C' Kaan Gr

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DIFFERENTIATED SERVICE MODEL APPROACH
C. Kaan Gür SME Banking Coordinator
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Garanti Today
SME Banking in Garanti
Fragmented RMs for different sub-segments of
SMEs
Deepening the Relationship, Cross-Selling with
bundle products
Reaching out the SME Mass? Telemarketing and ADC
activities
3
A brief chronology
1856 Ottoman Bank founded by English
bankers1875 Ottoman Bank to become the
Central Bank of the Empire La
Banque Impériale Ottomane1946 Garanti Bank
founded by prominent businessmen of the
time1951 Dogus Group founded with
construction as main area1983 Garanti Bank
acquired by Dogus Group1996 Ottoman Bank
acquired by Dogus Group2001 Dogus Group banks
- Garanti Ottoman Bank Körfez Bank
merged2006 GE to acquire a 25 stake in
Garanti Bank2007 Garanti Bank reacquired 4,5
stake from GE
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Garanti Pre-eminent Banking Franchise

• Third largest private bank in Turkey
• Integrated financial services company
• Strong international recognition
• Technologically advanced, innovative and dynamic
• Customer-centric growth model w/ key focus on
  profitability and asset quality
• Ownership structure
• 51 owned by Dogus Group (30) and GECF (21)
• 49 in the free float
• GECF is one of the six primary business of GE,
  the worlds biggest company
• With AAA credit rating, GE has the highest
  corporate credit rating possible
• Total assets 795 billion
• Market Cap 355 billion

Garanti in Numbers
Total Assets
US 65 billion
Shareholders Equity
US 6,1 billion
Total Revenues
US 3,5 billion
40,4
ROAE (Annualized)
Market Value
US 18,9 billion
Net Income
US 2 billion
592
Branch Network
Customer Number
6,9 million
As of December 31, 2007
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Turkish Banking Sector Assets Major Players
Total Assets1 (US bn)
CAGR 28
436
Top 10 Private Banks 62
State Banks 30
Turkish Banking Association As of September, 2007
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Integrated Financial Services Co. Focused on
Retail
Corporate
Commercial
Payment Systems
Financial Subsidiaries
Insurance (20)
As of December 31, 2007
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Strong Multi-channel Distribution Network

Internet Banking

• gt1 MM internet bank active customers -- 25
  market share
• gt500K log-ins daily
• 8,5 MM transactions/mo
• Recognized as Turkeys Best Internet Bank

Branch Network

• 592 branches
• Presence in 71 cities of 81 - 88 coverage

Call Center

• gt2.6 MM calls/mo
• 2007 sales target1,5 MM products
• CTI workforce management
• Worlds 1st to receive EFQM Award

Mobilebank
ATMs

• 1.854 ATMs
• Cardless transactions
• Coin dispenser
• Golden network access 6K ATMs

• 1st in the world to allow money transfer via SMS
• www.wap.garanti.com.tr --1st internet bank access
  via mobile in TR w/o application downloads or
  activations

As of December 31, 2007
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Branch Network
71
Cities with Garanti Branches
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Cities without Garanti Branches
Garanti branches cover 88 of Turkey
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Garanti Awards

• Best Bank in Turkey (1994, 1995, 1996, 1998,
  1999, 2000,2002,2006 and 2007)

• STP (Straight Through Processing) Excellence
  Award
• by JP Morgan Chase, Citibank and Bank of New York
  (2006)
• Quality Recognition Award by Deutsche Bank
  (2005)

• Public News honored Garantis environment
  friendly Bonus Card with OSCARDS award (2007)

European Payments Consulting Association

• 2005 Garanti Bank's POS sharing agreement with Is
  Bank ranked second as the "Most Innovative and
  Advanced Vendor Developed Payments Service"
  category in the "Excellence in Payments" awards
  (2005)
• 2005 Garanti Banks Bonus Business Card was
  chosen The Most Innovative Retail and Corporate
  Payments Product in the Excellence in
  Innovative Payment Products Awards

