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Large Market Size In any economy, SMEs account for a significant proportion of economic activity, employment, and financial transactions. The potential profit pool for banks is therefore large.
In most countries Small and Medium Sized Enterprises (SMEs) represent a substantial proportion of all economic activity, and typically account for well in excess of 50 per cent of total employment. Governments therefore regard the growth of the SME segment as essential to the balanced development of the economy. Likewise banks and financial institutions compete to capture a share of this potentially lucrative market.
WHY TARGET THE SME MARKET?
Whilst there are problems to be solved, investment in developing a strong SME
banking business remains a priority strategy for most banks for the following reasons.
Large Market SizeIn any economy,
SMEs account for a significant proportion of economic activity, employment, and financial transactions. The potential profit pool for banks is therefore large.
Lower Price-Sensitivity
Compared with larger corporates, SMEs are far less price-sensitive. They tend to be more
concerned with access to financial services, and are willing to pay a premium for good service
and the right products, delivered through convenient channels.
Strong Customer Loyalty
Once they have been won as customers, SMEs are typically reluctant to move to another bank,
and will provide stable income for many years.This contrasts with the behaviour of larger
corporates who are usually multi-banked and will award transactions to different banks based on very fine price differentials.
Lucrative Relationships
SMEs are often owned by high-net worth individuals. Many are also suppliers to larger corporates. By understanding these ownership structures and supply chains, and offering related products, banks can indirectly strengthen their private banking and corporate businesses.
High Growth Potential
Most large corporations start out as SMEs. Banks that can identify and support good quality small enterprises may find that these grow into substantial corporate customers. GBRW can help your bank realise the benefits of investing in developing an SME banking franchise, through the extensive practical and consulting experience of the GBRW team throughout the world.
Requires the development of small and medium industries to conduct in-depth studies to identify promising areas in every Arab country separately, and in this context, some industries stand out because they are characterized by high operational return for investment, and thus a candidate to increase operating rates and contributing to import substitution. Among these food industries such as drying fruits and vegetables, and the manufacture of jams, juices, oils, meat processing, and the processing of ready-made meals, and manufacture of bakery products, etc., and the activities of textile such as knitting, weaving, embroidery, textiles and garments, etc., and leather industries such as leather tanning industry, bags, shoes, etc., and manufacturing finished products from rubber and plastic, such as irrigation pipes and sanitation; industry wooden and metal furniture, and metal industries aimed at forming minerals and the production of nails and kitchen tools and parts and components used by manufacturing industries subsequent, and some chemical industries as small as perfumes, odors and some toiletries and soaps and disinfectants.
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