Our most recent member in Latin America, Banco Pichincha, has a 31% share of the Ecuadorian market, and is widely acknowledged in the region to be one of the best players in targeting different consumer segments. Guido Cordero and Maria Belen Sanchez spoke with the Global Banking Alliance for Women about the bank’s decision to join the Alliance, its hopes for the planned Women’s Market Program, and the role the bank can play in supporting women.
GBA: What barriers do women face in growing their business from ‘micro’ to ‘small’ in Ecuador?
The graduation from microentrepreneur to small business owner is very challenging in Ecuador. Many clients do not want to grow their business because this implies more onerous tax liabilities among other regulatory requirements. Business owners need financial education and business advisory to be able to understand and meet many of these requirements.
Women also face an important barrier in accessing finance because they lack collateral. In many instances, family assets are held in the husband’s name only and so it is difficult for a woman to show that she has collateral when she applies for a loan. (This is further complicated by the fact that in Ecuador, regulatory requirements restrict banks from lending to clients that do not meet a certain equity threshold). It is also a traditional society in which women have to prioritize family over business. We see that women working in the informal or ‘micro’ business sector tend to have more flexibility to work and take care of their families while growing to the ‘small’ business level requires more time and they tend to hand over their business to a family member. We have also observed that women with ‘micro’ businesses tend to invest a lot of their profits into health and education for the family, instead of reinvesting in the business, limiting its growth.
GBA: Banco Pichincha is the leader in market share in the country and serves all segments of the population, from village banking to large corporations. Why did you decide to develop a program that specifically targets women?
Six years ago we launched a program to finance Small and Medium enterprises (SMEs), with the support of the IDB. The program was very successful – we increased the number of SMEs that we served by an average of 7,500 annually. Currently, we serve about 100,000 SMEs. Of those SMEs that hold personal accounts (about 70,000), only 30% are women. (We are looking at ways to tag business accounts by gender, as our system is currently not able to do that). Because we have a relatively low percent of women in the SME portfolio while the market research reveals that women launch small enterprises in Ecuador at very high rates, we see an important business opportunity to be able to serve an untapped market.
GBA: What goals have you set for your Women’s Market Program?
The program is currently in the design stage and we will be working on its launch and pilot in 2014. We see two main areas of innovation in order to increase the percent of women in our SME portfolio.
- Design women-friendly loan policies for SME finance. The changes we will make obviously depend on what the market research says, but our preliminary research shows that women likely need longer loan terms and we are considering reducing collateral requirements, adding grace periods, and making other adjustments to credit policies.
- Reduce credit underwriting costs so SME finance can offer smaller loans to target ‘missing middle’-small but growing business segment where lots of women are located. The SME market requires a type of service that is similar to microfinance, in that it is very labor-intensive. Currently, all the information from clients is collected via hand-written applications. We are planning on automating this process through the use of tablets. Loan officers will be able to use tablets while visiting clients at their homes or businesses. This will allow them to increase efficiency, travel longer distances, and reach more clients. We also want to integrate psychometric testing into our underwriting process, which will help us give loans to women who do not have the credit histories that we normally require.
-As told to the Global Banking Alliance for Women
Banco Pichincha
AT A GLANCE
(as of July 31, 2013)
# of employees: 5,800
% female employees: 63%
# of full service branches: 229
# of ATMs: 738
# of clients: 2.5 million
% of female clients: 31%**
USD value of outstanding loan portfolio: $5.4 billion*
USD value of deposits: $6.5 billion*
(*as of November 30, 2013, **as of December 31, 2013)
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