New Member Spotlight: BancoEstado de Chile

Our most recent member in Latin America, BancoEstado de Chile has the largest bank customer base in the country, serving more than 8.5 million people. It ranks No. 2 in assets and is No. 1 in accounts, deposits, mortgages, higher education loans and microenterprise banking, with 485,000 microbusinesses served — 40 percent of which are women-owned. BancoEstado also has a strong presence in the SME segment, serving 15,500 small and medium businesses. Jessica Lopez, Chief Executive Officer, 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 plays in supporting women.

GBA: How would you describe the current state of financial services for women in Chile? Are there any differences in access, quality or customer experience from that of men?

Jessica: Chile has achieved great gains in women’s access to financial services: Between 2002 and 2012, the percent of borrowers in the financial system who are women increased from 36 percent to 44 percent of the total. This undoubtedly occurred due to the large increases in female labor force participation. At the same time, however, Chile was recently ranked 119 out of 142 in Economic Opportunities and Participation by the World Economic Forum’s Global Gender Gap Index, which shows that a number of challenges still remain.

GBA: BancoEstado has a big share of the microenterprise segment through your subsidiary, BancoEstado Microempresas, and 40 percent of these businesses are women owned. By contrast, less than 20 percent of the SMEs in your portfolio are women owned. What accounts for women’s under-representation in the SME segment, and how does this frame how you are thinking of supporting women SME owners?

Jessica: As reported by the OECD, there are fewer women entrepreneurs globally, women-owned SMEs tend to be smaller, and they also tend to cluster around less capital-intensive sectors. These and other factors negatively affect their businesses, and many exhibit lower sales, profits and labor productivity as a result. Women are also less likely to borrow in order to launch or operate their businesses.

These trends can be very clearly observed in Chile, where 36 percent of the owners/managers of microenterprises are women, while women own or manage just 20 percent of small enterprises, 10 percent of medium enterprises and 5 percent of large enterprises. These trends are reflected in BancoEstado’s portfolio, as well. What we see is that women face more barriers than men when developing a new business, and these barriers are becoming larger as the size of the company increases.

In regard to access to finance, the World Bank Enterprise Survey shows that there are significant differences in the behavior of men and women entrepreneurs in Chile when it comes to borrowing from banks to finance investment. Only 16 percent of women owner/managers do so, compared to 45 percent of men.

It’s been proven, however, that these barriers have nothing to do with competencies or entrepreneurial spirit. They are due to a complex socio-cultural phenomenon related to the roles traditionally assigned to women and transmitted to girls. For example, the responsibility of childcare and family-member care is traditionally assigned to women, which means that women have to combine their family responsibilities with their income-generating activities. As a result, their range of income-generating activities is narrower, and in many cases they are less profitable. We experience these realities firsthand when talking to many of our customers — especially micro and small business owners — who report how their traditional roles have limited their access to information and the knowledge they need to develop businesses, as well as their access to networks.

GBA: What does BancoEstado do currently to support SMEs, and what will be new for women business owners in particular?

Jessica: Within the national Agenda for Productivity, Innovation and Growth announced by the Chilean government, we have established several measures aimed at financing and supporting SMEs. One of these is the establishment of our program Woman Entrepreneur Grows, aimed at supporting women as they establish and grow businesses. The program will be launched in March of 2015, and we will gradually roll it out to all regions of the country.

Our initial diagnostic concluded that women entrepreneurs face three barriers: gaps in access to the financial system, gaps in management competencies to grow businesses, and need to strengthen social and business networks (social capital).

This program will offer our women customers a comprehensive advisory service on the most appropriate financial products and non-financial services.

While our existing range of financial solutions will not be adapted, as they are comprehensive, we intend to develop a non-financial offering to include access to information as well as education, including online trainings, advisory programs, workshops and training sessions. The program will also feature an online and phone platform and an event calendar to promote events for women.

In its first stage of implementation in 2015, the program will target low-income entrepreneurs. We will then move up to SMEs.

GBA: A lot of women-owned businesses would be categorized as “start-ups.” Does BancoEstado have a strategy for start-ups?

Jessica: We currently do not have a product offering for start-ups. However, we are considering developing an offering in 2016 that would include specific products for early-stage women-owned businesses — which are not always an obvious focus for banks. We are currently working with some institutions — mainly CORFO, an organization focused on economic development — to define how banks can support start-up women entrepreneurs. CORFO reports that currently only 15 percent of the start-ups they support are women-owned.

GBA: Are you looking at other segments for your Women’s Market program?

Jessica: It is important to note that the bank’s gender approach is not exclusionary. We offer services to everyone, but we are focusing on the removal of barriers that limit women’s access to the financial system.

Our initial segmentation analysis differentiates employed and self-employed women. In the case of the self-employed, we found that the total sales of the business is the variable that has the highest impact on the needs for financial as well as non-financial support. For instance, in the first segment — which features lower sales levels — the issues faced are mostly related to socio-economic vulnerability and subsistence, whereas the segment with the highest sales has very different challenges. The Woman Entrepreneur Grows program, in its first stage, will focus on this first, lower-income segment.

GBA: What will you do to gain buy-in from the staff around this strategy?

Jessica: As a bank we are convinced that to implement any new program, all staff must clearly understand and embrace the meaning and importance of it. That is why we are investing an incredible amount of effort into explaining the program and training all teams involved — especially those who will be serving women directly — on the program features and, most importantly, why and for whom we are doing this.

GBA: On a separate topic, we understand that Chile’s regulator (Superintendencia de Bancos de Chile) requires banks to report sex-disaggregated data. When did this start, and how easy is it for banks to report the data?

Jessica: The SBIF has published an annual report on “Gender in the Financial System” since 2001 to study gender in the national financial system. The information produced by the SBIF is useful to monitor the progress made in closing the gender gap in access to the financial system. However, the information related to businesses has a degree of distortion given the difficulties in determining the sex of who makes the financial decisions in the business.

GBA: BancoEstado has been named the Best Place to Work in Chile and Latin America numerous times. Considering that a large percent of your workforce is female, what kind of policies do you have in place to achieve this?

Jessica: It is important to note that these awards were received by our affiliate, BancoEstado Microempresas. To achieve this, BancoEstado has implemented a wide range of policies and benefits that promote female employees’ well-being and development. Some of the most important ones include education scholarships, training, maternity leave benefits (pre and post), flexible working hours, personal development workshops, preventive health screenings, birth bonuses, etc.

GBA: How did you first hear about the GBA? Why did you decide to join?

Jessica: As a public bank, BancoEstado has a strong mandate to promote gender equity in the financial system. With that in mind, we also believe that our services are for everyone, without any exclusion. To ensure these principles are acted on at the depth and speed that we would like, we must learn from others who have more experience in this area. GBA provides us a great platform to do this.

—As told to the Global Banking Alliance for Women