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Innovation in SME Finance
The document summarizes the SME Finance Forum, an initiative launched in 2012 to promote SME finance. It discusses the forum's achievements to date, including daily news/report feeds, a growing LinkedIn group, and promoting innovative SME finance approaches. It lists the forum's team members and notes support is provided by IFC and the G20 Finance Innovation Fund. It also discusses common myths around SME banking profitability and notes returns can be attractive if the right capabilities are put in place, with partnerships beyond just banks also important to SME finance.
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Innovation in SME Finance
- 1. Innovation in SMEFinance Matthew Gamser Head, SME Finance Forum Sao Paulo, April 2013
- 2. The SME FinanceForum Part of Hosted by Launched on April 19, 2012
- 3. Achievements to date News/reports on SME finance with daily feeds Growing LinkedIn group: over 1300 members Promotion of innovative approaches to promote SME finance/SME Finance Challenge Data sharing/harmonization Policy dialogue (G20/AFI) Impact analysis Women’s Finance Hub launched 21 April 2013!
- 4. Our Team Matthew Gamser,Head mgamser@ifc.org Hourn Thy, Operations & Technical Supports hthy@ifc.org Nadia Afrin, KM & Web Communication nafrin@ifc.org Minerva Kotei, Women’s Finance Hub Mkotei@ifc.org Nothando Nyathi, Administration nnyathi@ifc.org Support for the SME Finance Forum: Support for the G20 Finance Innovation Fund provided by: Donors
- 5. 82-86% (~ 0.8-0.9Tn) of total credit gap of formal SMEs in emerging markets is represented by formal SMEs that already have a deposit account
- 6. managed well, SMEBanking can be very profitable… Key observations • ROE can be very attractive (up to 25-35%) • Margin compression inevitable but can be negated by establishing a “total wallet” P&L • Key profit drivers are typically deposits and transaction banking, representing between 50-60% of total SME business profitability • Need to take a 5-year view of product profitability “We want to double in 3 years. Returns are the best in the Group. Risk-returns are now twice as high as all our consumer banking businesses” Global Product Head, SME Banking Standard Chartered Sept.2010 Faster Revenue Growth……….. Higher RoA’s……….. 6 SME Finance Gap Challenges in SF IFC – What & How IFC and G-20 IFC Footprint
- 7. Performance in SMEBanking can be highly volatile if the right capabilities are not put in place… SME ROA PERCENT SME Banking rewards those with the right capabilities in placeSource: Mckinsey 7 SME Finance Gap Challenges in SF IFC – What & How IFC and G-20 IFC Footprint
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- 10. Myth Opportunity 3. It’sall about banks Banks matter, but so do partnerships - with real sector large firms, and others.
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- 12. On the Webat www.smefinanceforum.org LinkedIn Group: SME Finance Forum Twitter: @SMEFinanceForum