SME BUSINESS SOLUTIONS CASE STUDY: TBC BANK’S NON-FINANCIAL SERVICES STRENGTHEN GEORGIAN SME CLIENTS TBC Bank, Georgia IN PARTNERSHIP WITH Project Approach The Key Components of the NFS Program: IFC supported TBC Bank in designing a non-financial services strategy. To SME IFC offered the first educational web portal for SMEs in the region. The portal allowed SME owners and implement this strategy TBC Bank took Educational a multi-faceted approach in partnership Web managers to find Georgian-language articles, templates, forms, video seminars and e-learning materials on a broad range of business management topics and provided the ability to ask questions and receive 608,000 unique visitors with IFC and other international and Platform guidance on legal, tax, and financial issues.2 donor organizations by launching SME Business Support Program, entitled 7 The TBC Business Academy, a virtual training center built by TBC Bank with IFC support, consists of Steps to Success. The program offered educational videos on financial and business management within the SME web portal. Technology- over a combination of financial and enhanced learning is still a new field for many countries worldwide, including the Eastern Europe and Central Asia region. Launched in March 2015, TBC Business Academy includes core courses in business 12,000 non-financial services. The financial users management, the fundamentals of finance, and general management. package included digital services: Internet banking, mobile banking and SMS banking. A set of specially-tailored non-financial services offered free Training programs directly focused on improving SMEs’ business management skills training sessions, an online business SME and created informal networking opportunities. These training sessions were exclusive Bank’s Need platform, conferences, and consulting Management to SME clients of TBC Bank and covered important topics such as cost-volume-profit 4,300 services. (CVP) analysis, budgeting, human resources management, social media marketing trained SMEs The goal of TBC Bank was twofold: Workshops and strategic management. 1. help SME clients overcome major obstacles to doing business and thereby become stronger banking clients. 2. become a market leader – a major partner bank for SMEs. By helping its SME clients address their insufficient business management skills, SME Conferences provided a platform for client SMEs to network and TBC Bank could help them build up their business knowledge and achieve better 10 events: 7 obtain comprehensive information about important business topics, SME with over results. Conferences development opportunities, and the general business environment in Georgia. SME conferences reached large audiences and served as important 1,200 participants networking and information exchange events for SME clients. Challenge In 2012 TBC Bank, one of the stronger commercial banks in Georgia, recognized that the SME sector – one of the most dynamic and fast growing components Steps Business consultancy services for SMEs were conducted of the country’s economy – was important for its long-term success. But to Success in partnership with the Netherlands Senior Experts Service SMEs in Georgia had numerous shortcomings: many lacked substantial SME (PUM). This customized service offered a thorough analysis 11 managerial and technical specific skills and were not as innovative as Consulting of SME clients’ operational, business and development needs SME clients under PUM SMEs in neighboring countries.1 To strengthen SMEs, and thereby Services and drawing from qualified PUM experts to provide advice. program its own competitiveness, TBC Bank introduced two innovative This service was offered to a few clients selected through a packages: a) digital technical support; and b) set of non- business-plan competition. financial services (NFS). TBC partnered with IFC, a member of the World Bank 1 The 2012 World Bank Entrepreneurship Survey Group, which had significant global experience in developing these services SMS Mobile Internet- 2 This service was offered via SME Toolkit (www.smetoolkit.org), an innovation of IFC developed in partnership with IBM to, lever- Services Banking Banking age the latest information and communication technologies to help entrepreneurs and small and medium enterprises in emerging in local markets, to develop non- markets learn and implement sustainable business management practices and increase their productivity, capacity, and access to financial services for its SME clients. finance and new markets. Results TBC Bank’s focus on small and medium-sized businesses, through its NFS approach, has been a considerable success. Since the launch of the Business Support Program in 2013, the Pro- gram has helped position it in the market as the partner of choice for that customer segment. Strategic differentiation from #1 partner bank for businesses competitors of newly registered businesses become 50% TBC Bank’s clients. Better client acquisition increase in the number of SME clients 57% (from 42,000 in 2013 to 67,000 in 2015) Project Lead Says: TBC Bank provides an excellent example of how annual growth in the SME portfolio since financial institutions can effectively embrace the Portfolio growth 37% 2013 untapped potential of SMEs by helping existing and prospective clients develop their business and financial skills. TBC Bank’s experience led to a chain reaction: Increased client loyalty 59% Net Promoters Score (NPS) new clientele started onboarding very shortly after the bank offered NFS. This translates into a growing SME portfolio, increased sales of SME products/services, Strengthening client non-performing SME loans remain low lower NPLs, better results and satisfied customers performance and 2% despite political and financial turmoil choosing TBC as their partner bank. profitability Garth Bedford, Banking Advisory Services Lead, Central Asia and The success of the NFS program and IFC’s skills development offerings for SMEs in Georgia were Eastern Europe, IFC recognized by the International Business Brilliance Award under the category, The Best New Product Launched in 2014. Partner Says: Benefits for the Bank The innovative NFS package truly complemented 1. Market leadership: By deploying non-financial services, TBC Bank brought its service the TBC Bank’s new MSME strategy and helped us for MSME clients to a new level, where the bank is providing a combination of financial stand out in a very competitive and well-developed support and business advice. financial market. As a result of supporting our client MSMEs through NFS, TBC Bank is now perceived 2. Maximum reach to clients: A suite of complementary NFS offerings maximized the as a partner bank for micro, small and medium size reach of TBC Bank to its clients through new delivery channels. businesses. 3. Better performance of SME clients: The business performance of SME clients can Tamar Zhizhilashvili be enhanced by offering complementary non-financial services that strengthen SME Deputy Director, business skills. Business Banking 4. Sustainable customer base: NFS also enhances SME client satisfaction and loyalty, Beneficiary Says: providing a stronger, more stable customer base despite local and global political and financial turmoil. Those who have made investments into small family businesses often are unable to get business advice 5. Global expertize to local clients: Partnerships with international development institutions, from highly qualified specialists. It’s the same with such as IFC, ADB, or PUM, help local banks bring global experience to local clients. me. Being self-educated and new to the business environment, I am trying hard to learn and develop IFC EMENA Banking Advisory Services professional business skills. To do so, I could never IFC SME and Value Chain Solutions imagine any better partner than www.tbcbusiness.ge. Olena Prokopovych, EMENA Non-Financial Services Lead Mariam Gengashvili oprokopovych1@ifc.org Entrepreneur and Founder of Silver Hotel ifc.org