Banking: Do it yourself (Bankomunales)
Muhammad Yunus taught the world the poor were financiable. We are demonstrating that in fact they are self financiable.
About You
Location
Project Street Address
Project City
Project Province/State
Project Postal/Zip Code
Project Country
Your idea
Year initiative/program began:
2000
Field of work
Banking/Financial Services
If Field of Work is "Other" please define in 1-2 words below (and explain in detail in the entry form):
Service / Activity focus (If "other" please explain in entry form)
Delivery Method
Year organization founded (yyyy)
1996
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Project URL
Positioning of your initiative on the Mosaic of Solutions™ diagram:
Which of these barriers is the primary focus of your work?
Lack of access to markets or products
Which of the principles is the primary focus of your work?
Leverage the stake individuals have in financial success of the group
If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic
This field has not been completed. (333 words or less)
Name Your Project
Banking: Do it yourself (Bankomunales)
Describe Your Idea
Muhammad Yunus taught the world the poor were financiable. We are demonstrating that in fact they are self financiable.
Innovation
What is your signature innovation, your new idea, in one sentence?
Muhammad Yunus taught the world the poor were financiable. We are demonstrating that in fact they are self financiable.
Describe what makes your idea unique—different from all others in the field.
Million communities and groups, spend many years, hoping for someone to develop a program of credit or micro credit, to gain access to a regular financing system. We are showing to thousands of these people, from several countries in three continents, that it is not necessary to wait too much and that they have all the human and economic resources, to begin his own mechanism of credit and investment. Our methodology thinks about how to show the aptitude that these groups have of constructing their own system of credit and investment, without needing to hope that public or external private organizations, would provide the funds facilitate the credits, since all the resources come from the own group. The mechanism that we have for the mobilization of the groups economic resources, is not the traditional saving (debit), but the (active) investment, which not only provides the funds necessary for the credit, but it generates a strong owner - investor concept in the individual, who strengthens the enterprising mentality and becomes financially savy. We want that the millions who do not have access to the formal financial system could finance their small daily activities, without this implying the complexity of the bank system. Then, those in need, who are bancables, will be better prepared to use the formal system and the financial system will be able to attend to them more easily.
How do you implement your innovation and apply it to the challenge/problem you are addressing?
At the beginning we were implementing it with promoters and personal visits every group. These promoters were hired by our organization, but now we have understood that this way we would only reach thousands of persons, therefore we are developing visual virtual means and audio to be able to reach millions. We are in full process of creating different massive models of education and application of our methodology. Radio, manuals, videos, Internet, e-learning tutoring, wireless and mobile technology, TV, anyway, a mechanisms combination to achieve quality and overcrowding of the model. We want to provide them with a simple and reliable method so that with their own resources, they could gain access to credit and investment to satisfy their most immediate needs.
Do you have any existing partnerships, and if so, how did you create them?
At the moment we have partnerships with several nongovernmental organizations in order to extend the use of the methodology to other regions of the country and the world, but also with the intention of adding value to the work that we do. Some of these organizations not only apply the methodology, but they have the commitment to develop new products and to reach new populations. SOCSAL organization of a Venezuelan Fellow, is using the methodology, but at the same time she is developing a program of special training on the way in which people are psychologically related to money. Co-development, a Spanish organization, is applying the methodology in emigrants' communities, but he has committed himself in developing additional services like micro-insurance. Interaccion, an organization of a Brasilian Fellow and us are sharing a methodology to incorporate solutions into problems of housing. In Venezuela we are working on an agreement with the formal banking, to implement the initiative in popular districts of Caracas.
In which sector do these partners work? (Check all that apply)
Citizen sector (nonprofits, NGOs) .
Impact
Provide one sentence describing your impact/intended impact.
We want to transform informal mechanisms to access credit and savings (not regulated) widely used by low income people and transform them into instruments for development and economic development.
Please list any other measures of the impact of your innovation.
• Helps people to get Financial literacy
• Improve people Self esteem
• Changes old habits related to the way people manage money, making them more able to deal with it.
• Provide people with an organizational method that helps them to solve conflicts among themselves.
• Helps community people to develop a democratic and participative mentality.
Does your innovation address and/or change banking regulations?
Our model is based on informal mechanisms widely used by low-income communities to access savings and credit. These informal mechanisms are usually unfair and unsafe leaving people in a very vulnerable situation. we have transformed these mechanisms into a methodology that not only provides more security, confinement and allows a more regular access, but also works towards educating people in financial matters to improve their relationship with money.
How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation?
We are focused on developing and testing the methodology. To this end we have developed small programs in very diverse groups, such as indigenous, rural groups, fishermen, neighbors, etc. That is how we have carried small and medium size in more than 200 communities, in countries as dissimilar as Venezuela, Spain, Senegal, Bolivia, Colombia and Brazil. Now, with the new virtual expansion models, we try to take the benefits of our model to very varied communities joined by geographical, trade union, managerial bonds, etc.
Till now we have reached more than 10 thousand people in 3 continents. But we already have an action plan developed with the help of Mckinsey, for in 5 years reach 100 thousand and in 10 years more than one million.
This Entry is about (Issues)
Sustainability
Financing source
How is your initiative financed (or how do you expect your initiative will be financed)?
Till now we have financed it in agreements with different companies of the private sector to which we sell our service. Our current strategy, is to lower the costs through the use of virtual and audio-visual models. We will keep on selling services to companies from the industry (insurances, banks, etc), but now we will also do it to the own users, so if we have thousands of groups, with each little one, we will be able to pay the maintenance of an organization that every day is less expensive to manage. If we lower costs and reach the critical mass, we will be able to support the whole operation with the payment of services of the users. The own groups are economic resources generators and therefore there are a self sustainable practically from the first day that they begin operations. Some of them are already 10 years old and act completely independent from us.
