The Perspective of E-Banking in Small Business Banking Sector

Abstract

Small Business Banking (SBB) segment is one of the most important segments of the banking sector in Serbia because it includes different sectors such as entrepreneurs, micro and small enterprises sectors. SBB segment is the sector with the highest growth in the post-transition period. This sector is attractive for banks because of its profitability and risk diversification. E-banking is becoming increasingly important in business correspondence between banks and SBB customers. E-banking platforms, in addition to the functions of payment transactions, become an advanced communication channel when applying for micro loans in the SBB segment. This paper discusses the potential for development of advanced e-banking channels of communication in the SBB segment, with reference to the advantages and disadvantages as well as the risks of implementing this system. It compares the commercial banks in the domestic banking market according to the criteria and effects of e-banking in the SBB segment. The conclusion is that the application of this concept reduces operating costs of banks, increases profitability, but it also increases the risk of loans. Commercial banks should gradually and cautiously approach the implementation of e-banking in the credit process in the SBB segment, because it may cause an increase in the percentage of non-performing loans.