• 2006 Turkey The leader bank in Visa Corporate
  Cards Transaction Volume

• Best Foreign Trade Finance in Turkey (2002 and
  2003)
• Best Custodian Bank in Turkey
  (2002-2003-2005-2006)
• Best Consumer Internet Bank in Turkey (from
  2001 to 2007)
• Best Sub-Custodian Bank in Turkey
  (2003-2004-2007)
• "Best Commercial Bank in Retail Services (2005)
• Best Consumer Internet Bank of Europe (2007)

• www.garanti.com.tr was named the
• The Best Internet Bank (2007)
• The Best Corporate Communication (2007)
• Best Finance Website and Best Financial
  Services Website (2004)
• "Best Financial Services" category (2005)

• Committed To Excellence (2004)
• GarantiCall center became the first call center
  in the world to be awarded by EFQM

• www.paragaranti.com.tr as
• The Best Financial Sevices Site (2007)

• www.evimgaranti.com as
• The Top-rated Professional Services Site (2007)

• Top Rated Custodian Bank in Turkey (1997-2006),
  10th time

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Garanti Today
SME Banking in Garanti
Fragmented RMs for different sub-segments of
SMEs
Deepening the Relationship, Cross-Selling with
bundle products
Reaching out the SME Mass? Telemarketing and ADC
activities
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GarantiBank and SMEs
1997 First bank to implement a project for SMEs
with the title Business Owner General Purpose
Programme

• 50.000 Customers
• US 70 Million Loans

• 2007
• Sector based Product Packages
• Agreements w/ Chambers of Commerce
• Garanti Anatolia Meetings
• Basel II Meetings
• SME Entrepreneur Magazine
• 444 KOBI (5624) SME Hotline

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SME Team What we do
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The Garanti difference key advantages over
competitors

• Began serving SMEs in 1997
• First bank to establish a separate business line

First mover

• Extensive use of alternative delivery channels
  for product delivery, service, marketing
• CRM applications for supporting sales team to
  sell products the customer has propensity to buy

Technology

• Experienced sales teams working as financial
  consultants
• Conferences, meetings, financial planning
  software for customers

Comprehensive financial services

• Sectoral Packages developed in cooperation with
  customers
• Protocols with Chambers of Commerce

Local and sectoral approach

• Meeting Anatolia, Basel II meetings and
  Trade Seminars
• Attend and sponsor major events like trade fairs
  and informatory seminars

Keeping the direct contact

• Branch Credit Authority
• Rating up to USD 200,000 -- Scoring up to
  USD 100,000
• auto / premises YTL 100,000

Swiftness
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SME Swot Analysis
Strengths
Weaknesses

• First mover advantage
• Technologically advanced infrastructure
• Comprehensive financial services
• Sector specific and local approach
• Keeping the direct contact
• Extended ADC network, user friendly preface
• Customer centric approach (NPS etc. tools)
• Current customer base

• Customer visit frequency still low to get in
  touch with all porfolio customers
• Low cross sell rates for new customers
• Competitors with higher branch credit authority
• Complaint management processes in need to improve

Opportunities
Threats

• No bank with SME Bank image
• Branch network still expanding
• EU membership in process
• Synergy with GE

• Imitation by competitors
• Foreign banks as competitors
• Competitive pricing by smaller banks

• () GFK market survey, 2005

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Garanti Today
SME Banking in Garanti
Fragmented RMs for different sub-segments of
SMEs
Deepening the Relationship, Cross-Selling with
bundle products
Reaching out the SME Mass? Telemarketing and ADC
activities
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Service Model
Branch
CRs
LOBBY
Medium Scale, Small Scale RMs
Customer Representative
Teller Area
Self Service Area
Sales Manager Reps for Retail Banking
Sales Service Area
SME Relationship Manager
Sales Relationship Area

• Medium Scale Customers
• Small Scale Customers
• SME Mass Customers
• High Investors
• Upscale Retail Customer
• Commercial Banking Customers

• Low Activity Customers
• Credit Card Holders
• Recently Acquired Customers
• Retail Mass Customers
• SME Mass Customers

Meeter / Greeter Area
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Our Strategies
Medium
Small
Mass

