Mr. José Freitas de Araújo was born in Lisbon and obtained a degree in BA in the Economical University of Lisbon. In 1983 he started working for Price Waterhouse. After one year experience he moved to banking area and has worked in four different institutions during past 23 years: Banco Purtuguês do Atlântico, Lloyds Bank International, Banco Comercial Macau and finally Millenium Bcp, where he has consolidated his career for the last decade. Hs professional experience includes various job positions such as Commercial Retail Director, Commercial Business Director and Clients Director. Currently Mr.Araujo is the Business and Corporate Marketing Director and is responsible for all offers targeting the middle business segment and corporate segment of the Millenium Bcp group in Portugal. He is also board member of LISGARANTE a “Societies de Guarantee Mutual”. Mr. Araujo was one of the top speakers at the SME Banking in Europe:Keeping Pace with SME Growth (11-12 February 2008 in Vienna) conference.

1. What are the main challenges banks are facing when dealing with SME markets?
In our opinion, the main challenges that Banks face nowadays when approaching the SME market can be summarised as follows:
a) Increase competition in this segment, where all the Banks are putting a strong commercial effort, and resulting in high pressure on prices;
b) Better knowledge by the customer of the bank’s products and services, leading to a higher bargaining position in terms of negotiation;
c) Shopping decision more and more related to pricing and less to the existing relationship with the Bank, leading to a greater pressure for price reduction;
d) Increase sophistication of SME’s needs, as a result of the higher profissionalization of their structures, namely hiring CFO’s with great experience and expertise on financial area.

2. What are the latest trends in SME banking?
As per our observation of the SME’s market, the main trends we identify are:
a) Superior importance of non-traditional channels, with customers presenting a greater propensity for the usage of internet banking as a source of decreasing costs in transaction;
b) Greater tendency to shop-around, obtaining 3 or 4 proposals before taking the final decision, namely in what concerns credit lines;
c) Tendency of SMEs to outsource its activities not directly related to their business, for instance in collections from customers and auto fleet management (opening opportunities for factoring and renting solutions);
d) Increase internationalization of SMEs, leading to strong investments on the modernization of their production line and the establishment of local partnership in the potential markets.

3. What are the cornerstones of Milleniumbcp’s SME Models?
At Millennium bcp, the approach to SME is made directly by two networks:
- Retail Network (regarding customers with a turnover of up to 7.5 million euros)
- Commercial Network (customers with a turnover between 7.5 and 100 million euros).

Regardless of the network, our main moto is always to optimise the service and the solutions presented to the customers, in order to best serve its specific needs and thus obtaining the maximisation of sales. The Customer and its needs are the focus of our commercial activity.

To best achieve this strategy, a new innovative model was implemented – Integrated Corporate Plan -, allowing the commercial area to establish a one year plan to approach the customer, identifying the needs of each customer and the corresponding solutions the Bank has to offer, as well as to evaluate his potential profitability and value added.

This new model can be summarised in four activities:
a) Understanding the customer’s industry and business, in order to typify the customer’s needs;
b) Identify the potential opportunities regarding the industry and the business of the customers and evaluate their potential value, in terms of profitability and value added;
c) Establish goals to attain in the relation with the customer and define a plan of contacts directing to the fulfilment of the set goals;
d) Register all interaction with the customer, which may lead to the identification of more opportunities and to a better relation with the companies.

With the application of this model, Millennium bcp aims to establish a clear and complete approach to the customer taking into account, its needs and the profitability it brings to the Bank.

4. How do you evaluate and measure the success of your model?
Each Relationship Manager (RM) is responsible for the creation of the ICP regarding his Clients; identifying his needs, analysing its potential and the value added they might bring to the bank and defining the plan of contact to be met. This process has an annual periodicity and is validated by the entire Commercial Hierarchy: Branch Manager and Commercial Director.

The ICP each RM establishes is introduced in a Central Application, which enables the Commercial Hierarchy to have an online knowledge of the execution of the Plan, the opportunities identified and the potential value that their achievement might achieve.

Throughout the year, corrective actions may be implemented in order to comply with the set objectives and the additional information the RM obtained from the customer.

5. What are the key learnings and feedback on this model?
As previously said, through this model, we aim to obtain a better understanding of the customer and its needs, directing the commercial action more to the profit of the customer and a better organization of the Relationship Manager’s time and activity.

In what concerns the commercial area, after a brief initial period of adaptation, they now regard this new tool as a potent application, namely in terms of the evaluation of opportunities detected, enabling them to focus on most profitable customers and establish a more close relationship with this segment of companies.

6. What are the best techniques to maximize sales opportunities in SME markets?
The model we implement reflects, in our view, the best techniques to maximize sales opportunities in the sense that it corresponds to a previous identification of the specific opportunities of the customer, enabling the commercial area to correctly direct its efforts, maximising the customer satisfaction by proposing the right solution the specific need and, at the same time, concentrating on the Bank’s profitability.

The fundamental part is to present the RM with the most effective way to best organize its commercial activity, namely by:
- centralizing, on a single application, the access to all information regarding the customers, avoiding time wasted on administrative tasks;
- enable the direct coordination between the work schedule and other tools;
- creating some centralized opportunities, according to specific logarithms, related to practices by fellow companies operating in the same industry, target credit and application quotas, etc;
- listing future events (ex: maturity of credit or applications) allowing the RM to establish a pre-emptive commercial action with the customer;
- accessing the Business Dossier of the customer, where its main indicators are presented and the comparison with the industries averages is established;
- filing a visit’s report, stating the result of a contact made with the customer.

In this way, the RM has the possibility to establish an agenda of contact, thus making it easier to organize its day-to-day activity.

7. What do you think, how will the future expansion of Euro-Zone affect SME banking?
In our opinion, the major effect will be in SME banking will be in result of the implementation of SEPA – Single European Payments Area -, that will result in an increase of competition between banks, causing greater pressure on pricing.

This expansion, may also constitute an opportunity for banks to launch international operations and diversify its markets to locations with show a economic growth.

Millennium bcp is an example of this late factor, viewing the expansion of the Euro-Zone as a business opportunity, creating operations in two different countries:
- Poland: launched in 1998, presented, at the end of 31st December, a total of 410 branches, with 967.000 clients;
- Romania: this operation was launched in October 2007 with the opening of 41 branches on the first day.

Conducted in February 2008 in Vienna