Financial institutions

Strategy and model to consolidate Brazilian bank's lead in small business

The small business banking segment in Brazil was growing fast and increasingly becoming more professional. This trend presented a huge opportunity for banks in terms of offering credit and other financial products and services. One of the leading, privately owned banks already had a large penetration in the small business segment — greater than 70 percent. However, it had a low share of its customers’ wallet, mostly due to the lack of a structured value proposition and service offering. Therefore, competitors were gaining space in this segment.

Challenge
The bank was challenged to better understand the small business market, develop a compelling value proposition for these customers, and design a model that would deliver effectively and profitably. The bank engaged A.T. Kearney to help obtain these objectives — and ensure the bank's leadership in this market.

Approach
The project was structured in six major steps. The joint bank / A.T. Kearney team:

Conducted a segment analysis, including market characteristics and trends
Benchmarked the bank’s main competition and assessed them against the bank’s retailing service model
Developed strategic alternatives, detailing market positioning, a new business model, and customer offering
Conducted financial modeling and a feasibility study
Designed a robust business plan for the selected model
Developed an implementation roadmap, including responsibility matrix, pilot, and risks and implications

Results
The bank has implemented this new model that consolidates its leadership position in the small business market. It successfully is meeting revenue and targets within the range of projected results:

Revenue growth of 15% - 20% average per year (for 5 years)
Profits growth of 22% - 28% average per year (for 5 years)
NPV of R$ 10 billion - R$ 12 billion (for a period of 5 years)

Full implementation of the model and comprehensive roadmap was conducted over a year, with positive results starting to appear after the first four months. The roadmap comprised detailed plans for all key areas, such as organizational structure, human resources, training, performance management, technology requirements, distribution channels, product specifications, and marketing.