3. Bank Alfalah recognizes the key role SME’s play in Pakistan’s Economy and has
developed a Long Term Strategy to target the SME segment as a major business
opportunity.
In its continuous commitment to provide sustainable solutions, Bank Alfalah has
initiated various Financial and Non-Financial Programs to improve Financial
Inclusion for SMEs.
Contribution
of
SMEs
Economic Growth
Incubator for development of Local Corporate entities
Huge Market potential and opportunity
Why at Bank Alfalah SMEs hold such great value?
Strategic Intent and Ideology
Creating a value
proposition that
creates a win-win
situation for both
SMEs and Bank
Alfalah Limited
4. Business Segmentation and Potential
Corporate/
Commercial
Enterprises
Medium
Enterprises
Small Enterprises
Agri
Micro
Corporate / Commercial
Enterprises
Medium Enterprises
Small
Enterprises
Agri
Micro
The Volume Pyramid The Value Pyramid
Vs
.
5. Contribution to the Economy
Over 3
Million
SMEs in
Pakistan
Contributes
30% towards
GDP
Employs 75%
- 80% of
non-
agricultural
workforce
Employs
almost 45%
of total
workforce
Contributes
25% of
export
earnings
But ..
Only 6% are banked
Only 8 – 9% of the
total private sector
lending is deployed
in SME Sector
6. Borrowers hesitant to borrow from banks, preferring
equity financing from other sources (acquaintances,
private investors) instead of debt financing
Smaller size of operations and irregular cashflows
result in a reluctance to risk collateral with Banks
Limited management capability and multiple book
keeping results in an inability to borrow through
Banks
Infrastructural constraints like power, labor,
technology and law & order situation inhibit access
to finance
Since inception of any SME it
faces daunting challenges
Incubator
5-7 Years
Successful and Established
Commercial Entity
High NPLs in the sector (31.8% of the borrowers)
has resulted in a flight to quality for Banks which has
saturated the large corporate segment
Banks following a 100% secured lending model to
minimize risk. Many businesses are unable to offer
the required collateral
High search costs for Banks in terms of information
acquisition and lack of credible data on market
potential and opportunities
A high percentage of Banks do not offer a
differentiated customer value proposition with
tailored SME Transactional, asset and liability
products
Supply Constraints
Demand Constraints
*Source: IFC Analytics, SBP
Failed Business
Propositions
OR
Bank Alfalah is focused at providing financial solutions to
assist SMEs during the incubation period; focusing on
complete financial and non-financial needs of the company
Why SMEs are Discouraged?
7. SME Banking Transformation
Year 2012 Year 2014 onwards
Almost
11,000
customers
with
Lending
Relationship
Conventional
Lending Solutions
Trade solutions with
focus on existing
advances customers
From SME Lending to
SME Banking
Almost
280,000 of
BAFL
customers,
and the
potential
market
Value Chain
Financing
Conventional and
product based
Lending Solutions
Payroll and Cash
Management
Solutions
Transactional
Accounts; current
and saving
Business Advisory
Manager
8. Digital Banking &
Transactional Needs
Financial Needs
Payroll and Cash
Management Needs
Wealth Management,
Investment and Financial
Advisory Needs
Liabilities
Transactional
Flow
Advances
Cross Sell
Business Cycle and Misperceptions …
Not always a
starting point for
New
Relationships
SME Banking
Transformation
9. SME Active Work Streams
SME
Product
Suite to be
Enhanced
Integrating the
Value Chain
Verticals
Sector Based
products and
Services
Cash-flow
based unique
Product
Propositions
Relationship
Based
Model
Branch Led
Sales Model
RM
Productivity
Model
360 Degree
Agenda
Non
Financial
Advisory
Services
SME Tool Kit
Business
Advisory
Managers
Seminars and
Workshop
Credit
Approval
Process
Delegated
Credit
Approval
Structure
Streamlined
Policy and
Process
Manuals
Collection and
Recovery
Human
Capital
SME
Certification
BAM
Certification
Staff
Engagement
and
Performance
Matrix
Business
Analytics
and
Monitoring
Business
Dashboard
SME Business
Monitoring
Pack
Automation of
reporting
1 2 3 4 5 6
10. Alfalah Turning the Wheel for SMEs…
Business Model
Product Ideology
Non-Financial
Advisory Services
• From SME Lending to SME
Banking
• 360 Degree Approach for
SME Banking
• Branch led SME Sales
Model
• RM Productivity Model
• Integrating the value chain
verticals
• Sector based products
addressing the needs of
niches
• Cash flow based SME
Financing products
• SME Toolkit, an online
portal, to provide business
tools to enhance business
efficiency.
