right. Good morning, everyone. Many thanks for hosting us today. This meeting is organized on the back of our brief encounter with the chairman during the airport we briefly discussed and brainstormed two main ideas, and we thought we'd kind of come over and double click on them further and then in the office, the first was kind of how we built on the success we had last year, and congratulations on the great performance, the great numbers that were released, and on winning the best experience for our banking application, we want to build on that further and optimize it, especially as we see, there are a few challenges. Customers are becoming more tech savvy, more digital e com transactions, so there is changes in pricing, increase in risk, so on and so forth. So Christian here we'll cover this for you on the second part, which I understand the chairman was very keen on, is new flows. How can we bring in and explore a new segment which brings new revenue flows to the bank, to both of us as partners, and we thought of discussing with you about the SME sector, which we believe is a topic very close to our hearts together. It is a key component in the vision 2030, of our nation, and it is something kind of in the vision of the bank, or its plan for the coming year, in line with the country's vision. Now in the Levant region, we understand that half of the Arab world's 100 top startups are based in the Levant region. And guess what? From what we have seen in other markets like UAE with Rio, once these startups find the right solution provider, they tend to be super loyal to them, much more than large corporates or consumers, and that's why Sara will talk to you more about that. So I'll let Christian start with the optimization, and then we move ahead. I'm
Christiano. I'm the head of consumer and visa. So thank you for your time following the conversation you have with Fatma. We understood that you have, you have have a great year with on the consumer side, but you have some concern around profitability, so therefore, we did a quick analysis of your consumer portfolio with us, and we have found that Your average authorization rate is lower than the market. So we deep dive to see the authorization rate on cross border ecom, and we find it also lower. So now what we have seen in the market also is when a consumer use a card like let's take an example. Your son go to a website to buy a ticket for a concert, and the card has money, but the card is declined, so your son will be will not use again that card most likely because it's a false decline. For him, he has money, but the experience is bad, so the consumer experience is negatively affected. So the other aspect, obviously, your payment volumes, obviously has a back because of those false decline, your transaction volume for your first decline are also affected. Right now. You have been a year in the product, you have scared. And then at visa, we have tools to help optimizing around authorizations, around what we can call we call it three Ds, but actually is to make sure that you can be confident in approving transactions, to increase your authorization rate and increase your payment volume and your number of transactions, so especially on E commerce, which is more profitable for you like, you know. But
I have a question, you know, I'm more interested in this year, and I want to really make sure that we have a good, you know, ENL. So in the past, the solution that we have received from visa, they have been very expensive for us, right? So whilst we talk about giving us a new solution to increase our authorization rates. Will this be as expensive as early or can you do something on the you know, incentives that you gave us on a general so,
like you know, when we launched business with you, we had some incentive, which will be using grow your business. View. So those incentives are applicable to spend on those solutions. So you can use the incentive to finance those solutions.
Sure. I mean, we can address that basis on our alignment and the numbers at the end, but I mean, let's, let's jump here, and then we see how we can use all this to meet your financial budget. Thank
you, Fatima. Thank you for hosting us here to the point that Fatima raised about how to increase the profitable of your business. So we are, we are seeing a segment that is not addressed yet in Lebanon, and it's a huge segment, and there is a huge growth on issue is the SME statements we saw in the profit plan. It's just sorry in the profit, the profit of Japan, because this year, is just 5% from the revenue is generating from this. So we need to focus on this, because if we didn't do things today, we will lose this opportunity. And just in the DCC measure of the major banks, they got this. So we need to work on this. So what we we offer here as a visa, we need to have a transition from consumer business to commercial business, because the commercial part is doing 3x what the consumer is doing. Now this is how our data is showing to us. So we are targeting, for the five for the next five years, to have 40% from your revenue from the commercial part. And this, we believe they will, it will increase your profit from 15 to 20% on the next five years in Salma. So we are offering us
priorities. Or is this what our banks priority? This is, let's say it's some unaware of this priority.
No, it's a new flow that we introduced you because we seen this is an opportunity. If you cannot get it, the other one will get it. So we need also, we are here to suggest to you a new flow that will maximize your profit plan. So we are working, we will work with your team, with your card team, to do that. And just
a question to his point, our underwriting capabilities in the SME section are pretty underdeveloped. We focus on consumer, yeah. So will visa be able to somehow bring insights on the risk associated to the SME sector? What more can you bring on the table? Sure, sure,
as you know, we have this partnership, and we have an incentive on the table. So definitely, we have a team for the PTA or the consultancy that we will will help you to identify how we can share this, what is the risk associated with it, and what is the suitable solution about it, and we know the time to market. It's very important here. So we are offering to build on top of your mobile app to provide you with SDK that doing innocent issuance for your SME.
