Retail Banking in CEE: Exploiting the Potential of ... - Roland Berger
Retail Banking in CEE: Exploiting the Potential of ... - Roland Berger
Retail Banking in CEE: Exploiting the Potential of ... - Roland Berger
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6<br />
SUMMARY OF KEY FINDINGS<br />
SUMMARY OF KEY FINDINGS<br />
From <strong>CEE</strong> banks' perspective,<br />
micros are attractive because <strong>the</strong>y<br />
represent growth potential <strong>in</strong> a<br />
stagnat<strong>in</strong>g market<br />
OVERVIEW<br />
The f<strong>in</strong>ancial market crisis rearranged <strong>the</strong> priorities <strong>of</strong> <strong>CEE</strong> banks with<strong>in</strong> a very short<br />
period <strong>of</strong> time. After <strong>the</strong> stabilization <strong>of</strong> bad loan portfolios, <strong>the</strong> number-one priority <strong>of</strong><br />
banks is now to f<strong>in</strong>d break-through segments with a realistic growth perspective – even<br />
if we do not talk about annual market growth potentials <strong>of</strong> more than 10% anymore.<br />
Certa<strong>in</strong>ly <strong>the</strong> real driver is lend<strong>in</strong>g. Therefore banks focus on segments that have a<br />
relatively low loan penetration and show lend<strong>in</strong>g potential with reasonable risk.<br />
The micro segment meets <strong>the</strong> above described criteria. Thus it is def<strong>in</strong>itely planned to<br />
become one <strong>of</strong> most <strong>CEE</strong> banks' focus areas <strong>in</strong> <strong>the</strong> upcom<strong>in</strong>g three to four years.<br />
However, those banks still need to elaborate and detail <strong>the</strong> respective segment strategy<br />
and especially its impact, e.g. on sales and service models or risk model<strong>in</strong>g.<br />
<strong>CEE</strong> banks' challenges and<br />
questions can be grouped <strong>in</strong>to three<br />
topics: strategy, risk management,<br />
cross-segment <strong>of</strong>fer<strong>in</strong>g<br />
CHALLENGES<br />
The micro segment challenges identified by <strong>CEE</strong> banks are <strong>the</strong> large number <strong>of</strong> potential<br />
clients and <strong>the</strong>ir heterogeneousness. The banks' uncerta<strong>in</strong>ty is reasonably high to<br />
avoid NPL rate growth or a too high cost level caused by over-servic<strong>in</strong>g. Generat<strong>in</strong>g<br />
more pr<strong>of</strong>it from this segment requires <strong>the</strong> understand<strong>in</strong>g <strong>of</strong> <strong>the</strong> ma<strong>in</strong> micro-specific<br />
cost and revenue drivers. As a result <strong>of</strong> <strong>the</strong> study and <strong>of</strong> <strong>Roland</strong> <strong>Berger</strong>'s project experience,<br />
three key success factors can be highlighted:<br />
1. Detailed micro strategy aligned with all relevant <strong>in</strong>ternal departments to guarantee<br />
<strong>the</strong> highest operational efficiency with focus on two major topics:<br />
> Segmentation – group<strong>in</strong>g micros <strong>in</strong>to homogeneous sub-segments, identify<strong>in</strong>g<br />
target groups and <strong>the</strong>ir specialties<br />
> Service model – def<strong>in</strong><strong>in</strong>g <strong>the</strong> level <strong>of</strong> service and organizational setup required<br />
for cost-efficiently sell<strong>in</strong>g to micros and servic<strong>in</strong>g <strong>the</strong>m<br />
2. Tailor-made risk management consider<strong>in</strong>g all micro specialties via elaborat<strong>in</strong>g a<br />
sub-segment specific, efficient scor<strong>in</strong>g model to avoid NPL growth and to speed up<br />
"time to yes" process<br />
3. Enhancement <strong>of</strong> cross-segment <strong>of</strong>fer<strong>in</strong>g by <strong>in</strong>creas<strong>in</strong>g sales and service efficiency<br />
<strong>of</strong> advisors and sales boost by utiliz<strong>in</strong>g best practices <strong>of</strong> jo<strong>in</strong>t private and bus<strong>in</strong>ess<br />
need services