MARKET EXPANSION TRAINING THRU
MICRO BANKING OFFICE (MBOs)
2-day Seminar/Workshop
Place
Day 1 AM
Time
8:30 am
9:00 am
Activity
Opening Activities/Expectation
Setting
Workshop 1: RB X at a Crossroads
9:45 am
Case for and against expansion
10:30 am Break
10:45 am Workshop 2: RB X Expansion Options
11:30 am Various Expansion Strategies
Facilitator
Day 1 PM
Time
Activity
1:30 pm Latest BSP Circular
3:00 pm Break
3:15 pm Planning the Expansion
- Expanding through Micro-banking
Offices (MBOs)
- Basic tools and information to
decide MBO establishment
4:30 pm Learning for the day
Facilitator
Day 2 AM
Time
8:30 am
Activity
Planning the Expansion
- Approval process
- Market Research
9:30 am
Planning the Expansion
-Financial Projections
10:30 am Break
10:45 am -Building the Expansion Team
- Determining the right team
members
- Working as a team
12:00 pm LUNCH
Facilitator
Day 2 PM
Time
Activity
1:15 pm
3:00 pm
3:15 pm
Controlling the Expansion Process
- Reports and internal controls
Break
Workshop 3: Action Planning
4:30 pm
Closing Activities
Facilitator
Rules
Have FUN !!!
Be YOURSELF !!
Be INVOLVED !
EXTENDED WORK HOURS!
Remember ...
• We learn from each other.
• MABS does not know everything nor have
asked all pertinent questions ...
• ... But we have made this training as
informative (and fun!) as much as possible.
• Most importantly, YOU determine how your
learning spells success in the field!
Learning Objectives
1. Understand the reasons behind expanding
bank operations.
2. Develop a step-by-step knowledge in MBO
expansion to reach and serve MF clients.
3. Identify other microfinance products and
services to be used to expand market reach.
Workshop 1A
A. Instructions:
1.
2.
3.
4.
Read the case.
Read the news articles.
Study the bank status report.
You have 15 minutes.
90,000,000
RB NOY Microfinance Loan Portfolio
78M
80,000,000
68M
70,000,000
59M
60,000,000
50,000,000
40,000,000
53M 51M 51M 55M
50M
43M 45M
42M
40M
30,000,000
PAR 1 = 10%
PAR 7 = 8%
PAR 30 = 5%
20,000,000
10,000,000
<Default Format>
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011
Loan portfolio balance
Portfolio at risk 1 day or more
Portfolio at risk more than 7 days
Portfolio at risk more than 30 days
RB NOY Number of Active Microfinance Borrowers Outstanding
10,000
9,500
8,800
9,000
8,000
7,000
7,000
6,000
5,000
5,500
5,800
7,600
7,300 7,400
7,900
8,300
6,200
5,000
4,000
3,000
2,000
1,000
<Default Format>
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011
Workshop 1B
B. Instructions:
1.
2.
3.
4.
5.
6.
Divide into groups of five.
Discuss the questions below.
Choose a representative.
Fill up the SWOT Analysis Table.
Complete the activity in 10 minutes.
Present to the entire class your key points in 5 minutes.
Questions:
1.
2.
3.
What are the opportunities and competitive threats faced by
RB NOY?
What are the operational issues that RB NOY must address?
What are the courses of action that RB NOY must do in the
next 6 months?
SWOT Analysis
Opportunities Threats
Strengths
Weaknesses
Workshop 1C
C. Instructions:
1. Discuss with your group the question for or
against expansion.
2. Answer the questions: What is your position? Is
your group for expansion or not? Why?
3. Complete the activity in 10 minutes.
4. Present to the class your final position and
explain the reasons behind the decision in 5
minutes.
Case for or against expansion
For Expansion
• ??
Against Expansion
• ??
Break Time!
Workshop 2
Instructions:
1. Look back to your SWOT Table.
2. Complete the SWOT Table. What are the emerging
strategies for each quadrant? (S-O, S-T, W-O, W-T)
3. Choose a viable set of strategies. Given RB Noy’s
situation, what are its top three viable strategic
options? Which strategy is an expansion strategy?
4. Complete the activity in 15 minutes.
5. In 5 minutes or less, explain to the class why your
group chose those strategies.
SWOT Analysis
Opportunities Threats
Strengths
S-O
S-T
Weaknesses
W-O
W-T
Case for Expansion
Competition
Regulation
Overhead
Costs
Case against Expansion
Market
Capital
Competence/
Capability
Exploring Various Expansion Strategies
Geographic
Expansion
Product
Diversification
Mergers &
Acquisitions
Bank
Expansion
Strategies
Customer Resegmentation
The Strategy Challenge
S-O Strategy
•
Enter new territories in Visayas through new
branches/MBOs.
