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Banks and SMME need to speak the same lanuage
Date : 01/03/2007 The general belief among South Africa's major financial institutions is that to really understand its small business customers, the investment in time and money - not to mention the lengthy lead times - is enormous, and that it is therefore simply not feasible. This view, says Hendrik Kotze of The IQ Business Group, a global provider of practical business solutions, is a fallacy. He believes that banks can improve their revenues substantially by partnering with and understanding small business. The key, however, lies in segmentation and the integration of processes in order to become more effective and efficient. "While much has been written about small businesses being the engine for future growth in the banking industry, the fact is that South Africa is lagging behind other emerging markets in terms of innovation and stimulation where small businesses are concerned," says Kotze. For Kotze, process integration, based on sound business analysis and segmentation, is the answer. "By engaging with small businesses, banks can begin to understand each client's unique needs and where in the business lifecycle the business is at any given time. This will enable banks to develop offerings that will not only satisfy, but will also help grow, small businesses." He explains that in terms of small business, especially upstarts, there are some very common general challenges, with the most obvious one being funding, or rather the lack thereof. "Instead of positioning funding as the be-all of enabling a small business, banks should be focusing on a holistic offering where finance is simply one element. For example, there is a severe lack of financial and commercial education in South Africa, and banks are easily able to provide this necessary service." While educating customers is not legislated, Kotze believes that as a goodwill exercise, the value of such a service is immeasurable and can be further fuelled if government provides appropriate incentives to banks such as tax rebates on customer education spent. "Banks should also be more innovative in their approach, especially in looking at how they can facilitate trade between small businesses. Thanks to data mining technology that can inter-relate any type of information regarding customers to establish patterns of interdependencies, banks can easily use its own network of knowledge to facilitate this kind of trade," he says. "At the end of the day, unless banks invest the appropriate amount of time and money in understanding each client's goals and aligning and integrating these across customers with similar needs, they will never be able to present an appropriate or appealing value offering."
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