During the Caucasus18 SME Banking Club Conference in Tbilisi on May 17-18, Olena Gryniuk talked to Maya Margie Younes, Head of the Marketing Group at BLC Bank (Lebanon) about the non-financial services for SMEs that the Bank has implemented, and about women entrepreneurship in Lebanon.
BLC Bank was incorporated in 1950. It is part of Fransabank Group, which is the 4th largest banking group. While BLC Bank has a market share of 3%, it has an SME market share of ~15%.
You provide a full and comprehensive range of Non-Financial Services (NFS) for SMEs. What was your primary objective when implementing NFS?
The Bank’s primary objective in providing non-financial services was to be able to differentiate itself from the competition. The market in Lebanon very small and saturated with more than 65 financial institutions serving less than 3 million bankable Lebanese. We wanted to differentiate ourselves through our commitment to SMEs and wanted to become their Bank of choice. We ran a market research to understand the needs of SMEs that revealed that SMEs needed non-financial support such as access to knowledge and access to the market, which led us to develop our non-financial offering. This gave way to our learning and development, and networking and consultancy services. We also launched The Brilliant Lebanese Awards, which is currently in its 7th edition.
The Awards were and still are the first banking awards in the MENA region geared towards Lebanese entrepreneurs and SMEs. They provide SMEs with exposure, acknowledge and recognize their success and inspire other SMEs to follow in the winners’ footsteps. I can honestly say we have done a great job. Even finalists that were not winners got a good exposure and were able to find investors or opportunities to access other markets and improve their growth. The finalists also receive mentorship and coaching from the Jury members who are all professionals and key players in the SME ecosystem, and most of all are independent from the Bank, giving further credibility to the Awards.
What proportion of your SME customers used at least one component of the program? What is the coverage?
Our non-financial services are offered to all SMEs, irrespective of whether they are BLC Bank clients or not. These services are part of our promise and our social responsibility towards SMEs to develop and grow that segment, knowing that the more this segment improves, the better the country’s GDP will perform.
What are the critical steps in implementing NFS services successfully within the bank?
This is an important question. First things first, the top management’s support is crucial for the success of such a program. We had to develop a business case and show the management potential growth forecasts for the Bank and its customer-base as a result of providing such a service, knowing that the management itself wanted to differentiate BLC Bank from the competition and increase profits, of course. The business case proved positive, projecting that if we implemented this approach of servicing the SME sector with a 360-degree approach, the numbers would be better and customer acquisition would increase, which is exactly what happened, with the results turning out to be very good.
Is it easy to open a business in Lebanon?
No, it’s not easy to open a business in Lebanon. It takes a lot of time and paperwork, and you have to meet a long list of requirements. In fact, Lebanon holds 133rd place in the Ease of Doing Business Ranking by the World Bank.
How are the needs of female entrepreneurs different compared to those of male entrepreneurs? And how does the Bank meet them?
There’s no real difference, even our market research showed that. They all need access to finance along with the support brought forward through the non-financial services: networking, business advice, access to knowledge.
However, on a more social level, with women coming later into the economy, they need a boost in self-confi dence to venture-off and start their own businesses. In addition, there is the constant work-life balance issue. Due to cultural stereotypes, women are expected by their husbands to be fully devoted to their families. So, women have an extra challenge in comparison with men, as being a successful businesswoman leaves less personal time. This is a critical difference between men and women in business. One of the major challenges that they face is access to finance. Banks don’t have high-risk appetites and ask for a lot of collateral before they lend money to SMEs.
This in particular is a bigger challenge for women, because they have less tangible assets such as property or guarantors to secure their loans and end up with fewer opportunities than men. Why is that? In some religions, a woman will receive a smaller inheritance than her brother will as she is expected to marry a man who will eventually inherit from his father. So, they end up with less to offer as collateral than men and are faced with a much greater challenge when it comes to accessing finance. This is why we decided to collaborate with IFC on a risk-sharing facility, whereby we agreed on a $10 million dollars credit line to lend to SMEs, with a special focus on female entrepreneurs, who can then take out loans from BLC Bank with minimal or almost no collateral. We have already distributed the credit line and are now looking to secure a second credit line of $10 million.
In Lebanon, the design, fashion and jewelry design industries are mostly dominated by women, as is the food industry, e.g. bakeries and restaurants. There are very few women in male-dominated sectors. We had one female finalist in the Brilliant Lebanese Awards, who independently runs a company that equips cars with military grade armors, so that was very interesting: a woman in a male-dominated sector, and she is doing a great job.
To what extend are your branches or RMs involved in the promotion of NFS among customers? What is their role?
Since non-financial services are not part of the core banking business, it was challenging to get RMs involved; it’s not easy for them to accept that they needed to provide these additional services free of charge. Sometimes when we announce that we are organizing training, it’s difficult for RMs to sell that program to their clients. What we did was to assign ambassadors to our various branches, who are responsible for nurturing SMEs and female entrepreneurs. They had targets and were trained specifically on what our offering includes. For the Brilliant Lebanese Awards, because we go after SMEs and solicit applications to the awards, we considered a monetary incentive. So, all employees, irrespective of whether they work in HO or other departments, were given financial incentives.