporating overall risk control
assessment and risk heat map
• Full roll out of the OR framework and tools across the Bank,
especially Risk Control Self Assessment (RCSA), Key Risk
Indicators (KRI), internal loss event reporting, incident reporting
along with mitigation plans
• Very manual process and should consider use of an OR system to
efficiently capture, manage and analyse OR data
• Complete core process mapping to facilitate OR assessment. For
any technology implementation or change, impacted processes
should be evaluated for risk controls and impacts
49
Policy
Framework
New tools
Process
mapping

WE HAVE DEFINED A NUMBER OF INITIATIVES SO FAR…
• Agree segmentation strategy
• Perform market research
• Develop CVP for strategic segments
• Refine & implement product offerings
• Pilot & implement multi-channel model
51
Customer Value
Proposition-
Retail/SME/APEX
SDBL
Branch
Redesign
• Baseline review and Voice of customer
• Branch current state assessment
• Prioritization of opportunities – short and long term
• Future state development & pilot
• Design new branch layout
• Design & rollout new KPIs
• Implementing new sales tools and roles
Scalable
Credit
Operations
• Implement LOS/ LMS
• Reengineer credit process front end and back
• Create new risk assessment tools/ scoring
• Restructuring credit responsibilities & structure
• Create & pilot credit hub strategy & implement

• Study tour Westpac
• Gender based research
• Gender employer of choice assessment &
certification
• Refine & develop women product and service
proposition
52
Women
Banking
Champion
Strategy
SME
Vertical
Establishment
• Define commercial model & staff requirements
• Refine & develop new product programs
• Develop risk models & credit model
• Define KPIs and incentives
• Define training requirements & materials
Non-financial
advisory
services
• Develop NFS strategy
• Study tour - TEB
• Refine CSR approaches
• Implement NFS components

• Implementing operational risk management
framework
• Implement IRRM changes
• Obtain additional support in further refining risk
governance
53
Risk
Management
Customer
centric
Organization
• Evaluation of current organization & structures
• Agree design principles and options to be evaluated
• Agree target state & establish new resourcing model
• Revamp roles and KPIs
• Map staff into positions and assess recruitment
requirements
Change
Management
• Establish PMO
• Establish change management plan
• Establish internal teams – process, CVP,

SDBL Growth Strategy

Recommended

Recommended

More Related Content

What's hot

What's hot (7)

Viewers also liked

Viewers also liked (18)

Similar to SDBL Growth Strategy

Similar to SDBL Growth Strategy (20)

SDBL Growth Strategy

Editor's Notes