JMMB commercial bank to target SME services

BY AVIA COLLINDER Business reporter

Tuesday, October 04, 2016

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Jerome Smalling, CEO – JMMB Merchant Bank said the finance house, which is on track for conversion to a commercial bank, will introduce new products and services for small and medium-sized businesses, a market which he indicates is currently underserved.

In September, the JMMB Group of which the merchant bank is a subsidiary received the go-ahead from the central bank to begin the licensing process. The merchant bank, with under $33 billion in assets, will rank among the smallest in a group of seven or eight — depending on when the other entity granted a green light, Jamaica National Building Society, joins the commercial club.

The island’s six licensed commercial banks have assets of just over $1 trillion as at July 2016, with 80 per cent of that belonging to the National Commercial Bank and Scotia Jamaica Group Ltd.

JMMB bank, Smalling says, will introduce demand accounts which is likely to lead to clients using JMMB for all their banking needs.

"The inability to offer on-demand accounts prevented JMMB from providing clients with the full suite of banking products, despite their expressed desire to make JMMB their primary financial institution, in some instances," he told the Jamaica Observer yesterday.

SMEs, he added, will also be targeted. "We anticipate significant benefits to the small- and medium-enterprise (SME) sector, which is currently experiencing challenges with receiving particular banking services. This anticipated growth in client base and financial solutions is expected to increase the bank’s earnings, which will add value for shareholders."

Smalling said that over time, the bank intends to introduce all the products and services offered by traditional commercial banks.

"Though we are not able to share a specific timeline at this time, in the first instance we will be offering demand deposit/chequing accounts which could not be offered under the merchant banking license, because of the requirement to have a 14-day hold on all deposits.

In relation to product and service pricing, Smalling said, "the focus will not necessarily be on pricing, as our surveys have indicated that service and value rank higher on the client value map. In this regard, we will be focusing on delivering the best advice available in the market. JMMB has built its business model on financial partnership with our clients, by providing them with the financial solutions that seek to help them achieve their financial goals; that will remain the focus of JMMB."

He concluded, "we believe that each institution will operate based on their own value proposition, which will no doubt drive the cost experience for clients. The JMMB Group, however, has a conservative fee guideline, which has seen us applying minimum charges for the services that typically attract a sizeable fee elsewhere".

The bank is also likely to enter the lucrative credit card market which, as at August 31, 2016, was valued at $33.6 billion by receivables outstanding and recorded by the central bank.

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