SME Banking in emerging markets
Our client, a large international bank targeted to expand its Small Mediumsize Enterprise (SME) portfolio in the Asian market. New
Frontier Solutions Pte. Ltd. was assigned to develop and implement a business solution together with the Banks project team to
expands its SME portfolio in a sustainable way.
The original plan of the International Bank was to merge its Asian branch with a local bank . This would ensure that local content
and knowledge about the local SME market would become instantly available. Numerous challenges had to be considered though.
For instance, if local bankers would leave the Bank, local content or asset value would walk out of the door. Clearly, it was
important to mitigate against the risk of local SME knowledge leaving the Bank. Even if all the local bankers would stay at the Bank,
the number of bankers were far too little in order to realize an aggressively growth of the SME portfolio. To add the the complexity,
small business owners often do not have a credit history and more often than not these small business owners are individuals that
do not keep financial books.
Our analytics team built a set of psychometrics scorecards for different SME sectors. Local banking knowledge was captured in
psychometric credit score cards and validated. The credit scorecards (special class of decision models) were integrated into a
webportal, meaning that more than 100 branches would have access to the credit scorecards. The credit scorecards were
parameterized and varied per region and industry. Using the webportal and the built-in credit risk scorecard, local business owners
whoa pplied for a loan could be given a pro-forma answers within minutes, This allowed the Bank to lock in its prospective clients.
The complete loan approval cycle allowed the Bank to approve or reject loans within days.
For more information contact Frank van Gelder.