• Growth in volume
• Increase active product use
• Foreign tradecash management products
• Profit target per customer
• Establish credit limit per customer
• Intense customer visit
• Migrate customers to Commercial Banking

• Growth in numbers
• Differentiated pricing strategy
• Sales with sectoral packages
• Sell products by Sales Lead System
• Migrate customers to Medium Scale Segment

• Growth in numbers with the new customers
• Sales via Telemarketing
• Sell-Win bonus system for CRs sales
• Efficient use of ADC
• Create customer base for upper segments

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Key Elements of SME Banking Strategy
Strategy

• Utilizing current customer base while acquiring
  new customers
• Achieving bank cost/income levels through strict
  cost / income measures
• Preserving our margins and increasing SME
  profits
• Increasing customer profits and active product
  use in each segment through specific measures and
  customer visits
• Serving medium scale customers as potential
  commercial customers, creating cross sell
  opportunities for subsidiaries and other LOBs
• Increasing customer profits and active product
  use of Medium Scale customers by increasing
  wallet share in foreign trade volume and trade
  payments
• Selling bundle products to Small Scale customers
  and acquiring new customers
• Increasing active product use in Micro
  Businesses and Mass Market customers by using
  ADC, telemarketing and converting mass market
  customers into portfolio customers.

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Garanti Today
SME Banking in Garanti
Fragmented RMs for different sub-segments of
SMEs
Deepening the Relationship, Cross-Selling with
bundle products
Reaching out the SME Mass? Telemarketing and ADC
activities
20
Listening to Our Customers
How do we listen to our customers?
For a better Customer Experience...

• Current VOC
• NPS Surveys and Call Backs
• Customer Complaints Hotline
• Turkish Customer Satisfaction Index
• Customer Satisfaciton Loyalty Surveys Ads
• Ad Hoc Marketing Research
• Current VOE
• Employee satisfaction surveys
• Internal customer satisfaction surveys
• Employee workshops

• CEO mentions NPS on all occasions
• CEO sponsorship aligns the organization for a
  differentiated customer experience
• Internal web page for NPS (CEO letter, NPS info
  etc.)
• Employee suggestion sytem

• Planned after 1st NPS Deployment
• Exit surveys
• Customer Centricity Index (incl. mystery
  shopping)

NPS Findings
Marketing Research
Response Plan
Results Tracking
Customer Complaints
Action Plan
Employee Workshops
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What are the SME customers expectations?

• SME customers expect a better service from the
  banks by the reason of being service oriented
  customers.
• They want that banks communicate with them more
  often.
• They demand customized solutions according to
  their sectoral and local needs.
• They also need to have financial consultancy
  beside the standart banking service.
• Early detection of the customer needs is the
  corner stone of being customer oriented.

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Our recent market research points out that...

• Our customers are satisfied by our service and
  buzz about us.
• We provide a higher service quality than
  expected.

But...

• Top of mind level is unfilled for SME
  customers.
• SMEs dont position any Bank as Bank of SMEs

As a result of the survey the issues to be
examined primarily are
Creating Top of mind awareness for Smes

• The more buzz about our product or service (our
  technology, new products/services,
• service quality) obviously the more
  awareness exists.
• The more awareness exists, the higher the
  probability of being in that top of mind
  position.
• Increase of loyal customers and customer
  retention.

Differentiating our strategy from the
competitors...

• Our SME banking strategy is not only to offer
  appropriate solutions to the financial needs of
  this group but also to guide them to improve
  their manegement cabability.