I'm a chairman. I don't understand this.
Okay, it could be the mobile app, yeah, it's a feature that could be integrated with your mobile app, and the client could just issue the cards instantly. And this could be do, do in just four weeks. And this, we will provide it for, yeah, you can integrate directly, definitely, with your core banking and so on, but we will provide this on top for, let's say, one year from our incentive to
touch and to see recap, what's the technique? Technical support that is
available? Yeah, backlog, totally understandable. I mean, this is a very easy to integrate solution. Doesn't require a lot of development, and in case it requires any support, with kind of best practices and insights we can leverage some of our internal resources to support now we understand that this is a complete new idea that we kind of brought here, and some of this is just on back of our discussion to bring in something new that as a commercial segment, is not impacted by the pricing changes of the regulation, and That's why we thought we'd share this opportunity with you. We know it's completely new. So what we did is we did a little bit of analysis back office, and we'll share with you a calculator where you can put in some of your numbers of SMEs that you have in already and the ones that can be onboarded to see kind of what is the opportunity. You can look at what are the volumes, revenue, total that can be generated, and based that we can then discuss how we can put together a an agreement that kind of addresses your requirements from budget. Yeah, it's
like a small P and L. You can put what you are expected for the next five years, and you can see a. Are the profit that you can get
on the technical side, just to address it. So we work also with the nebulous FinTech which come between you, between both of us, and make sure that we can, they can do the up the heavy lifting for integrating ourselves.
So as a chairman, I received many proposals like this and from your competition also. So why visa?
Because the only thing I've heard is incentive, incentive, incentive. Is there anything else you bring to the table beyond incentive?
No, definitely. I think we bring a very unique solution that is ahead of competition. From a features and benefits perspective, they bring in a simple card solution, which has a lot of benefits, and we can share those in details with you, but we add onto it a platform that kind of help with spend controls and has many other technical benefits that could be could give you an edge in comparison to competition?
Are there any need? So we are talking about this one option of looking at the SME sector. Have you looked at any other areas, even in the consumer sector, for example, looking at my portfolio, my revolver rate is decreasing day by day. Do you think something can be done in the consumer space?
That's exactly what we were talking before. So as I said, as a bank, when you start your journey with Visa, so we start using on the basic to push to get the card out issuing. So next step now is to work on optimizing the authorization rate. So because we have now resizable portfolio. We have tools which leverage data on the visa net network, which help mainly identifying the first decline which are painful for the bank, but also for the consumer. Those are the solutions we are proposing. The other solution, obviously, is around loyalty, because you want to keep your consumer spending with you and spending more.
Actually, you were telling me that they had promised that project will be implemented within six months, between a year and a half. So any concerns there that things are promised but they are not done on time. I hope you don't see the same thing again. Yeah,
sure, sure, we have
technical No, I think we can get into further details on the technicalities. Of course, basically resonance and what you can do the year and a half was, was due to multiple which we can discuss a little bit if you want to, but for the purpose of the integration we are talking about here, it should be quite straightforward. But again, we can do a deep dive and get our technical team speak to your technical team to come up with a number or basis what you think is
required. And also, we have a technical program manager that we can be appointed to support you even with the internal processing we can accelerate.
So what is going to be the first outcome out of all these many authorizations? What am I going to see developed within the first iteration, I think
the very first is to move ahead with this project. This is something that you have today. We're just optimizing it and ensuring that you maximize your profitability out of it. And then in parallel, we would like to get your thoughts and inputs on moving ahead in the SME segment space that's a new area, but that is growing eventually, very quickly, so we would like to leverage the central economy together. I also want to add on top of that, our
GTA thing is with you guys, so definitely they will provide the team with you and try to find what is the most or the fastest thing that we gain with water. Any
other questions?
Question
change, and
that is time that's 15 minutes.
Kind of make a note that you're making the other team sweat. They're like, Oh, they're not going to be easy. To be so nice and easy. No, no, no, we got, we got some Levant. Commercial Bank does not come to play.
Be ready for anything. It's just like the real world. Yeah. Have let's see.
