innovation in sme finance

Innovation in SME Finance

Matthew GamserHead, SME Finance Forum

Sao Paulo, April 2013

The SME Finance Forum

Part of

Hosted by

Launched on April 19, 2012

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!

Our TeamMatthew Gamser, Headmgamser@ifc.org

Hourn Thy, Operations & Technical Supportshthy@ifc.org

Nadia Afrin, KM & Web Communicationnafrin@ifc.org

Minerva Kotei, Women’s Finance HubMkotei@ifc.org

Nothando Nyathi, Administrationnnyathi@ifc.org

Support for the SME Finance Forum:

Support for the G20 Finance Innovation Fund provided by:

Donors

82-86% (~ 0.8-0.9 Tn) of total credit gap of formal SMEs in emerging markets is represented by formal SMEs that already have a deposit account

managed well, SME Banking 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………..

6SME

Finance Gap

Challenges in SF

IFC – What &

How

IFC and G-20

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Performance in SME Banking 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

7SME

Finance Gap

Challenges in SF

IFC – What &

How

IFC and G-20

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Myths and Opportunities #1

Myths and Opportunities #2

Myths and Opportunities 3

Myth Opportunity

3. It’s all about banks Banks matter, but so do partnerships - with real sector large firms, and others.

The Way Forward - Potential of both relationship and transactional-based strategies

and

On the Web at www.smefinanceforum.org

LinkedIn Group: SME Finance Forum

Twitter: @SMEFinanceForum