Charles B. Wendel New Technologies for SME Finance The World Bank December 4, 2002 Financial Institutions Consulting Frontier Products and Services in SME Finance

1 Panelists Sandy Kemper Chief Executive Officer E-Scout Lees Summit, Missouri Bruno Masier President World Trade Point Federation Geneva, Switzerland Zia Ahmed Senior Consultant and Manager SEDF Financial Markets Group/ International Finance Corporation Dhaka, Bangladesh

2 U.S. Small Business Profit Distribution Deposits 70-85% Loans 10-15% All Others 5% Small Business Profitability 100% Today, two product areas drive profits at most banks

3 And, 20% of customers need to receive extraordinary focus Profit Contribution by Decile (%) Top 20% contributes 85% of total profit Bottom 30% destroys 15% of total profit Disguised Client Example Source: Bank One 70% of customers, 1% of profit

4 Going forward, banks need to decide where to focus their investment and marketing dollars Traditional and basic products Loans/credit cards Deposits Basic investment products Basic treasury management products Non-traditional products Advanced treasury management products Commercial insurance Leasing Retirement services Wealth management Capital markets (Derivatives, foreign exchange, M and A) Internet related products

5 When they team up, they need to develop a checklist for partnering success Open financial information – no hidden agendas Agree to common business definition and focus Complimentary core competencies and culture Long-term commitment with near-term signposts of success Clear exit strategy on day one

6  How much priority should banks give to “non- core” products/services? How do they decide which ones to offer?  Are “frontier” products intended to generate stand-alone profits or are other factors (for example, customer retention, differentiation in positioning) more critical?  Re: SEDF initiative. What is the value to participants of engaging in a “best practices” analysis? How do they protect their privacy? Issues