If known, provide information on your finances and organization:
• Annual budget: 200.000 US. Dollar.
• Annual revenue generated: Service sold to groups and companies: 120.000 $
• Number of staff :9 people full time, 1 part time.
What are the main financial barriers and how do you plan to address them?
A study done for our action plan and guided by Mckinsey, showed us that the big operative costs are concentrated on the promoters' hired to visit and to accompany the groups. The same study showed that more than 80 % of the tasks performed by these promoters, could be replaced with other training mechanisms such as virtual and audio-visual. At the moment we are developing these tools to teach and to give follow up on the new groups, with these less expensive mechanisms.
Aside from financial sustainability, how do you plan to grow the initiative?
The plan contemplates using the created groups to generate new groups. We try to mobilize a big voluntary force (3 students), so if we are provided with the virtual and audio tools for training and follow up, it would only be necessary to have a volunteer for a few days, to help the organizations get started. Beyond this volunteer for the initial phases, we would be able to provide customer service through remote tools such as: phone, Internet, videos, etc. We look for a long term agreement with the formal banking system that could service those members of the groups that need larger amounts or longer payment schedules.
The Story
Please select one
What was the motivation or defining moment that led to the creation of this innovation? Tell us the story.
I was implementing a traditional micro credit model, based on traditional Village Banks, where the credit funds were coming from external community sources. Nevertheless these resources were late and the people were waiting to form the groups. Then I decided to use resources from the own community and stop waiting. Shortly after I saw that a lot of the demand for local credit was possible to satisfy with resources originated from the own group, so although they were poor, many of their financial demands matched their own resources.
Months later came the external resources and the groups that had worked well with their own resources, began to fight for these external resources and the late payments increased.
Some groups failed and I decided to do everything without external resources, but later, an international organization approved a request for support that it had done months ago, an external fund that was binding to use for facilitating credit to the group. If I did not apply the external funds, this organization would not give me funds to keep on extending the program.
I was forced to grant credits with external funds as they typically do micro credits programs. But after a few weeks of giving the first credit, the group that had been a beneficiary of the credit presented a letter to me returning the money and saying that they preferred to keep on granting their own money, since that way they got to keep the profit and not the external organization. At this point I understood that the local demand could be satisfied with local funds and that we did not need to wait for the participation of external institutions to start its own program of credit and investment.
Please provide a personal bio of the social innovator behind this initiative.
I grew up in a town dominated by the petroleum industry, where indigenous residents were treated as inferiors. My mother was a housewife who ran her own small clothing business from the home. Her contributions to maintaining the family awakened me to the significance of home-based economic activities. I studied philosophy and earned my Masters degree at the London School of Economics. Back in Venezuela began working with microcredit program for farmers. However, I identified major inefficiencies in their models but understood the importance of accessing financial services.
a) Please identify the individuals that your innovation benefits (Please check all that apply)
Producers , Consumers , Holders of assets.
b) Do you help the people you serve to buy goods or services using financial innovation? If so, how?
- In our model we consider that no only micro businessmen have the right to access financial services. All citizens, businessmen or not have the right to access credit and investment services. Therefore in our model many people access credit to satisfy their various needs. For many of these people access to credit is perhaps the only way to acquire these goods and services that ultimately contribute to capitalize the family.
c) Do you help the people you serve to sell goods or services using financial innovation? If so, how?
Even though many access credit to acquire goods and services, there are also those who access credit to offer goods and services. Close to 40% of the given credits at Bankomunales are destined to revenue generating activities, such as commerce. Purchase and sale goods and services is one of the most important.
 | 176 weeks agoSalomón Raydán said: Thanks for your questions. I like to begin apologizing for my English. We normally said that from the point of view of FUNDEFIR, we are ... about this Competition Entry. - read more > |
| 176 weeks agoKaylena Bray said: Dear Roberto, On November 3, 2008, the judges reviewed the entries for the Changemakers “Banking on Social Change: Seeking Financial ... about this Competition Entry. - read more > |
| 183 weeks agoSalomón Raydán said: Depende de cada país y de cada marco legal, sin embargo está basado en el principio de "derecho a la asociatividad". Los Bankomunales ... about this Competition Entry. - read more > |
| 183 weeks agoAlfredo Bello said: Roberto: ¿Cuáles son las limitaciones legales que tiene este proyecto?. ¿Qué sucede en caso de fracaso?. ¿Quien pierde el dinero.? about this Competition Entry. - read more > |
| 184 weeks agoJEAN CLAUDE RODRIGUEZ-FERRERA MASSONS said: Dear Salomon, Congratulations for your initiative. This is more revolutionary that it seems at first sight, and also very useful for ... about this Competition Entry. - read more > |
| 188 weeks agoSalomón Raydán said: Thanks a lot for your interest. The NGO is responsible for sharing methodology – teaching the Bankomunal leaders how to organize ... about this Competition Entry. - read more > |
| 188 weeks agoRaquel Rueda said: Dear Salomon, I have two more questions. Firstly, although each bankomunal creates its own credit conditions, does the non ... about this Competition Entry. - read more > |
| 190 weeks agoSalomón Raydán said: This is a very interesting question. Our model is based on the study of an informal credit and lending mechanism that people already use ... about this Competition Entry. - read more > |
| 190 weeks agoNicole Parilli said: Is your model informal or it`s regulated? about this Competition Entry. - read more > |
| 191 weeks agoSalomón Raydán said: I must apologize for my English. Related to your first question: Basically we feel we should be linked to the formal financial system. ... about this Competition Entry. - read more > |