S-T Strategy
•
•
Maintain the current markets among farmers, traders, LGU
employees, and microentrepreneurs by introducing better
designed products. Business focus shall remain on farmers
(30%), micro (20%) and SMEs (30%) totalling 80% of loans
allotted to these sectors.
Improve IT systems and credit processes to support
overcome competition.
The Strategy Challenge
W-O Strategy
•
•
•
Implement a total quality thrust in the bank.
Implement a centralized and integrated IT infrastructure for all
units by 2007.
Institute organizational development plan for personnel.
W-T Strategy
•
•
•
Develop fee-based services and alternative financial services
beyond lending such as remittances, collection services, ATM,
new MF products (MF Agri/HMF), etc.
Improve risk management and good governance towards
globally acceptable best practices.
Build-up of equity via plowback of profits. Reduce dividends.
Mergers & Acquisitions
• 1974: Fast-tracked its growth by merging with
Peoples' Bank and Trust Co.
• 1981: Acquisition of Commercial Bank and
Trust Co.
• 1982: Acquisition of Ayala Investment and
Development Corporation, Makati Leasing and
Finance Corporation
• 1983: Acquisition of Family Bank and Trust Co.
• 1996: Acquired CityTrust Banking Corporation
• 2000: Acquired Ayala Insurance Holdings
Corporation and Far East Bank and Trust
Company
• 2002: Acquired DBS Bank Philippines
• 2005: Acquired Prudential Bank and Trust Co.
Product Diversification
• 2000: BPI became the first bancassurance firm
after it acquired the insurance companies of the
Ayala Group
–
–
–
–
–
FGU Insurance Corporation
Universal Reinsurance Corporation
Ayala Life Assurance, Inc.
Ayala Health Care, Inc.
Ayala Plans, Inc.
• 2009: Completed sale of its 51% stake in Ayala
Life to Philamlife to form the BPI-Philam Life
Assurance Corporation.
Market Re-segmentation
• 2000: BPI introduced its Internet bank, BPI Direct
Savings Bank
• 2010: Partnered with its sister firm, Globe
Telecom, in establishing Globe BanKO, a mobile
savings bank with microfinance as its main thrust.
• Followed by the launch of the BPI Family KaNegosyo program, a reinforced program to fit the
financing requirements of micro and small
entrepreneurs, signaling BPI's foray into small and
micro-entrepreneurship.
• BPI “Micro deposit” ATM account...
Mergers & Acquisitions
Pro
• Rapid gain of market share
• Secure critical technologies
• Fill-up gaps in product lines
• Have faster product roll-out
• Acquire talent
Con
• Risk of failure due to
incompatible culture and
processes
• Over-paying for acquisition
• Internal dissent
• Employees turn-over
Manage the acquisition process by assigning a top
executive to over-see the integration process with focus on
managing social and cultural fit.
Product Diversification
Pro
• Used to enter new market
niche
• Answer customer needs of
existing market
• Protect core products and
market
• Deliver top-line revenue
growth
Con
• Time-consuming
preparation and change of
internal processes
• Reconfigure IT support
structure
• Heavy cost in initial product
roll-out
• Risk of market rejection
Appoint product management unit to lead product
research, design, and process improvements in
coordination with other bank departments.
Customer Re-segmentation
Pro
• Discover new market
segments
• Support profitable market
segments
• Boost investments in key
technologies and products
• Expand sources of demand
from existing products
Con
• Risk of poor market uptake
• High cost of investment for
small markets
• Complexity of managing
multiple markets and delivery
channels
• High incremental cost with
potentially lower incremental
profits per new customer.
Market research unit and financial planning unit must carefully consider cost
implications as you go to a different market niche. Impact on per unit cost or
profits must be considered.
Producers Bank
• 1995: Incorporated October 1995, started
with one branch in San Jose City, Nueva Ecija.
• 1996-2000: Opened 8 branches all in Nueva
Ecija.
• 2003-2006: Opened, acquired, or moved 20
branches in Isabela, Baguio, Pangasinan,
Aurora, Pampanga, Zambales, Bulacan, and
Camarines Sur and Pasig City.
• 2010: Totaled 51 branches with presence in all
regions of Luzon.
Branch expansion
2005
2006
2007
2008
2009
2010
34
42
50
50
50
50
Visayas
-
-
-
-
6
9
Mindanao
-
-
-
6
6
9
34
42
50
56
62
68
Luzon
Total
In millions, Php
YEARS
Geographic Expansion
Pro
• Expand market reach
• Diversify geographic risk
• Enhance brand recognition
• Tap new clients from the
same market segment
• Increase resources (loans,
deposits)
• Channel for additional
products/ services
Con
• Capital intensive
• Burn-out of assigned
employees
• Complex management
control systems
• Heavy investment in IT
infrastructure
• Lax internal controls
Key executive should focus on putting together interdisciplinary
team for market research, construction, IT, HR, and branch
operations opening.