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JEDDAH: ARAB NEWS
Published — Saturday 19 July 2014
Last update 19 July 2014 1:04 am
New report shows that capturing SME segment is critical for GCC banks to retain competitiveness and spur private sector growth.
Capturing the SME segment is now a critical strategy for large banks in the GCC and is no longer limited to smaller retail or specialized banks.
From Saudi Arabia through to Oman, increased governmental and policy focus on scaling established SMEs, entrepreneurship support and a restrained SME credit market is providing the opportunity for banks in the GCC to seize a “first-mover” advantage and innovate its products and services to tap into SME segments.
Global best practices in SME banking show that banks can derive over 60 percent of its revenues from supporting SMEs, specifically through the introduction of non-loan based products and services.
For GCC banks to penetrate this segment and create returns from SME clients, they should pursue an execution strategy that is consumer-centric, and focuses on enhancing client relationships and transaction-based products.
The report titled “Innovating SME Banking in the GCC” released by de Kerros & Company addresses how banks can seize the largest untapped market opportunity, strengthen their market share, and deploy new tools that optimize serving SMEs, while mitigating risk and operational costs.
“Micro-enterprises and startups can easily access finance and benefit from dedicated support services within the entrepreneurial ecosystem,” says Tatjana de Kerros, managing partner of de Kerros & Company and author of the report.
“However, existing SMEs who are more likely to scale and exponentially contribute to job creation and economic productivity are being neglected in the Gulf. Banks have a unique opportunity to capitalize on this segment by optimizing financial and non-financial product and service offerings that meet the operational and growth requirements of SMEs, while increasing their returns and supporting private sector growth,” he added.
With bank lending to SMEs standing at just under 2 percent in the GCC according to the IFC, the debate needs to shift away from the lack of credit supply, to how to meet SME demand. Such an approach will increase banking engagement, identify market gaps, and engage financial, private and government actors to better mobilize resources to increase the productivity of SMEs and position them as vital elements of economic growth.
The de Kerros & Company is described as the emerging leader in strategic consulting, specializing in techno-policy, innovation and economic development for GCC markets. It advances solutions and know-how that enable institutions, organizations and regions to catalyze knowledge-based-competitiveness.
Transforming ideas into tangible growth requires re-imagining, re-inventing and re-designing the way institutions and systems interact in an increasingly complex environment.
The mission of de Kerros & Company is to support its clients in achieving long-term success, pioneer-thinking and meaningful, long-term results by co-creating solutions for the most pressing challenges to economic sustainability and competitiveness.
Its solutions and applied expertise include economic and industrial development; entrepreneurship, new venture creation and spin-off’s; national innovation systems and infrastructure; institutional development and policy planning; program ideation and implementation; custom research and future planning, future studies and horizon scanning.
The Bayt.com’s Fresh Graduates in the Middle East and North Africa survey, recently conducted by Bayt.com, the region’s number one job site, and leading market research agency, YouGov, has revealed that despite the majority of respondents in the Kingdom stating that finding a job is a challenge faced by their generation of fresh graduates, 82% are considering entrepreneurship as a viable career option.
Six in 10 graduates completed their most recent qualification in the Kingdom, with 26% having studied engineering as well as Information Technology/computer science as part of their highest degree. Some 67% were satisfied with the quality of higher education they received, considering the preparation it gave them for the workplace to be mostly ‘good’ (28%). Teaching methods, quality of infrastructure, technology usage for effective teaching, value for money paid, curriculum and qualification of teachers are also considered to be ‘good’ by Saudi graduates.
The majority (53%) do not feel that they would have fared better in the job market if they had chosen a different major or different school, with 66% stating that they considered the job availability in the field they chose to major in prior to enrolment. The majority of working respondents (67%) are currently employed in their field of study.
According to Saudi graduates, the most appealing industries from a career point of view are banking and finance (24%), business consultancy, business management or management consulting (28%), and IT (21%). A fifth of respondents (22%) state that their education prepared them to target the industry of their choice only to ‘some extent’.
For three in 10 respondents, the most important attribute when selecting a job is experience in the field they want to work in, followed by a high salary.
When seeking their first job, 83% of graduates used or plan to use leading online job sites. Direct applications to target companies and finding a job through their network of family and friends are also highly used.
Most graduates (67%) feel that the biggest challenge they face in finding a job is that employers are looking for candidates with previous experience, though knowing where to find relevant jobs is also considered to be a challenge by 43%.
Salary expectations for fresh graduates are high: 18% expect to receive between US$2001-3000, while 20% anticipate US$1501-2000.
According to 76% of respondents, their college or university did not help them to identify job opportunities. – SG
For those whose colleges assisted them, career fairs (48%) and assistance in writing a CV and cover letter (44%) helped them.
Almost six in 10 (57%) respondents acquired work experience either before or during their time at university, with 48% having spent 1-6 months in a work placement.
Some 71% of graduates are planning to pursue higher education, with the US being the most popular destination to do so outside of their country of residence. Graduates are also keen to travel abroad for employment purposes, with 55% stating they will consider relocating for a job. They would prefer to move to the UAE (55%), Qatar (35%), or the US (30%).
When asked what challenges their generation face the most, 78% stated that finding a job is a challenge. This is followed by being able to financially afford a basic lifestyle (30%) and saving money (43%). 60% claim there is a low availability of jobs for fresh graduates. However, 25% claim to be very optimistic that their generation has better career and educational opportunities in comparison to their parents’ generation.
Some 62% of graduates consider computer skills to be among the most important skills required to excel in the workplace, followed by academic and technical skills (44%) and linguistic skills (41%). They consider their skills in negotiation, problem-solving and analytical thinking, academic and technical skills to be ‘good’; they consider themselves to be ‘very good’ in leadership, linguistics, communications, computers, interpersonal and team playing skills, and flexibility. – SG