SynopsisThis VRL report tackles the main issues concerning best practice in SME banking- It analyses the ways in which banks approach SME's in terms of outreach, offering and risk-based considerations
- It contains extensive data, a number of global case studies and a comparison of SME banking practices in developed and developing countries
- Product and risk implications are analysed with regard to the gap between established and emerging markets
SummaryThe majority (95 percent) of firms operating around the world are, in fact, SME's with European and Chinese SME’s contributing 99.8 percent of the total. According to the World Bank, the SME sector can contribute to the GDP of high income countries by as much as 51 percent as opposed to middle and low income countries, where SME's produce up to 39 percent and 16 percent of local GDP. Moving to emerging Eastern economies, Indian SME output represents 45 percent of industrial production and 40 percent of total exports. Even more staggering is the contribution of Chinese SME’s to the creation of the national taxable profit, 40 percent of total production. Judging from these figures, obstacles to funding means forcing SME's to downsize their businesses and ultimately exert a major influence on their country’s wealth.
European and US SME’s are still relatively well served (only between 12-14 percent of the high-income OECD countries are underserved or financially constrained), but economic conditions for businesses are getting tougher. SME’s from emerging markets are equipped with more solid growth-driven potential. This growing involvement in new SME markets will, based on country specific evidence, contribute substantially to a bank’s revenue. For example, Malaysian banks with a significant SME portfolio are expecting higher revenue growth due to a set of government projects deployed across the country to boost the economy.
Scope- A look at the moves being taken to serve the needs of SME’s globally
- Both bank and government sentiment to this sector is analysed
- The sector’s profitability is examined
- Case studies embrace microfinance institutions, municipal banks and world bodies
- Risk management and credit scoring is discussed in depth
Reasons To BuyBy reading this report you will:
- Understand the crucial role of SME's and the need to serve them
- Investigate the drivers and barriers to SME engagement
- Overcome obstacles to engagement with SME's
- Understand the legislation driving SME best practice
- Succeed in serving the SME segment
- Develop an effective product offering
- Read global case studies
- The financial sector is failing SME's throughout Europe and the US
- Unless the value of lending increases, there will be serious repercussions on the Western economic system in terms of contribution to GDP and employment figures
- SME's have great potential in emerging economies
- For banks to optimally serve the SME sector, they should develop dedicated internal units
