“The CEO is seeing the success of this data warehouse project, because we have the right information at the right moment, and he has access directly,” says Federico Hernandez, COO, Banco Compartamos
Features
Case Study
Small Loans,
Huge Impact
Micro-financing from Banco Compartamos empowers individuals to transform their communities.
by Jackie Zack
Growing up in southern Mexico, Marlene del Carmen Godoy Gomez learned to make dresses from her grandmother. When she decided to start her own dressmaking business, Marlene turned to Banco Compartamos for credit to purchase thread, buttons, needles and cloth. As her business grew, she obtained more credit to buy additional sewing machines, and she began her own line of bags and purses. Eventually she branched out, opening a cybercafe that offers mobile phone repair services. “I tell people to get Compartamos credits and to invest in their business,” she says.
Through countless stories like Marlene’s, Banco Compartamos has demonstrated the transformative effect its unique vision has had on impoverished communities. More than a decade ago, the company recognized that accelerated population growth in Mexico had surpassed the availability of jobs, leading many people to develop small businesses to make a living. In response, it began offering financial services to low-income entrepreneurs.
The bank provides loans (micro-credits) and insurance services, including free life insurance to all clients. Typical loans are about US$500 and are paid off in 16 weeks. “It’s a small amount of money compared with traditional products of banking institutions, but that’s why we are a very different kind of financial institution,” explains COO Federico Hernandez.
Clients consist of low-income entrepreneurs—98% of whom are women—in search of capital to create a better future for their families. The clientele includes small businesses that provide services and produce food, clothing, and arts and crafts.
Growing Pains
Established in 1990 as a nonprofit, Banco Compartamos became a financial institution in 2000. By the time it began operating as a commercial bank in 2006, it was encountering significant business challenges. Among the problems were increasingly high risk of fraud and less-than-optimal customer service.
To address these issues and create opportunities, Banco Compartamos began evaluating data warehouse solutions that could quickly provide up-to-date information for analysis to accelerate fact-based decision making and reduce processing time for credit applications.
“We wanted to offer our customers different products and services, but to do that required a single, online, integrated, customer view to better segment customers and to provide them the right choice,” says Hernandez.
The organization also needed to be able to predict seasonal product behavior and profitability, as well as reduce business users’ dependence on IT to develop reports. “One of the most important objectives was to have access to the information in the right moment when we needed it,” Hernandez recalls. “In the past, we had access, but sometimes we had to wait at least a week to get the right information.”
Overcoming Obstacles
Ultimately, the bank turned to Teradata. As part of the initial project, it utilized Teradata’s visual business discovery and EDW roadmap to create a visual planning model and a business plan to illustrate the concepts and values the EDW would address. The roadmap enabled the company to understand strategic and operational objectives and to establish the type of data required to accomplish those objectives.
“One of the best experiences was that we made a roadmap to start working together,” Hernandez says. “This was very important because we were able to involve the main users in the project. Once we made specific goals, we were able to develop the project phases to reach the end results. It was easier for the IT team to deliver results to the business areas and was crucial for acceptance of the project.
“There were other vendors that offered a variety of solutions, but Teradata had specific financial and banking models that were already in place,” he explains. “It enabled us to adopt the best practices at the beginning with immediate results that we could present to our main business units.”
Ready to Roll
With assistance from Teradata Professional Services consultants, Banco Compartamos began implementation in September 2007. “We made the implementation by phases. This allowed us to prioritize the objectives of the main users to acquire reachable results,” says Hernandez. “It was a very good approach because we were able to align the expectations.”
For starters, data regarding customers, employees, credit, insurance and risk were consolidated so the organization could:
- Enhance visibility and provide easier access to consistent, comprehensive information and feedback for better decision making
- Provide single-view reports and dashboards containing business results and goal achievements from different lines of business
- Gain comprehensive knowledge of customers and their financial behavior
- Create cost savings in time and people who had been focused on information consolidation, validation and maintenance
The bank also accelerated analysis of critical business information, including sales and credit trends, portfolio risk, profit and loss, and key performance indicators (KPIs). For example, it can monitor daily sales KPIs—such as total number of credits disbursed, loan capital portfolio, loan average per client, non-performing loan ratio and credit recovery. This enables the organization to identify risky customer profiles based on demographic and behavioral analysis, resulting in better risk management and a healthy portfolio.
Additionally, the bank’s commercial division now has access to unique customer information, including general and demographic data, and customer credit performance scores. It can perform historical analysis of payment behavior to set business rules and parameters while providing fast and accurate answers whenever needed.
“The CEO is seeing the success of this data warehouse project, because we have the right information at the right moment, and he has access directly. It is the same for the legal and governmental authorities and the board of directors,” Hernandez says. “As a public organization, that is very important to us.”
The EDW solution has automated the generation and distribution of 500 daily reports (formerly weekly) on business results. These reports are sent to the appropriate audience—from the board of directors to the branch managers—many of whom access them through mobile devices.
Looking to the Future
Having achieved impressive growth in clients, loan portfolio and net income, Banco Compartamos is already the largest micro-finance organization in Latin America. And it is poised to continue its mission and pursue plans to expand operations to other countries for the benefit of the bank, its clients and the greater community.
“We already have the solution with the data warehouse to integrate information if we purchase a financial institution,” Hernandez notes. “We are able to start thinking about the future, and we are prepared to make this happen.”
Whatever the future brings for Banco Compartamos, it will stay true to its mission of enabling entrepreneurs to transform their communities one micro-loan at a time.
Jackie Zack is a freelance business, marketing and technology writer based in Brighton, Mich.
Photography by Hector Armando Herrera