BANK ALFALAH LIMITED, A

WORKING ON SMALL & MEDIUM

ENTERPRISES
Presented by: Hiba Ahmed – NCBA&E FLC
Business Segmentation and Potential

Corporate / Commercial Enterprises

Medium Enterprises

Small Enterprises

Agri

Mi
cr
o

The Volume Vs The Value Pyramid

Pyramid .
Contribution to the Economy

Contributes Only 6% are banked

30% towards
GDP

Employs
Contributes Over 3
75% - 80%
25% of Million
of non-
export SMEs in
agricultural But ..
earnings Pakistan
workforce

Employs
almost 45%
of total
workforce Only 8 – 9% of the
total private sector
lending is deployed
in SME Sector
Why SMEs are Discouraged?
Demand Constraints Supply Constraints
Borrowers hesitant to borrow from banks,
preferring equity financing from other sources High NPLs in the sector (31.8% of the borrowers)
(acquaintances, private investors) instead of debt has resulted in a flight to quality for Banks which
financing has saturated the large corporate segment

Smaller size of operations and irregular cashflows Banks following a 100% secured lending model to
result in a reluctance to risk collateral with Banks minimize risk. Many businesses are unable to offer
the required collateral

Limited management capability and multiple High search costs for Banks in terms of
book keeping results in an inability to borrow information acquisition and lack of credible data on
through Banks market potential and opportunities

Infrastructural constraints like power, labor, A high percentage of Banks do not offer a
technology and law & order situation inhibit access differentiated customer value proposition with
to finance tailored SME Transactional, asset and liability
products
Bank Alfalah is focused at providing financial solutions to
assist SMEs during the incubation period; focusing on
complete financial and non-financial needs of the company
Successful and
Incubator Established Commercial
Entity
Since inception of any SME it OR
5-7 Years
faces daunting challenges
Failed Business
Propositions
*Source: IFC Analytics, SBP
SME Banking Transformation
Year Year 2014 onwards
2012

From SME Lending to Transactional

Conventional SME Banking Accounts; current
Lending Solutions and saving

Value Chain
Business Model Revamp
Almost
Almost Almost
Almost Financing
11,000
11,000 280,000
280,000 of
of
customers
customers BAFL
BAFL
with
with customers,
customers,
Lending
Lending and
and the
the Business Advisory
Relationship
Relationship potential
potential Manager
market
market
Trade solutions Conventional and
Payroll and Cash
with focus on product based
Management
existing advances Lending Solutions
Solutions
customers
SME Active Work Streams

1 2 3 4 5 6
SME Non Human Business
Relationshi Credit
Product Financial Capital Analytics
p Based Approval
Suite to be Advisory and
Model Process
Enhanced Services Monitoring

Integrating the
Value Chain Branch Led Delegated SME Business
Verticals SME Tool Kit Credit Certification
Sales Model Dashboard
Approval
Structure

BAM
Sector Based RM Business Certification SME Business
products and Productivity Advisory Streamlined Monitoring
Services Model Managers Policy and Pack
Process
Manuals Staff
Engagement
Cash-flow and
based unique 360 Degree Seminars and Automation of
Agenda Workshop Collection and Performance reporting
Product Recovery Matrix
Propositions
Alfalah Turning the Wheel for SMEs…
Ideology Initiatives
• From SME Lending to
SME Banking
• 360 Degree Approach
Business Model for SME Banking
• Branch led SME Sales
Model
• RM Productivity Model
• Integrating the value
chain verticals
• Sector based products
Product Ideology addressing the needs of
niches
• Cash flow based SME
Financing products
• SME Toolkit, an online
portal, to provide
business tools to
enhance business
Non-Financial efficiency.
Advisory Services • Business orientation and
knowledge sharing
sessions
• Business Advisory
Key Constraints addresses
• Reduce cost of Search
• Increase Target Market
• Unique Customer Value Proposition by
catering to complete Need Matrix of
SMEs
• Relationship and Need Based Solution
oriented approach
• Address Collateral Constraints
• Reduce Financing Risk Through Value
Chain Financing
• Reduce NPL through Niche
Identification
• Enhance Management Capability
• Improve Documentation and Book
Keeping Methodologies
• Improving efficiency and output
• Managing Infrastructural Constraints
Product Ideology

Unsecured
Financing

Value Chain Financial Segment

Financing Inclusions Niche
Long Term
Financing

Alfalah has the largest suite of SME

Supplemented by:
products covering wide range of
• US AID Credit Guarantee Scheme
working capital, long term and cash
• SBP Credit Guarantee Scheme
flow based lending products
Non Financial Advisory Services

Global Best Practice:

According to a survey conducted to understand Financial Advisory for SMEs in Developed
Markets in 2001 it was revealed that almost:
95% of SMEs use
External Advisory Accountants – 83% Banks - 62%
services

Solicitors – 56% Customers – 47% Suppliers – 36%

Consultants – 32%

In Pakistan most SMEs are deprived of any form of formal

advisory services specially from Banks and keeping this in mind
Bank Alfalah has taken a step towards providing formal Business
Advisory Services through its SME Banking Platform.
NFAS at Bank Alfalah

 Key impediment for SMEs is lack of management capability due to knowledge/skill gap

 In its continuous commitment to provide sustainable solutions, Bank Alfalah has initialed its Non Financial Advisory
Program to provide businesses with key management tools and solutions

• Differentiate the Bank from competition by offering NFAS

• Reinforce Bank Alfalah’s brand awareness, by becoming the “Advisor of Choice”
OBJECTIVES to SMEs
• Outreach towards Non/Under-banked segment

• Information
STRATEGY • Knowledge Sharing Events
• Advisory (Business Advice Managers)

• Access to Finance / Financial Inclusion

• Improve business practices
EXPECTATION • Support business growth
• Increasing SMEs ability to secure/ repay loans
The SME Toolkit

Product Overview

Web and mobile platform

Offers the latest information and communication

technologies to help small businesses in emerging
markets to:

Learn and implement sustainable business

management practices

Increase their productivity, efficiency and capacity

Gain access to finance and new markets.

Help them in term of business guidance, market

review and industry analysis

www.pakistan.smetoolkit.org
Business Advice Manager (BAM) Program

Who are BAMs?

 Business Advice Managers (BAMs) are trained business

professionals who provide recommendations to SMEs after a
systematic analysis of the SMEs’ business to improve business
management practices and increase access to finance. 

BAM Program:

 Bank Alfalah in collaboration with IFC’s brought in a trainer to train

all its employees on SME Banking needs and the provision of
advisory services.

 These Trainings are a One Day Program and is included as part of

each SME RM Level 2 training Program.

 All BAMs will work closely with their existing SME Customers to
assess the need of Business Advisory and provide necessary
guidance and will evaluate the performance.
Thank You !!