Be the leader in SME: 5 recommendations

Robert Kossmann
Robert Kossmann - Deputy Chairman of the Board of Raiffeisen Bank Aval

September 20-21, 2018 in Kiev will be the seventh annual conference of SME Banking Club Conference 2018, devoted to the development of the banking segment of SMEs in Belarus, Ukraine and Moldova (abbreviated as # BUM18). On the eve of the conference, we publish one excerpt of the speech of Robert Kossmann, Deputy Chairman of the Board of Raiffeisen Bank Aval.

Based on the successes and failures of SME banking in Ukraine over 10 years


  • Country – Ukraine
  • Since October 2005 – part of the banking holding group Raiffeisen Bank International AG (RBI), Austria.
  • The main shareholders are: RBI (68.28%), EBRD (30%).
  • The number of customers – more than 2.6 million.
  • The number of SME clients is more than 260 thousand.
  • Number of branches – 498*.
  • The number of employees is 8 thousand.

*Data of the annual report for 2016.


SME Loan PortfolioB ased on the best practices of Raiffeisen Bank Aval, Raiffeisen Bank International and my more than 25-year banking experience in Ukraine and other European and Central Asian countries, I would highlight the following priorities on the basis of which the bank can be successful and a leader in the SME segment:

  1. The SME should be on the list of 5 key priorities of the bank. It’s simple: either the SME is included in the top 5 priorities of your bank, both for the CEO and other members of the bank’s board.
  2. Separation of the head of SMEs to positions not lower than Board-1 (for large banks) or the position of a member of the management board of SMEs (in small banks). Without this there will be no success. Otherwise, he has no leverage to influence the situation.
  3. Availability of the SME risk management system. Business can not achieve success without its reliable partner – a team of risk management with its tools.
  4. Well-prepared SME managers. The bank should invest in staff training. And be prepared for the fact that competitors will take employees to a higher position.
  5. SMEs are not just lending: they include Internet banking, daily banking services, deposits, and non-fi nancial services. Lending is important, very important, but not the highest priority in the banking business.

I recommend that small and medium-sized banks focus on a small, specific segment. Because you can not generate and process as many applications as large banks

I can distinguish several benchmarks, below which it is impossible to achieve an excellent result. It:

  1. The number of SME customers is not less than 30000.
  2. RORAC should be at the level of 25-30%.
  3. The CIR should not be more than 40-45%.
  4. Risk to income should be at the level of 10-15%.
  5. Loan NII / GI should be at the level of 35-50%.

And in order to remain successful in the SME segment, my recommendations are:

  1. Invest in digital banking, but do not forget about the development of the branch network.
  2. Build a network of offi ces based on long-term cooperation with SMEs.
  3. The future of retail banking is based on your SME strategy.
  4. SMEs business is diverse. Find your niche in the market.
  5. Be unique. Find your special off er for customers.


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