Responsive microfinance for a changing economy: Colombia’s Bancompartir

During a recent work training in Bogota, Colombia, I had the opportunity to visit one of the country’s leading microfinance institutions (MFIs), Bancompartir. It originated literally from the ashes of a natural disaster — the eruption of the Nevado del Ruiz volcano in November 1985, which killed over 25,000 people. A small organization, Actuar, was created to form solidarity groups for collective savings and lending to help the homeless and suffering survivors of the volcano’s wrath.

In 1988, Accion partnered with Actuar to found a non-profit microcredit foundation. Over the following almost-30 years and several name changes, the non-profit became a regulated MFI and then received a commercial banking license. Today, Bancompartir serves over 400,000 clients across 93 nationwide branches, covering 60% of all microfinance borrowers in Colombia.

Bancompartir has adapted to changes in Colombia’s microfinance environment more quickly and effectively than its peers, consistently driving innovations across Colombia’s microfinance and banking sectors. For example, Bancompartir was among the first MFIs to offer individual loans, having realized that in a country where social trust had been shredded by an ongoing narcotrafficking-fueled civil war, solidarity-group lending could not be sustainable.

During our recent visit, my colleagues and I heard about Bancompartir’s strong commitment to financial education and respect for their clients. As with all MFIs, nearly all of its clients are financially vulnerable, and many experience shocks that affect their ability to keep up with payments. But its collections agents are trained not to harass delinquent borrowers, but rather to encourage them to visit their loan officer to renegotiate their terms. A prominently displayed poster reminds the call center that “Recoveries happen with a handshake, not with a net.”

When microfinance institutions transform from NGOs into regulated commercial banks, “mission drift” is a frequent result, as the added pressure of profitability may lessen their focus on loaning smaller amounts. Bancompartir has taken active measures to avoid this outcome, offering free savings accounts and first-cycle loans of as little as $80. The institution uses innovative technology to serve these small-amount borrowers, such as its “Credit Factory,” a team of 96 data specialists that compares each loan applicant against every other applicant that has ever been approved, rejected, repaid a loan successfully, or defaulted. The resulting credit score allows the bank to operate with an exacting level of efficiency; most borrowers learn within 4 hours whether their applications have been approved, with a loan disbursement typically offered within 24 hours of the application.

At the same time, Bancompartir seeks to serve its clients who may be able to graduate from microenterprises to consolidated businesses. To keep them from leaving for a more commercially-oriented financial institution, Bancompartir offers small and medium-sized enterprises higher loan amounts — up to $100,000, at low interest rates. The bank has also recently begun offering 20-year mortgage loans to low-income customers who could otherwise never afford to own a home. In all, Bancompartir offers 48 different lines of credit and 12 different savings accounts. This wide range of products enables the company to individually tailor the financial service provided to each client. Bancompartir’s commitment to customization and client satisfaction helped it earn a 4-Star SMART Certification in November 2014.

Bancompartir continues to provide innovative financial services to Colombia’s poorest citizens. Leveraging a loan guarantee facility from USAID, Bancompartir offers banking services in some of Colombia’s most remote, rural, and conflict-stricken regions. Bancompartir employs a network of hundreds of banking correspondents, as well as a third-party agent network, to extend its services without having to build and staff permanent branches in these remote areas. Bancompartir also won an award for financial innovation for its “Miracle” (El Milagroso) loan product, which credits a portion of the borrower’s repayment to her savings account, helping to build up her personal savings while simultaneously repaying her outstanding loan. (We’re proud to say that Accion helped to develop that product, as did the Bill and Melinda Gates Foundation.)

Accion continues to be a partner of Bancompartir. We take great pride in building and improving microfinance institutions around the world. For my own part, as a manager at DAWN Microfinance, Accion’s partner in Myanmar, the visit to Bancompartir afforded me an opportunity to envision our future — one with a diverse suite of products customized to the needs of each client, operating with a level of efficiency that allows us to continue serving the most underserved clients in the country.

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