Download Alternative ways of SME financing and a credit risk appropriate

CHANGING WORLD
Alternative ways of
SME financing and
credit risk
appropriate approach
Presentation of EUROBANKING 2016 in Barcelona
©2016 • Pavel Finger• May 2016
Content:
Ways of SME financing
World of information
SME credit risk management
How to manage it?
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WHY ARE SME IMPORTANT FOR BANKS?
Pure retail banking is really fighting area for banks
and
they probably not just win, as they are backward in that!
World Retail Banking Report 2016
Efma and Capgemini
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WORLD of SMEs – BIG BUSINESS SPACE
SMEs are important driving force for world economy,
but not only banks will profit on it.
Czech SMEs according to
turnover
1 až 10
mil.Kč
1%
9% 2%
16%
49%
23%
10 až 30
mil.Kč
30 až 100
mil.Kč
100 až 500
mil.Kč
500 až 1500
mil.Kč
více jak 1500
mil.Kč
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WAYS OF SMEs FINANCING
Loans from banks and financing via business (trade receivables)
Financing via banking loans, not as one company loan, but as a credit for the
group companies bounded by mutual guarantees. Typical representative of this
approach is European Association of Mutual Guarantee Societies (AECM). For
example there are so called “Confidi” doing this business in Italy.
Venture capital providing sources namely to fast growing innovative projects.
There are many various Venture funds or private investors across Europe, but it
is rather expensive source of money, not fits for common business needs.
P2P (peer to peer) financing, typically provided through auctions of financial
demands. Funds can be delivered by banks or others investors, often both in
combinations. We can see the first trials in the Czech Republic, but still with
many problems.
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WAYS OF SMEs FINANCING
Crowdfunding project finance,
typically collect money from
many private investors in case of
very interesting projects through
FinTech infrastructure. Investor
can replace a yield for another
benefit as for example promotion
of his/her name. Typically it is
about non-profit project like
musical concert or movie picture.
Crowdfunding in the world in billions USD
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2012
2013
2014
2015
SME financing via capital market that seems to be a method very supported by
European commission. In case of SME there should be easier processes than in
case of big corporations. Main ways are IPOs or issue of bonds. Despite of EC
support, there are still a lot of problems for SMEs to go this way. A certain
possibility seems to be bundling of more loans in one package and replace it by
the securities.
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WAYS OF SMEs FINANCING
Financial institutions have a last call to serve SME segment, but
trend is not good
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WORLD of INFORMATION
Information eruption and new
technologies in IT
New ways of financing and new
providers (FinTech)
Industry 4.0
Payment Services Directive (PSD 2)
Standardising, integrating and improving payment efficiency in the European Union
Offering better consumer protection
Promoting innovation in the payments space and reducing costs
Incorporating and providing clarity on the use of emerging payment methods such as mobile payments
and online payments
• Create a equal playing field for payment service providers - enabling new companies to get into the
payments space (Application Programming Interface - API)
• Harmonize pricing and improve security of payment processing across the European Union
• Incorporate new and emerging payment services into the regulation
•
•
•
•
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WORLD of INFORMATION
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WORLD of INFORMATION
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SMEs CREDIT RISK MANAGEMENT
Different approach comparing with corporates
Fast, simple and transparent way of risk analyses
Data comes from business information systems
Data from industry and regional data are important
Not only ratings, also people behind are the key risk drivers
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HOW TO MANAGE IT? – BI SYSTEM
Majority information on SME are in the business info systems
People behind the business can be analyzed there as well
Company profile is still the key knowledge of the banks
Industry analyses as well
But time is running – is date for changed approach
12
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HOW TO MANAGE IT? - BI SYSTEM
All necessary inputs for analyses are „single sign-on“
There are tools for evaluation start up companies as well as
Entrepreneurs
BI system contains various type of scoring models (payment
index, financial index, key person evaluation etc.)
BI system is useful for marketing, credit risk and collection
life cycle parts.
But don’t worry, there is still enough space for statisticians ...
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CHANGING WORLD
Thank you for your
attention
Pavel Finger, CRIF – Czech Credit Bureau ([email protected])