Financial Product Design For The Batched Operation Of "Bank Of Handan Micro Loan"

Along with the further improvement of market economic system as well as the political support gained from the state, small and micro enterprises (SMEs for short), as an emerging force, have witnessed the leap-forward development both in terms of quantity and quality during recent years, played a greater role in Chinese market economy, and have become an important component in Chinese economic structure. However, while SMEs are in strong demand of financial services during its development course for long, some SMEs with low profit margin and in dire need of funds direct their eyes on the bank loan but step back. The reason lies in that it is hard for SMEs to obtain funds needed from formal financial institutions or they have to pay interest cost several times of that of their large and medium-sized counterparts and go through more stringent approval processes even when they are lucky enough to get the funds due to their small scale, little asset, and poor guaranty ability. For commercial banks, the traditional loans for SMEs are characterized by small amount of loans, high cost and low profit margin, hence an unsustainable business. Thus, the financing difficulty of SMEs has become a general concern during recent years. Particularly, since the financial crisis, the downturn of China’s macro economy, the stagnant foreign trade, as well as the rising labor cost and raw material cost, have all contributed to the plight of capital shortage faced by most SMEs. Meanwhile, while the financial market has deepened its reform and financial disintermediation has been strengthened, traditional profit margin of the Chinese bank industry has been narrowed, resulting in the further expansion of the distribution chains of various banks. At present, SMEs have gradually emerged as the main battle field of various commercial banks, for which, it has become a top concern to explore sustainable credit technology designed for SMEs based on their actual conditions.By bringing into full play of their own advantages, and making full use of such features as short decision-making chain and their close understanding of SMEs, the urban commercial banks have made active efforts to develop micro loan business and innovative products for SMEs on the new competition field. Currently, two main operation modes are available in the actual business of micro loans, namely, the "one-to-one" single client marketing, and the batched operation. As for the former operation mode, it is indispensable to train the account managers and set up the marketing terminal at the very beginning of the loan business for SMEs. However, during the business expansion process, the operation mode has refrained the further development of the SMEs loan business due to its higher cost, and lower efficiency. And batched operation has turned out to be the unanimous choice of the urban commercial banks with solid SMEs loan business foundation, as well as the development trend of SMEs loan business.After two years into cooperation with Deutsche Postbank AG in SME loan business since the early2011, Bank of Handan has made great achievements. As the traditional "one-to-one" business mode can hardly satisfy the business demands with the gradual expansion of business, and the constant growth of the team, Bank of Handan has basically met the requirements for batched operation with the cultivation of a batch of professional and mature account managers, and the establishment of brand awareness to some extent. Right now, designing the financial products suited to the batched operation has become a burning question for SME Loan Center of Bank of Handan to tackle. In combination of theory on SME loan business and reality of SME loan business practice of Bank of Handan, the paper strives to work out financial innovative products suited to the batched operation of SME loan based on the actual situation of Bank of Handan, so as to improve the market competitiveness and economic effectiveness of the SME loan business in Bank of Handan, provide the wide SME loan clients with more convenient and lower-cost financial services, and make sound explorations to improve the relevant theories on SME loan business of the regional small and medium commercial banks.