SMEs Continue to be the Banking Sector’s Golden Goose


Life expectancy of SME sector used to be different per each country. However, the practice shows that SMEs are prone to disappear quickly. Providing proper advises and mentoring is what the banks decided to launch for getting win-win solutions while crediting SMEs. Partnership – is a new way of cooperation of SME and banking sector of Georgia. Together with Georgian bankers Caucasus SME Banking Club Conference 2017 has brought together representatives of various countries for sharing their experience regarding SME trends.

On May 24-25, 2017, SME Banking Club arranged the Caucasus SME Banking Club Conference 2017 in Georgia. Representatives of world leading banks and financial institutions attended the Conference and discussed the modern trends of SME banking.

“The main problem of SME banking firstly is that SMEs do not trust banks so much. There are different reasons for these. They are seeking for alternative funding which can come from crowdfunding, equity service scheme and so on. Sometimes SMEs might not have access to the funding. For example, I come from Greece, and SME representatives there face difficulties in getting funding nowadays due to the financial crisis. Another issue is that lots of SMEs are afraid that they will fail. So, they do not want to risk even their personal finance by going to the bank and getting loans. There also are some misconceptions from the banking perspective, as banks are currently much lacked on giving a loan to SMEs because they consider it risky sometimes as far as SMEs appear and disappear very quickly. Secondly, banks think that money is disappearing from SMEs. If we look at figures globally, we will see that SME lending is reducing. Meanwhile, it is a false picture. What really happens is that SMEs are looking for alternative funding as mentioned above or are getting funding through retail channels,” said Dimitris Petrilis, Sales and Marketing Director, Europe and CIS at Capital Banking.

During his presentation at the conference, Petrilis spoke mainly about the trends on SME Banking and also the challenges out there in global markets and how innovation and digitalization can help address these challenges and turn them into opportunities.

“SMEs are looking for complete non-financial services from the banks. They want to be advised, to be guided, to be mentored, etc. This is also very good for the banks because this way a bank can de-risk the finance. If the bank advises SME correctly, then SME is more likely to succeed”.

As Boris Dyakonov, CEO at Tochka mentioned, for SME banking, where Tochka is concentrated at, banks, at least in Russia, becomes much more user-friendly. “They expand their offer. It is becoming cheaper, and they become more aggressive on the advertisement. At the same time, they are learning how to provide extra value, like non-financial services.  In the nearest future, we should expect banks to continue running their businesses following these trends,” Dyakonov told.

“Today Banks are partners of businesses,” said Zurab Masurashvili, Head of MSME Banking Department at Bank of Georgia, one of the leading Georgian banks.

As Masurashvili added, it is not a surprise that bank can issue loan but it does not make anyone happy. “This encourages banks to get closer to their clients and provide another type of support. Banks are accumulating an extensive knowledge regarding different sectors, so we are able to share this knowledge with businesses. This is one of the most important things what a bank can make for businesses”.

While determining an individual approach to SME segment together with crediting, Bank of Georgia started providing different non-banking services to its customers. The Bank has arranged important events regarding DCFTA in order to explain to the business community what kind of procedures are required in this regard. Another important project of the Bank was a platform named #ICreate.

Under this platform, the management supports businesses and provides not only funding but also consultations and popularization. Video catalogues of successful cases were also launched, which at one hand helps businesses to get more contacts and on the other hand, inspires others and teaches them to achieve success on the example of others’.

“Developing distance services to customers are one of the main challenges all over the world, including Georgia. This is not only banks’ challenge; this is equally customers’ challenge. So, together we are making quite bit steps. Technological crediting of today is radically different from the way they used several years ago. Today customers are having offers and can take out loans without any permission of the bank. With such steps, our bank moves forwards and gets integrated with businesses. We have an important strategy of getting closer to businesses. Society becomes digital ready, and one of our challenges is providing efficient communication and service channels, satisfying for customers,” said Masurashvili.

Current credit portfolio of SME loans at Bank of Georgia amounts to approximately GEL 1, 400, 000, 000.  It is over 45, 000 loans. Market share of the bank in this segment is around 35%. 30% of SME customers of our Bank are females.

“SME will remain prioritized for our Bank. What we are witnessing now is that more and more youngsters prefer to start up their own business rather than to be hired. This trend continues and will continue cooperation with this segment even deeper in the future,” said Masurashvili.

Like Bank of Georgia, another leading Georgian bank, TBC Bank considers SME as one of the most prioritized sectors for its business. Recently the Bank has launched a program Startuper for promoting entrepreneurship in Georgia.

Read interview with Nika Kurdiani, Deputy CEO at TBC Bank, about Startuper Program

Apart from financial products within the program, the Bank offers non-financial components, like trainings in marketing, finance and developing startups; networking and educational events, one-to-one consultations; Startuper web-catalogue and media support.

“The fair to fail is one of the most frequent obstacles that SMEs face in general,” said Tamar Zhizhilashvili, Deputy Director of Marketing Communications & Business Banking at TBC Bank. In her words, confessing them in the success of their business is crucial. In this regard, TBC Bank also established TBC Business Award. “We are proud to witness success stories of our entrepreneurs, their abilities to find out a niche and run the business successfully. Sharing their experience is really important also for others in order to get more motivation and inspiration,” said Zhizhilashvili.

The year of 2016 was a period of significant challenges for Georgian Terabank. After a 17-year history of existence, the Bank has revised its business strategy and changed the bank’s appearance and communication model. Following the visual revision of the concept, Terabank team has introduced new service standards, improved products with the aim to provide maximal comfort for clients. SME continues to remain the main target of the Bank.

A new concept of Bank’s business branches is “home” environment for clients, the interior is arranged like a home: with fireplace, soft furniture, and decorative photos. At Business Hub SME bankers and SME analysts offer business banking products and can assist customers in decision-making and provide some business advice.

As far as e-commerce direction has become very popular in contemporary business, Terabank intensified efforts in this direction too. Recently the Bank has offered a performance of operations through SMS signature, without paper, the purpose of which is to provide flexible and swift service. Terabank continues improving distance services and transforms them into an attractive product for small and medium business sectors.