Retail Banking in CEE: Exploiting the Potential of ... - Roland Berger

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IMPORTANCE OF MICRO BUSINESS – HIGH POTENTIAL WITH SEVERAL QUESTION MARKS
85% of the interviewed banks
separate micros from SMEs
BANKING DEFINITION OF MICROS
The majority of the participating CEE banks apply a separate micro definition so that
micros are not part of the SME segment. The definitions are usually based on annual
revenues (see fig. 3) and at the same time considering the exposure. In some cases, the
gross income generated for the banks is an additional factor that serves to split either
micro and SME or premium micro and mass micro.
Limits for the micro segment show a wide range in CEE banks:
> Client's annual revenue limits: from EUR 0.17 m to 2.0 m
> Exposure limits: from EUR 20,000 to 400,000
Often the micro segment is split into two sub-segments according to the gross income:
mass micro clients generate an annual gross income amounting to maximum EUR
1,700-2,700, whereas the annual gross income generated by premium micro clients is
above EUR 1,700-2,700.
SUMMARY OF KEY CHALLENGES
During the interviews, the banks' representatives identified the major challenges they
face when seriously considering growth or optimization strategies and potentials in the
CEE micro-business segment. The following questions summarize the key issues found:
> How to understand the micro segment and the behavior of the respective clients
> How to identify really valuable micro businesses and how to focus on them
> How to make the risk predictable and how to avoid growth of the NPL rate
> How to identify the optimal service level to avoid over- and under-servicing by universal
level service
> How to boost one-stop banking for the private and the business side