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Compartamos: More Microloans In Latin America

Feature Article | July 9, 2014 by Theresa Böhme

Banking software from SAP is enabling Mexican bank Compartamos to simplify its processes and grant more microcredits to small businesses.

More than half the world’s adult population has no bank account and no access to financial products or services. Mexican bank Compartamos Banco specializes in granting loans for small-scale business and finance projects and also offers financial products such as savings accounts, bank transfers, insurance, and business workshops. The bank caters particularly to young entrepreneurs and underprivileged people in rural regions. Currently, it serves around 2.5 million clients and is helping a large number of individuals to realize their dream of being their own boss. “It was an opportunity for us to help a customer that’s trying to reduce poverty in Latin America and help citizens to a better quality of life,” says Rosa Chang, SAP value engineer for financial services.

Founded in 1990 as a non-governmental organization (NGO), Compartamos Banco is headquartered in Mexico City and is now the largest microfinance bank in Latin America. As well as lending money, it also offers clients training courses and workshops to help them acquire the business expertise they need to survive,such as how to run a business and how to deal with local bureaucracy. Compartamos representatives come to the customers directly and provide financial services and information on site. Edgar Valenzuela, SAP solution architect for financial services, explains: “Compartamos advisors interact with 90 percent of their 2.8 million customers on a weekly basis.”

Crucially, Compartamos Banco is encouraging women from rural areas to turn their business ideas into reality and supporting them to open up their own shop to sell artistic products. Chang explains: “In the low income segment in Latin American society, women are the foundation of the family. They use these micro-loans to build up a secure living for themselves and their families and thus afford their children a better education.”

Highly simplified processes with banking services

Compartamos Banco turned to SAP software to dramatically simplify its entire credit process chain – from loan approval to payment – and to streamline its IT infrastructure. Launched in 2013, the implemented software includes banking services, SAP ERP (FICAX), the SAP Payment Engine applicaation, and retail account origination for banking.

“We chose the SAP solution because it fits our requirements and allows us to gain maximum benefit from the information we have available. SAP is experienced in the banking industry, and particularly in the microcredit sector, so we are confident that we have the right resources at both regional and global level to ensure our long-term success,” says Fernando Alvarez Toca, general director of Compartamos Banco.

By implementing banking services from SAP, Compartamos has been able to accelerate its credit issue process and grant a larger number of loans overall. It currently processes an average of 4.5 loans per second on peak days and a total of 12 million loans each year. The bank also plans to deploy SAP Value Management to constantly monitor the quality of its services and thus verify that the software is making the desired improvements.

Compartamos’ mission is to offer financial inclusion to the largest possible number of people in Latin America in the shortest time possible and helping to open up new perspectives for these people.

Photo: Shutterstock

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