Challenges Facing Rural Banks Presentation by: Atty. Arifa A. Ala 12 November 2013

Main Challenges Stiffer competition Changing environment/market Building talents/expertise Building capital Strengthening management Common management issues

Stiffer Competition in the Market Big banks start to serve rural areas Economies of scale; wider network More expertise in marketing/launching products More innovative More competitive interest rates Impact on rural banks Loss of customers Lower margins

Changing Environment/Market Customers are more demanding Technology is rapidly changing; increased IT risk exposure More regulations

Building Talents/Expertise Difficulty in attracting and retaining pool of talents Big players offer better compensation packages Many professionals prefer to work in urban areas Better career prospects in bigger institutions

Building capital Compliance with capital requirements Expansions require additional capital Challenges in attracting investors Especially for financially-challenged banks

Strengthening Management The need for - More active board and management oversight Establishment of appropriate risk management system

Common Management Issues In some, management is confined to family members Limited technical capabilities and experience of people running the banks

Management Issues Limited workforce results in- Overlapping Function Weak segregation of duties Conflicting functions

Thank you aala@bsp.gov.ph