VALUE CREATION OF BANKING PRODUCTS FOR SMALL AND MEDIUM BUSINESS CLIENTS: PROBLEMS AND SOLUTIONS

Abstract

An overview of the current state of affairs in the field of banking services for small and medium-sized enterprises is provided, the approaches that banks use to realize potential opportunities are considered. Recommendations are provided for banks that would like to start strategic development of the market of small and medium-sized enterprises. The authors note that for many banks, effective development of products and services involves standardization. Banks need to balance the demand from small and medium-sized enterprises for "suitable" products, including the bank's costs for their provision. Risk management has always been one of the most important functions for a bank, but it takes on particular importance in the framework of a line of activity such as banking for small and medium-sized enterprises, since there is less information about ways to mitigate risks in this sector. The risks themselves are not unique: as in all banking services, they include credit, market, strategic and operational risk. However, the complexity of their management increases due to the fact that the clients themselves are smaller here, the frequency of transactions may be higher, but their cost is lower. Managing the risk of excessive costs in the provision of services means managing the prospect of receiving more transaction costs with a narrower revenue base. The analysis of five links of the value chain allowed us to draw the following conclusions: it is very important to understand what is happening in the market; non-credit products should not be underestimated, as they can provide more profit than loans granted to small and medium-sized businesses; the bank's current loan portfolio is the most important potential source of new areas of business activity; segmentation of service methods throughout the value chain can help a bank balance customer service and operational costs; IT systems are just a tool. Using the needs of small and medium-sized enterprises, efficiently working banks can develop and quickly bring new products to the market. Banks are especially quick to respond to requests and are ready to develop new products, even in cases where these products go beyond the scope traditionally offered by banks.