IN “The Asian Banker Philippine Country Award” held at Fairmont Hotel on October 6, 2017, our team represented our president, Cecile Borromeo, in receiving the “SME Bank of the Year” award for the institution we represent – the Development Bank of the Philippines (DBP). How we ended up getting that recognition is a road not often taken by many. But as Robert Frost expressed in his famous lines, there are times when “we doubted if we should ever come back.” Yet for us, standing for the MSMEs “has made all the difference.”
The Asian Banker Philippine Country Awards program provides the undisputed benchmark for measuring the performance of the best financial institutions in an increasingly fierce marketplace. This year, The Asian Banker research team assessed detailed submissions from the Philippine retail banking and financial services industry.
The program is also a repository of evolving best practices from which participants can benchmark their own products and processes over the long term in their pursuit for excellence. International assessors of the awards are themselves ex-practitioners with considerable experience who contribute their respective insights into the different aspects of retail banking, technology innovation, risk management, distribution strategies and consumer lending, among others.
In its press statement, the following were cited as key rationale for the award. One, the DBP demonstrated leadership in growing its SME business and creating value to its customers through its core strategy of availability, affordability and access. Two, the bank’s Sustainable Enterprise for Economic Development, or SEED Program, enhanced financial access and empowered marginalized SMEs by offering alternative ways of securing credit. Finally, DBP continues to fine-tune its technology to provide customer-centric services to SMEs.
The journey toward getting this recognition has not been easy. Four years ago, the bank’s SME loan book was at a virtual standstill because of issues in the organizational structure, managerial processes, people competencies, reward system and management information system. The bank’s SME initiatives were there but unfortunately not harmonized as several disjointed units were in charge. SME loans go through the same process as large loans with a circuitous route among different departments. As in most banks, there was natural risk aversion to process small loans due to policies on collateral, track record and the peso-driven targets for the marketing units.
We realized that SME lending required different types of competencies, especially in understanding client needs and matching loan products to SME requirements. A serious SME lending program needed focus as it is naturally more attractive to do big ticket loans. Likewise, there had to be values change as the ideal SME specialist is mission-driven, inspired and charged to accomplish a task that is vital to the development nature of the bank.
The bank embarked on a wholistic approach, integrating into one coordinated functional structure all the SME functions of the bank in order to come up with a cohesive, focused and more effective approach to serving SME clients. We likewise wanted a focused delivery network from the head office to the regions/branches anchored on DBP’s unique Development Sector. The people issue became the next challenge, and here, we did encounter initial difficulties. But we worked on identifying and training SME specialists from the head office to the regions, and we embarked on systematizing and simplifying loan evaluation and assessment, to make it different from the processes of regular, large loans.
Finally we reviewed our product lines and started introducing templates with simple products features, and had more active networking with SME advocates. We covered intervention needs in specific targets like women borrowers and cooperatives, agribusiness enterprises, contractors, social entrepreneurs and start-ups, and overseas Filipino workers.
With deep conviction in the hearts of the people behind it, the SEED Program was able to bridge the financing needs of MSMEs, promoted greater entrepreneurship, developed and stimulated local economies and created more employment and income opportunities, especially in the countryside. The Bank had an approved MSME roadmap anchored toward building an MSME-friendly DBP infrastructure.
Accepting this award was a humbling experience, like a tap in the back for all the hard work that finally paid off. We believe this recognition will further invigorate our commitment not only to the institution but to the Filipino people for whom we work, by persistently challenging ourselves to surpass what we have accomplished and contribute to ending the financial exclusion that exists in the country. To former DBP President Gil A. Buenaventura, who actually posed the challenge and laid down the foundation for this modest accomplishment, we also express our thanks.
Empowering Filipino entrepreneurs is key to boosting the Philippine economy. In the end, most roads will diverge and we all need to make a choice. If we aim to make a difference, sometimes we need to gather strength and choose the one less travelled.
Benel D. Lagua is executive vice president at the Development Bank of the Philippines. He is an active FINEX member and a long time advocate of risk-based lending for SMEs. The views expressed herein are his own and do not necessarily reflect the opinion of his office or FINEX.)