Charles B. Wendel

1
Financial Institutions Consulting
Products and Services with a Proven Track Record
for Adding Value in SME Finance
Charles B. Wendel New Technologies for SME
Finance The World Bank December 4, 2002
2
Panelists
Charles Chemel Director, Strategic and Product
Development Standard Bank of South Africa,
Limited Klaus Glaubitt Chairman of the Board of
Directors Microfinance Bank of Serbia and
Montenegro Member of the Board of Directors
Micro Enterprise Bank, Kosovo Manuel
Montoya Director and General Manager Mibanco,
Peru Charles Wendel President, Financial
Institutions Consulting, Inc. New York City
3
FIC overview
Financial services companies offer banks many
products, but

• Credit
• Line of credit
• Cards
• Leases
• Commercial and mortgage
• Equipment loans

• Transaction
• Current accounts
• Payroll
• Bill payments and presentment
• Debit cards

• Investments
• Short-term investments
• Retirement plans

Small Business Customer

• Advisory
• Business procurement
• Succession planning
• Accounting
• Financing planning
• Tax

• Insurance
• Property and causality group health
• Group life disability

4
most small businesses require only a small number
Small Business Product Use
Core
Non-Core
5
Profitability is largely deposit driven
U.S. Small Business Profit Distribution
Small Business Profitability 100
All Others 5
Loans 10-15
Deposits 70-85
6
The deposit/loan ratio largely determines the
degree of small business ROE
Small Business Profitability
40 20 0
Bank B
Bank C
Bank A
Small business unit ROE
11 21 31 41 51
Deposit-to-loan ratio
Source First Manhattan Consulting Group
7
Generally, the more products sold, the greater
the profit contribution
Relationship Between Contribution and Number of
Products
No. of products
Contribution
Source Oxford Information Technology, Ltd.
8
Small businesses want to have branch access
What Is the Primary Method for Conducting Your
Company's
Business Banking?
Business Banker
Telephone
Internet/Online
Branch
9
While branch access is key, online users surpass
off-line customers in balances and loans
outstanding
Average Current Account Balances per Customer
Average online current account is 2.8 times
higher than average current account
Similarly, the average loan outstanding form
online customers is two times greater than the
average (87,000 vs. 42,000)
10
Online bankers also use more products and
register increased satisfaction
Average Number of Accounts per Customer
Average online customers number of accounts is
1.8 times higher than average number of accounts
11
Issues for discussion

• What do bankers view as the key products for
  today and for the future?
• Where are the key profit generators?
• How are SMEs in the various markets sold and
  serviced? Primarily by Relationship Managers?
  Branch Managers?
• How effective has Internet banking been so far?