Compartamos is the largest and most profitable microfinance institution in Mexico. Follow Compartamos’ transformation through the stories of the people who make it tick.
"Transforming Compartamos" Episode 1
"Transforming Compartamos" Episode 2
"Transforming Compartamos" Episode 3
Transforming Compartamos: Episode 1
With over 300,000 clients, Compartamos is the largest and most profitable microfinance institution in Mexico. Founded in 1990, its success has been achieved by maintaining a laser-sharp focus on efficient, scalable credit delivery. Until 2002, it had only one standardized credit product: village-banking-style group loans to rural women. This “mono-product” status allowed Compartamos to deliver credit cheaply and quickly to thousands of new clients per year. At the same time, Comparatmos recognizes that its clients’ financial management needs are too varied and complex to be satisfied by a single type of loan. So Compartamos is undertaking an ambitious transformation: from a credit-only MFI into a full-fledged bank offering a complete range of financial services, including savings and insurance.
Will Compartamos succeed in its ambition to become a full financial intermediary? We will follow Compartamos as it changes its products, personnel, and personality to better serve its clients’ diverse financial service needs. Specifically, we will follow the people that make Compartamos tick – examining their hopes, fears, and challenges in taking Compartamos into uncharted business territory.
Gonzalo Ramírez Reyes, Manager, Savings Mobilization Project
“Savings will be the ‘detonator’ of Compartamos,” predicts Gonzalo, who has spent six months working on Compartamos’ savings mobilization feasibility study. “The introduction of deposits will mean radical changes at all levels of the organization. Savings can’t be seen as just another product – they entail a change in our legal status, which will in turn trigger serious changes to our structure and organization.”
“One example is the way we discourage internal fraud,” he continues. “Right now, Compartamos staff is not allowed to physically touch clients’ money. And we make sure clients know that at every meeting, for example, by asking them questions like ‘When a Compartamos staff member asks you for your loan service fee, what doyou do?’ The answer is that there is no loan service fee and that the clients should report the staff member to management! When we start mobilizing savings, we will have to come up with new anti-fraud mechanisms and ways of maintaining customer trust in the institution.”
| Savings can’t be seen as just another product – they entail a change in our legal status, which will in turn trigger serious changes to our structure and organization. |
Compartamos will probably require more branches, or at least service points, to capture significant deposits. This will prove to be an enormous undertaking in the restructuring of its branch network.
“Currently, clients can live up to two hours away from a Compartamos office,” Gonzalo explains, “But they usually do their Compartamos loan-related business at a commercial bank office much closer to their homes.”
Once loan repayments and deposits are brought in-house, the need to travel such distances may discourage clients. Compartamos is exploring a number of alternative branching strategies including technology deployment, mobile banking, and using correspondent services. The goal is to enable customers to transact business closer to their homes without incurring the cost of setting up additional full-service offices.
Ivan Mancillas, Director, Human Resources
Compartamos management knows that changing from an MFI into a bank will require personnel with different professional backgrounds than those currently in the institution. But they are equally determined that this new influx of people and skills should not change the institutional culture – “la mística” – that they think is key to Compartamos’ success. The challenge of upgrading skills while preserving the institution’s personality falls in large part to new HR director Ivan Mancillas.
“I’m not so worried about finding people with the right skills, but rather finding people with the right attitude,” says Ivan. “Making sure our people have the right skills is a question of improving our training programs and our selection process. Right now, I am working on developing a training model that can be delinked from the number of people being trained. To do this, we’re going to invest in a training team, decentralize our training [which currently takes place at the Mexico City headquarters], and start using distance-learning techniques so that thousands of people can be trained at a time. The system should also have the flexibility to incorporate new modules as we develop new positions, which is another major challenge.”
| But they are equally determined that this new influx of people and skills should not change the institutional culture – “la mística” – that they think is key to Compartamos’ success. |
To compensate for the loss of this opportunity, Ivan plans to introduce new ways to align individual staff with the institution’s vision. These include creating a dedicated Employee Services team to support projects like a new leadership program, which will help employees internalize the organization’s values. The Employee Services team will also be charged with developing a set of indicators that can be used to judge individuals’ “fit” with the institution.
“It’s difficult because we’re trying to develop indicators for subjective things,” Ivan explains. “For example, we’ll be trying to track the number of promotions and rotations that occur, to understand how managers are managing their people. We’re hoping that we’ll be able to combine the use of such indicators with tools like 360-degree evaluations, to make sure that each staff member is working well with their team and the institution as a whole.”
Ladislao de Hoyos, Regional Sales Manager
“My job is to ensure that we’re meeting our quantitative goals while adhering to our mission,” says Ladislao de Hoyos, who oversees sales at 50 Compartamos branches in northern Mexico. Salespeople cannot meet those goals without good products, he says, “Salespeople always want more products!”
“But,” he adds, “not everyone agrees” that more products are needed. Part of this ambivalence is due to Compartamos’ mixed record with product diversification in the past. “Our solidarity groups and individual credit have not met their goals,” he explains. “We tried to replicate urban products from other markets in Latin America. We had fast growth initially, but risk and arrears also went up, and there was some fraud.”
| We tried to replicate urban products from other markets in Latin America. We had fast growth initially, but risk and arrears also went up, and there was some fraud. |
“We also hired dedicated sales personnel for our urban products,” he adds. Ladislao feels that the ability to deal with more sophisticated customers could make these newer loan officers well-suited to selling deposit products, which Compartamos plans to market not only to existing customers but also to a new, slightly more upscale clientele. However, he is not ruling out hiring additional salespeople specifically to handle savings.
“The urban credit officers could also sell savings,” he says, “but the market and client needs for these two products will be somewhat different. Similarly, village banking officers could also promote group savings, but in practice we know that voluntary savings tend to happen on an individual basis. So we’re still evaluating and analyzing the best way to market new and diverse product lines.”
Read the second episode of "Transforming Compartamos."
Read the third episode of "Transforming Compartamos."