Mexican Credit Union Expands Remote Branch Network
WOCCU’s Support Helps CU Jump-start Membership Growth in Rural Areas
February 08, 2010
ZONGOLICA, Mexico — Rural Mexican credit union Caja Zongolica celebrated the grand opening of two expanded rural branches Monday, an effort officials believe may double membership in one branch and increase financial services access among Mexico's rural poor. The new branches will improve capacity of the credit union, which operates as part of World Council of Credit Unions' (WOCCU) Mexico program, to grow and diversify its membership in the sparsely populated regions it serves.
"Caja Zongolica's expansion of these branches is exemplary of its tiered strategy to extend access to high-quality, affordable financial services to people living in marginalized rural areas," said Brian Branch, WOCCU executive vice president and COO. "By mapping its service territory by population density, the credit union knows whether to establish brick-and-mortar branches, reach out to members through personal digital assistants or place point-of-sale technology with retail agents."
Atlahuilco and Xoxocotla, the towns in which Caja Zongolica expanded its branches from much smaller existing facilities, are located high in the mountains where coffee production and hand-made wooden furniture are the principal industries. In Mexico, an estimated 15% - 25% of the urban population and as little as 6% of the rural population have access to financial services, according to recent studies. There is considerable demand for affordable savings and credit products from rural merchants, workers and small business owners, services sometimes difficult for credit unions to deliver without a branch office in the area.
WOCCU's development program in Mexico, funded by the Mexican Ministry of Agriculture, Livestock, Rural Development, Fishing and Food (SAGARPA) through its Proyecto de Asistencia Técnica al Microfinanciamiento Rural (PATMIR) project, works closely with Caja Zongolica and more than 50 other credit unions to extend financial services to marginalized rural areas. Branch expansions like Caja Zongolica's facilitate the extension of these services.
"Most importantly, we will be able to improve member service by hiring more personnel, providing a more comfortable environment, increasing service distribution and shortening members' waiting time," said Tomasa Castro, manager of Caja Zongolica's Atlahuilco branch. "We were often confused with the government's municipal office because we had been located in the same building. Now we will be seen as a completely independent institution."
The Atlahuilco branch has expanded from a single room office with one teller window, member service desk and outdoor waiting area, to a full-size branch office complete with three teller windows, separate desks for credit officers, an indoor waiting area and an upstairs board room that will help expand the youth financial education program offered at other branches. Although this particular branch has the smallest coverage area, it currently serves 1,500 members and plans serve up to 3,000 members by the close of 2010.
Another element to Caja Zongolica's expansion strategy this year is to connect all of its branch offices through a proprietary satellite network that operates in the absence of local Internet access or consistent cellular phone coverage in some villages. The credit union currently uses CB radios to communicate between branches, and with daily financial reports delivered on disks to credit union headquarters each night.
A few miles down the road in Xoxocotla, a similarly sized one-room Caja Zongolica branch also opened its new, full-service branch office yesterday. The town itself is home to nearly 3,000 inhabitants, but the Xoxocotla branch also serves the greater region populated by around 20,000 people, making the expansion key to improving member service and drawing in new business. The credit union's only competition, the microfinance bank Compartamos, has an operational presence in the region but not a physical office, and is known for its prohibitively high interest rates.
"It is very striking how strong Caja Zongolica's community development efforts are," Branch said. "All credit unions invest in the development of their members and their members' families, but Caja Zongolica has a strong commitment to support the economic base of the communities it serves, and their continued rural expansion is a reflection of that commitment."
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 300+ technical assistance programs in 89 countries. Worldwide, 68,882 credit unions in 109 countries serve 235 million people. Learn more about World Council's impact around the world at www.woccu.org.
NOTE: Click on photos to view/download in high resolution.