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How to grow during the slump?
Vienna, 26 March 2009
R HidRoxana Hidan Deputy Director - Product Management
Avem încredereSME Banking in CEE, SEE, CIS
A dAgenda
“Crisis” / “Recesion” / “Depresion”?• “Crisis” / “Recesion” / “Depresion”?• Heights of crisis in Romania
Ch ll• Challenges • Key steps
T t k• Top takeaways
Avem încredereSME Banking in CEE, SEE, CIS
What is “crisis”/ “recession”/ “depression”?
Crisis is …a. A crucial or decisive point or situation; a turning point.b A t bl diti i liti l i l i ff i i l ib. An unstable condition, as in political, social, or economic affairs, involving an
impending abrupt or decisive change.(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)
Recession is …An extended decline in general business activity, typically two consecutive quarters offalling real gross national product.a g ea g oss at o a p oduct(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)
Depression is …pA period of drastic decline in a national or international economy, characterized bydecreasing business activity, falling prices, and unemployment.(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)
Avem încredereSME Banking in CEE, SEE, CIS
The effects of the global crisis on Romania’s economy …
• 28 Oct 2008 - “Bucharest Stock Exchange sinks to new record low, following worse crisis on the financial markets” – NewsIn.ro
• 29 Oct 2008 – “Standard & Poor's has downgraded Romania's rating to BB+, with negative outlook” – Financial Newspaper
• 22 Jan 2009 – “Leu’s fall – Romania’s leuplunges to a new historical minimum of 4 3127 per euro on regional trend” –4.3127 per euro,on regional trend –NewsIn.ro
• 12 Feb 2009 – “Romania could borrow more than EUR 8bn from the EC, IMF” – NewsIn.ro
• 6 March 2009 – “Romania's unemployment t i t 5 3% i F b i irate rises to 5.3% in February on crisis
replicas” - NewsIn.ro
Avem încredereSME Banking in CEE, SEE, CIS
… and the impact on the Romanian banking environment …• 20 Oct 2008 – “Romania’s central bankgives Lombard credit of 2bn lei to offsetlack of money on the market” – NewsIn.ro
• 23 Oct 2008 - “Rates on the Romanianmoney market remain at 100%, but fewtransactions are closed” - NewsIn.ro
•02 Dec 2008 “Romania's central lender•02 Dec 2008 – “Romania s central lendergrants credits worth lei 49bn to banks inOctober” – NewsIn.ro
• 27 Jan 2009 – “Crediting brakes inDecember for the third month in a row, to anannual advance of 33.7%” – NewsIn.ro
• 28 Jan 2009 – “Romania’s central banklends 2.5 times less money to banks in Dec.over Nov. last year” – NewsIn.ro
• 28 Jan 2009 – “Romanians' overduepayments to credits rise 73% y/y inNovember 2008 to 1bn lei, central bankshows” – NewsIn.ro
Avem încredereSME Banking in CEE, SEE, CIS
6But…..
“When written in Chinese, the word "crisis" is
composed of two characters - one represents danger,
and the other represents opportunity.”p pp y
John Fitzgerald Kennedy
危機危機
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How to reach the objectives?
ChallengesChallenges
Key steps
Top takeawaysp y
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We have to face several challenges …How could a
How could maximize the commercial
ffi i ?
How could a larger customer
base be achieved?
How could adjust the product and
service portfolio?efficiency? service portfolio?
H ldHow could
improve Bank’s value towards
How could customer
management and care be organizedvalue towards
customers?care be organized more efficiently?
How could optimize the How could gain
additional insight
…
value of the client relationship?
additional insight into clients’ needs and preferences?
Avem încredereSME Banking in CEE, SEE, CISSME Banking in CEE, SEE, CIS
…to reach the expected results
Increase cross-Increaseselling
Increasecustomer’s confidence and loyalty
Increaseprofitability
Increasecustomer Increase
b dsatisfactionIncrease
competitive d t
brand awareness
advantages
Avem încredereSME Banking in CEE, SEE, CISSME Banking in CEE, SEE, CIS
10How to achieve the objectives?
Internal evaluation
Market research
Determine target
customer ProductsRedirect
marketingEnsure
infrastructure
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Key steps Internal evaluationy p
examine existing customer database (score
the customer using key criteria)
use scoring methodology to rank and
segment the customers
use the obtained data to establish keyDatabase ScoringScoring SegmentationSegmentation
performance indicators and benchmark
separate the micro and small business
customers from other categories of clientscustomers from other categories of clients
evaluate current products
asses the activities and responsibilities of
the staff in-charge with this segments
Avem încredereSME Banking in CEE, SEE, CIS
Key steps Internal evaluation
Marketresearchy p
establish the research objectives
design the research using the interviewdesign the research using the interview
methodology (qualitative research)
conduct interviews with as many companiesy p
as possible from each segment
analyze the data to determine the answers
to the questions and to compare the
difference in the answers between the
different segmentsdifferent segments
develop an action plan based on data
Avem încredereSME Banking in CEE, SEE, CIS
13Researches told us what customers’ need
Individuals Private MSE Corporate
MSE main financial needs are transactional services and pure lending
Individuals Private banking
MSE Corporate
Cash management services
Transactional services
Investment products & servicesp
Financial advisory
P l diPure lending
Structured finance
Source: OTP Internal Research
Avem încredereSME Banking in CEE, SEE, CIS
Key steps Internal evaluation
Marketanalysis
Determine target
customer
indentify customers and prospects with
potential
analyze segment profit dynamics: average
number of products, likely balances, growth,
cross-sell and up-sell potential
determine which customers are spending
more on the competitor's products than on
own products
it is easier and less expensive to sellit is easier and less expensive to sell
additional services to existing customers,
especially in economies were conditions are
not as good as they were previously
Avem încredereSME Banking in CEE, SEE, CIS
Key steps Internal evaluation
Marketanalysis Products
Determine target
customer
bundling offers the possibility to link viable
products together, to link “need” with “value”
bundles maximize the chances and
afterwards the benefits of being the “house-
bank”
the packages can be done using different
strategies such as: inter-product cross-sell,
up-sell, inter-segment cross-sell
the bundle should be tailored taking also intothe bundle should be tailored taking also into
consideration the life stage of the business
building multiple relationships with abuilding multiple relationships with a
customer makes it more difficult for the
customer to leave
Avem încredereSME Banking in CEE, SEE, CIS
Key stepsInternal
evaluationMarketanalysis
Determine target
customerProducts
Redirect marketingy p
multi-channels delivery is critical: every
touch-point is an opportunity to cross-sell, to
acquire, to service
multi-channels are an optimal tool in reducing
the cost of serving
do not underestimate the importance of the
dedicated RM; for most of the mature
companies the relationship is “the product”
redirect customers to appropriate productsredirect customers to appropriate products
taking into account the life stage of the
business
frame the small business owners and their
employees as individual customers
Avem încredereSME Banking in CEE, SEE, CIS
Key steps Internal evaluation
Marketresearch
Define target
customer
Products Redirect marketing
Ensure infra-
structure
streamline the processes and operational
systems
build competencies and skills for the sales
force
develop and implement incentive schemes
fully aligned with the cross-sell strategy
design and implement certain marketing tools
to create awareness and build utilization
continues analysis and evaluation of the
client needs and customer value tracking
refine segmentation, products and update
performance indicators in accordance with
the feedback
Avem încredereSME Banking in CEE, SEE, CIS
Top takeawaysp y
NeedValue
Profit
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Thank you for your attention!
Contact details:Email: [email protected] bil +40755 000 017Mobil: +40755.000.017
Avem încredereSME Banking in CEE, SEE, CIS