Standard Bank Group - Kenya SME Pilot - Psychometric Testing November 2010 - Strategic partner of ICBC
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Strictly Private and Confidential
Standard Bank Group – Kenya SME Pilot
Psychometric Testing
November 2010
Strategic partner of ICBC
Profile of Standard Bank Africa
‹#›
Largest banking group in Africa by assets and
earnings
Employs over 50,000 people in 33 countries around
Ghana Nigeria the world, of which 47,000 people are employed in
Africa alone
Own majority stakes in African and emerging market
Uganda
operations
DRC
Kenya
On the ground in 17 countries in Africa
Tanzania
Malawi
Angola
Zambia
Mozambique
Zimbabwe
Namibia Botswana
Swaziland Mauritius
Lesotho
South Africa
2
Profile of CfC Stanbic Bank - Kenya
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• Stanbic Bank in Kenya was previously a commercial bank with very
few branches
• With the merger of CfC Bank and Stanbic Bank in 2008, an
opportunity was identified to scale the retail banking business
• CfC Stanbic Bank now has 17 branches spread across the country
with a growing customer base - account base has increased
threefold since
• Consumer goods and services in Africa are largely driven by small
and medium enterprises
• Most of new entrants to the working population are likely to be self-
employed
Gikomba Market, Nairobi, Kenya:
• Estimated 15,000 to 100,000 informal shops ranging from
wholesalers to informal market traders
• Heterogeneous nature of SME market, absence of salaried
individuals and lack of formal documentation make lending
difficult if traditional methods are used
3
Standard Bank’s partnership with EFL
‹#›
A mutually beneficial partnership that can unlock significant potential in the markets
Innovation Infrastructure
meets
EFL
• Provides intellectual property • Provides strong balance sheet
• 30 - 40 minute assessment • 17 country Africa portfolio
• Reduced documentation • Established brand
requirements • Operational experience
• Automated and scalable • Innovative expansion plans
• Resistant to gaming
4
Overview of Operating Model
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• Program utilises a mobile workforce out in the market
complimented by local branch access
• EFL tool is a portable, user-friendly device with
programmable language capability
• Products have “no hassle” designs, requiring no collateral,
financial statements or multi-person guarantees
• With little verifiable business information, “seed loans” with
graduation plans help the Bank grow with the customer
5
The Customer Value Proposition
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Trader Unsecured Loan
It’s hassle free
We come to you for the application and you do not have to give
financials – just answer a few questions about you and your
business.
Unsecured
You don’t need to give any collateral, security or personal
guarantees.
It’s quick
We promise you quick turnaround times – results the following
business day .
No penalties
If you repay your loan early, we will not charge you any
penalties.
Plus...
With good repayment performance...you get access to a larger
facility. We’ll grow with you as you grow your business.
6
Introducing psychometric testing into the process
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Risk Aversion, Control, Attitude
Psychological • I like not knowing what tomorrow will bring? (Y/N)
Proprietary psychometric testing process Profile • I think more about my mistakes than my
accomplishments. (Y/N)
• 30-40 minute automated assessment
• Analyzes key dimensions spanning intelligence, Preventing Default
business skills, and psychological parameters • Do you believe that good guys come out second
• Measures the ‘jockey’ rather than the ‘horse’ Ethics & best? (Y/N)
• Do you think it is humanly possible for the average
• Technology developed by Harvard-based lab
funded by Google Honesty person to be completely honest on the job?
(Definitely Yes, Probably Yes, Uncertain, Probably
No, Definitely No)
Critical Thinking (Digit recall test)
Intelligence •
•
Person shown number for 5 seconds
Number is hidden for 5 seconds
• Person asked to enter number
• If number is correct, digits increase until a mistake
Experiential Knowledge
Business • Have you in the past year compared your prices
Skills
with those of other traders nearby? (Y/N)
• Have you in the past year made a budget where
you estimate future sales and costs? (Y/N)
7
Case Study: The Role of Women in the Kenyan Economy
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“Women entrepreneurs in Kenya are generating employment and economic growth”
• Eliminating gender based inequalities and uplifting women is
one of the keys to economic growth
• UNDP estimates that 53% of rural women and 63% of urban
woman live below the poverty line
• It is also estimated that 85% of businesses in the informal sector
and 48% of small and micro-enterprises are owned by women
• Key challenges faced by women entrepreneurs include:
• Business skills
• Access to finance
8
Source: International Finance Corporation – “Voices of Women Entrepreneurs in Kenya”.
Results and Learnings
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Too early to interpret results but there are strong themes and promising trends...
Disbursement Distribution
• Strong demand and acceptance of new method Loan Size % of total
KES 25 – 50k 33.3%
KES 51 – 100k 24.3%
• Customized operating model supports market needs KES 101 – 500k 20.2%
KES 501 – 1m 22.2%
• Customers have broader banking needs than expected
• No defaults in first 6 weeks of pilot phase Test Distribution
• No weekly standing orders missed
• No 30 day + arrears
No
X Approve any SB
or EFL approval
to determine tool
effectiveness
Yes
Yes No
Combining the EFL innovation with strength of the Standard
Bank balance sheet and scalable operating model...
This new approach to the SME market can reach unmet
demand for capital measured in trillions of dollars
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