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Innovative tools for communicating with customers
Understanding the management needs of the SME
business owner

• Meeting Anatolia, Basel 2 meetings
• Entrepreneurs Window and SME Entrepreneur
  Magazine
• SME Portal 444 SME Hotline

48 meetings 15,240 SMEs
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Innovative programs aimed at SMEs
Providing easier access to credit products

• 394 chambers agreements
• 224 craftsmans chambers agreements
• 111 agreements with chambers of commerce and
  industry
• 33 agreements with chambers of agriculture
• 26 agreements with chambers of pharmacist
• Special sectoral product packages since 2004
• 14 packages including tourism, EU fund,
  logistics, food wholesale, furniture,
  pharmacists, agriculture, taxi, exports, women
  entrepreneur, service, automotive, manufacturing,
  project loans
• Scoring and swift credit process, increased
  branch authority
• Loans up to USD 200,000

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Some of our sectoral packages
SMEs, who answer these questions, grow their
businesses.
Made in Garanti Loan for Made in Turkey
exporters
Increase your capacity with Manufacturers Package
Funds for turning wood to furniture, resources
for selling the furniture
Your general purpose package arrived just in time
Women entrepreneurs package
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Why sectoral packages?

• Each sector is a separate profile, with
  different banking needs
• Sectors have seasonal cash flows and have sector
  specific needs
• A Tourism Loan in Antalya cannot be repaid in
  winter
• Why a sectoral package?
• Create customer awareness My bank is doing
  something special for me
• Create sales team awareness Cross sell
  opportunity, address the needs of customer
• We tailor conventional banking products by
  sector specific modifications
• With sectoral packages, some products are
  emphasized
• Tailored according to the seasonal cash flow of
  the customer
• Either a grace period or no payment option at
  certain periods of the year
• Depending on the complexity of the payment
  structure of the sector
• Alternatives could vary from chequebooks to more
  complex direct debit systems

• And some insurance products
• Addressing insurance needs for reliance on one
  big machinery/reliance on one person
• Pension funds increasing employee satisfaction
  of the SME insuring the business owner

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Garanti Today
SME Banking in Garanti
Fragmented RMs for different sub-segments of
SMEs
Deepening the Relationship, Cross-Selling with
bundle products
Reaching out the SME Mass? Telemarketing and ADC
activities
28
Technologically Advanced, Innovative Dynamic
Pioneer in Banking Applications, Customer
Centric Services and Products...
Banking services, market data news via
Blackberry
Service network allowing sales from every point
Mobilebank
Change back feature in ATMs
Internet Bank
First cardless ATM transaction
Banking app. identifying customer need in advance
444 0 333 Alo Garanti
Qmatic service
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Alternative Distribution Channels

• TELEMARKETING
• Sales via telemarketing has got a call - sell
  ratio is more than 47
• Before sales call, the customers demographics
  and financial information and card expenses are
  controlled

• ADC (ALO GARANTI-INTERNET)
• When the customer approved, the product can be
  used without any other approval.
• 5 of total sales comes from Alo Garanti and
  Online Banking.

• SMS (Short Message Service) MMS (Multi
  Media Service)
• Product introduction and branch invitation are
  made by SMS and MMS.
• We enlist 30 more return rate in SMS and
  sectoral based SMS projects have higher customer
  return rate.
• MMS projects are done by regionally and branch
  specific, MMS customers are mostly directed to
  the branches.

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Conclusion
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Key Elements of Growth Strategy
Technology and People
Growth through Segmentation
Multi-channel Distribution
Efficiency Focus
Cross-selling and Fee Income
Highest Quality and Innovative ProductsServices
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Results Through Customer Centric Growth Strategy
Products Services
Technology People

• Customer focused innovative offerings
• Instant Loan
• E.L.M.A.
• Mobilebank
• Gani
• Flexi Card
• BonusTrink

• Strong CRM applications
• Propensity profitability analysis
• Advanced credit scoring
• Effective MIS applications
• incentive schemes
• Extensive employee training

Improving process services
Segmentation
Operational Efficiency
Customer
Delighting Customers

• Demographic, financial behavioral data to
  identify
• Customer groups by profitability
• Effective sales marketing approaches
• Customized service models
• Allocation of channel resources

Doubled employee productivity 97 centralization
ratio Optimized service effectiveness
Cross-sell

• CRM segmentation insights to
• Craft cross-sell strategies
• Monitor relationship status
• Identify selling opportunities
• Centralized direct marketing campaigns

Multi-channel distribution

• Wide and efficient branch network
• Leader in alternative delivery channels
• Internet, ATM, Call Center, Mobilebank

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