Efma Sme Banking Conference

How to grow during the slump?

Vienna, 26 March 2009

Roxana Hid
R Hidan
Deputy Director - Product Management

SME Banking in CEE, SEE, CIS Avem încredere

Agenda
A d

• “Crisis” / “Recesion” / “Depresion”?
• Heights of crisis in Romania
• Challenges
Ch ll
• Key steps
• Top takeaways
T t k


What is “crisis”/ “recession”/ “depression”?

Crisis is …
a. A crucial or decisive point or situation; a turning point.
b. An
b A unstable condition, as i political, social, or economic affairs, i
t bl diti in liti l i l i ff i involving an
l i
impending abrupt or decisive change.
(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)

Recession is …
An extended decline in general business activity, typically two consecutive quarters of
falling real gross national product.
a g ea g oss at o a p oduct

Depression is …
p
A period of drastic decline in a national or international economy, characterized by
decreasing business activity, falling prices, and unemployment.


The effects of the global crisis on Romania’s economy …

• 28 Oct 2008 - “Bucharest Stock Exchange
sinks to new record low, following worse
crisis on the financial markets” – NewsIn.ro

• 29 Oct 2008 – “Standard & Poor's has
downgraded Romania's rating to BB+, with
negative outlook” – Financial Newspaper

• 22 Jan 2009 – “Leu’s fall – Romania’s leu
plunges to a new historical minimum of
4.3127
4 3127 per euro on regional trend –
euro,on trend”
NewsIn.ro

• 12 Feb 2009 – “Romania could borrow more
than EUR 8bn from the EC, IMF” – NewsIn.ro

• 6 March 2009 – “Romania's unemployment
rate rises to 5.3% i F b
t i t 5 3% in February on crisis
i i
replicas” - NewsIn.ro


… and the impact on the Romanian banking environment …
• 20 Oct 2008 – “Romania’s central bank
gives Lombard credit of 2bn lei to offset
lack of money on the market” – NewsIn.ro

• 23 Oct 2008 - “Rates on the Romanian
money market remain at 100%, but few
transactions are closed” - NewsIn.ro

•02 Dec 2008 – “Romania's central lender
“Romania s
grants credits worth lei 49bn to banks in
October” – NewsIn.ro

• 27 Jan 2009 – “Crediting brakes in
December for the third month in a row, to an
annual advance of 33.7%” – NewsIn.ro

• 28 Jan 2009 – “Romania’s central bank
lends 2.5 times less money to banks in Dec.
over Nov. last year” – NewsIn.ro

• 28 Jan 2009 – “Romanians' overdue
payments to credits rise 73% y/y in
November 2008 to 1bn lei, central bank
shows” – NewsIn.ro


But….. 6

“When written in Chinese, the word "crisis" is
composed of two characters - one represents danger,
and the other represents opportunity.”
p pp y

John Fitzgerald Kennedy

危機

How to reach the objectives?

Challenges
Key steps
Top takeaways
p y


We have to face several challenges …
How could a
How could larger customer
maximize the base be How could adjust
commercial achieved? the product and
efficiency?
ffi i ? service portfolio?

How could
H ld
How could customer
improve Bank’s management and
value towards care be organized
customers? more efficiently?

How could …
optimize the How could gain
value of the client additional insight
relationship? into clients’ needs
and preferences?


…to reach the expected results

Increase
Increase cross-
customer’s selling
confidence Increase
and loyalty profitability

Increase
customer Increase
satisfaction brand
b d
awareness
Increase
competitive
advantages
d t


How to achieve the objectives? 10

Determine
Internal Market Redirect Ensure
target
evaluation research Products marketing infrastructure
customer


Internal
Key steps
y p evaluation

examine existing customer database (score
the customer using key criteria)

use scoring methodology to rank and
segment the customers
Database Scoring Segmentation
use the obtained data to establish key
performance indicators and benchmark

separate the micro and small business
customers from other categories of clients

evaluate current products

asses the activities and responsibilities of
the staff in-charge with this segments


Internal Market
Key steps
y p evaluation research

establish the research objectives

design the research using the interview
methodology (qualitative research)

conduct interviews with as many companies
y p
as possible from each segment

analyze the data to determine the answers
to the questions and to compare the
difference in the answers between the
different segments

develop an action plan based on data


Researches told us what customers’ need 13

MSE main financial needs are transactional services and pure lending

Individuals Private MSE Corporate
banking
Cash management services

Transactional services

Investment products & services
p

Financial advisory

Pure lending
P l di

Structured finance

Source: OTP Internal Research


Determine
Internal Market target
Key steps evaluation analysis
customer

indentify customers and prospects with
potential

analyze segment profit dynamics: average
number of products, likely balances, growth,
cross-sell and up-sell potential

determine which customers are spending
more on the competitor's products than on
own products

it is easier and less expensive to sell
additional services to existing customers,
especially in economies were conditions are
not as good as they were previously


Determine
Internal Market target Products
Key steps evaluation analysis
customer

bundling offers the possibility to link viable
products together, to link “need” with “value”

bundles maximize the chances and
afterwards the benefits of being the “house-
bank”

the packages can be done using different
strategies such as: inter-product cross-sell,
up-sell, inter-segment cross-sell

the bundle should be tailored taking also into
consideration the life stage of the business

building multiple relationships with a
customer makes it more difficult for the
customer to leave


Determine
Internal Market Redirect
target Products
evaluation analysis marketing
Key steps
y p customer

multi-channels delivery is critical: every
touch-point is an opportunity to cross-sell, to
acquire, to service

multi-channels are an optimal tool in reducing
the cost of serving

do not underestimate the importance of the
dedicated RM; for most of the mature
companies the relationship is “the product”

redirect customers to appropriate products
taking into account the life stage of the
business

frame the small business owners and their
employees as individual customers


Define Ensure
Internal Market Products Redirect
target infra-
Key steps evaluation research
customer
marketing
structure

streamline the processes and operational
systems

build competencies and skills for the sales
force

develop and implement incentive schemes
fully aligned with the cross-sell strategy

design and implement certain marketing tools
to create awareness and build utilization

continues analysis and evaluation of the
client needs and customer value tracking

refine segmentation, products and update
performance indicators in accordance with
the feedback


Top takeaways
p y

Value Need

Profit


Thank you for your attention!

Contact details:
Email: roxana.hidan@otpbank.ro
Mobil: +40755.000.017
M bil +40755 000 017


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