• Business orientation and
knowledge sharing sessions
• Business Advisory
Managers
• Reduce cost of Search
• Increase Target Market
• Unique Customer Value Proposition by
catering to complete Need Matrix of SMEs
• Relationship and Need Based Solution
oriented approach
• Address Collateral Constraints
• Reduce Financing Risk Through Value Chain
Financing
• Reduce NPL through Niche Identification
• Enhance Management Capability
• Improve Documentation and Book Keeping
Methodologies
• Improving efficiency and output
• Managing Infrastructural Constraints
Ideology Initiatives Key Constraints addresses
11. Integrating The Value Chain Verticals
Industry
Prospecting and
Need Analysis
• Identify Industries with strong Value Chain Verticals
• Identifying Key Anchors
• Understand the relationship and Transactional Flow of these Anchors
with their Value Chain Agents
Cross Sell
Products to
Anchors
• Deepen anchor relationship
• Understand the Wallet Size and Transactional Needs of Anchors and
provide appropriate products and services to fulfill these needs
Value Chain
Conversions
• Evaluate the Needs of Products and Services for Specific Value Chain
Agents
• Increase Financial Coverage for NON BAFL Value Chain Agents and
increase Product Per Customer
Current
Account
Transactional
Account
Digital Payment
Solution
Lending
Solution
Complete financial and non-financial solutions for all the agents in the value chain
through leveraging the anchor relationship.
12. Financial
Inclusions
Unsecured Financing
Value Chain
Financing
Long Term Financing
Segment
Niche
Product Ideology
Supplemented by:
• US AID Credit Guarantee Scheme
• SBP Credit Guarantee Scheme
Alfalah has the largest suite of SME
products covering wide range of working
capital, long term and cash flow based
lending products
13. Non Financial Advisory Services
Global Best Practice:
According to a survey conducted to understand Financial Advisory for SMEs in Developed
Markets in 2001 it was revealed that almost:
95% of SMEs use External
Advisory services
Accountants – 83% Banks - 62%
Solicitors – 56% Customers – 47% Suppliers – 36%
Consultants – 32%
In Pakistan most SMEs are deprived of any form of formal
advisory services specially from Banks and keeping this in mind
Bank Alfalah has taken a step towards providing formal Business
Advisory Services through its SME Banking Platform.
14. NFAS at Bank Alfalah
Key impediment for SMEs is lack of management capability due to knowledge/skill gap
In its continuous commitment to provide sustainable solutions, Bank Alfalah has initialed its Non Financial Advisory
Program to provide businesses with key management tools and solutions
• Differentiate the Bank from competition by offering NFAS
• Reinforce Bank Alfalah’s brand awareness, by becoming the “Advisor of Choice” to
SMEs
• Outreach towards Non/Under-banked segment
OBJECTIVES
STRATEGY
EXPECTATION
• Access to Finance / Financial Inclusion
• Improve business practices
• Support business growth
• Increasing SMEs ability to secure/ repay loans
• Information
• Knowledge Sharing Events
• Advisory (Business Advice Managers)
15. The SME Toolkit
Web and mobile platform
Offers the latest information and communication
technologies to help small businesses in emerging
markets to:
Learn and implement sustainable business
management practices
Increase their productivity, efficiency and capacity
Gain access to finance and new markets.
Help them in term of business guidance, market
review and industry analysis
Product Overview
www.pakistan.smetoolkit.org
16. The SME Toolkit
Visits on the SME Toolkit since start- Over 200,000
Local Content Development:
Regular update of the Toolkit with articles on the
economy, different industries and sectors.
Daily RSS Feed taken from Business Recorder.
Articles on local trade flows uploaded.
Video Tutorials:
New category with 12 e-learning videos added on
the SME Toolkit.
Content Translation:
Urdu translation of 42 global content items
sourced from SMEDA and uploaded on the SME
Toolkit.
Award to Bank Alfalah on “Best Content
Development” in IFCs 5th Annual
Conference in Abu Dhabi
17. Market Outreach Activities
Roadshows
Trade Associations
Entrepreneurial Bodies
Educational Institutions
Sahiwal
Faisalabad
Islamabad
Rawalpindi
Gujranwala
Karachi
Kamoke
Muridke
Lahore
Pattoki
Depalpur
Arifwala
Burewala
Chichawatni
Renal Khurd
Phool Nagar
Okara
Sargodha
Jhang
Sialkot
Pakpattan
• More than 30 events in key commercial hubs of
major cities
• Conducted across all regions
• 4000+ operating SMEs tapped
Roadshows
• 12 Events conducted in major commerce
chambers and trade bodies
• Connected with 1,000+ business owners
• Tax awareness sessions held
• Alliance with SMEDA to set-up Help Desk.
• SMEs Trained by Alan Miltz, Global Finance Coach .
Industry Events
• Trainings at 5 different business institutions
• Audience of 500+ students
• Plans to hold sessions at LUMS, LSE, Punjab
University
Educational
Institutions
• Collaboration with The Indus Entrepreneurs (TiE)
and Enclude to provide financial training to
entrepreneurs on ‘Access To Finance”
• 4 seminars conducted
• 350+ aspiring entrepreneurs touched
Entrepreneurial
Bodies
18. Business Advice Manager (BAM) Program
Who are BAMs?
Business Advice Managers (BAMs) are trained business
professionals who provide recommendations to SMEs after a
systematic analysis of the SMEs’ business to improve business
management practices and increase access to finance.
BAM Program:
Bank Alfalah in collaboration with IFC’s brought in a trainer to train
all its employees on SME Banking needs and the provision of
advisory services.
These Trainings are a One Day Program and is included as part of
each SME RM Level 2 training Program.
All BAMs will work closely with their existing SME Customers to
assess the need of Business Advisory and provide necessary
guidance and will evaluate the performance.
