QUITO, Ecuador — Credit unions throughout Latin America have successfully provided financial services to the rural poor thanks to both new technologies and time-tested strategies, but there are still many more people to serve. How to increase market penetration and reach more underserved communities was the focal point of a World Council of Credit Unions (WOCCU) conference held last month in Ecuador.
More than 300 directors, managers and employees of credit unions and organizations in Bolivia, Colombia, Ecuador, Mexico, Nicaragua, Peru and the United States attended to the Congreso Internacional de Finanzas Rurales e Inclusión Financiera [International Rural Finance and Financial Inclusion Congress] to discuss ways to increase service to rural members. Participants at the two-day event, co-sponsored by COONECTA-Entura, the Quito-based office of WOCCU Services Group, learned how savings mobilization, institutional strengthening, technology and other strategies help credit unions to reach and serve more communities.
"Good financial discipline, product innovation and technology application are key strategies that enable credit unions to better serve their members," said Mark Cifuentes, WOCCU senior vice president of technical services who coordinated the event. "We have a commitment to work not only with traditional donors, but also local governments to help credit unions expand their reach to serve even more people than they already do."
Participants studied how credit unions in Mexico reached the poor through WOCCU's Semilla Cooperativa [cooperative seed] program, a rural finance model in which credit unions send representatives astride motorcycles to remote towns and villages to conduct transactions, essentially taking the institution to the members. More recently, the program was enhanced as representatives were equipped with personal digital assistants (PDAs) and tiny printers strapped to their belts that allowed members in remote locations to conduct transactions in real time and provide members with paper records of those transactions.
Conference attendees also learned about experiences in various countries including Ecuador, which has a financial services penetration rate of just 49% and a credit union penetration rate of 20.3%, according to WOCCU's 2009 Statistical Report. Participants discussed ways to network more effectively in hope of finding new collaborative methods to increase penetration levels.
In addition to credit union attendees, representatives from the governments of Ecuador and Colombia also participated in the meeting. Janeth Sánchez, Ecuador's Minister of Social Inclusion, and Geovanny Cardoso, executive director of the Programa Nacional de Finanzas Populares, an Ecuadorian agency devoted to cooperative financial strengthening, opened the event. Carlos Moya, executive director of Colombia's Banca de las Oportunidades, stressed the need to develop products and define methodologies necessary to reach communities and individuals far outside the realm of traditional financial services. Offering poor people a mechanism by which to grow must have appropriate safeguards in place to reduce poor members' financial vulnerability, Moya stressed.
Financial inclusion for people throughout Latin America remains a challenge that credit unions must face if they are going to meet their social and economic obligations, according to Cifuentes. New products, more widespread use of technology and, especially, more aggressive distribution strategies will be necessary for credit unions to fulfill their missions.
"In WOCCU's mind, access by the poor to financial services is the best way to improve people's lives," Cifuentes said. "Success comes from finding ways to both lower costs and improve services to make these programs more sustainable."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.