Inclusive Business Bank: networked income generation by bringing academia and the base of the pyramid closer through cloud banki
Visando sustentabilidade financeira, o primeiro banco júnior do mundo, o projeto BNI, faz gestão de redes de bancos inclusivos através de “cloud banking”
About Your Organization
Banco de Negócios Inclusivos
Brazil, SP, São Paulo
Country where this project is creating social impact
Brazil, São Paulo, Carapicuíba, Curitiba, Barueri, Campinas
Is your organization a
Non‐profit/NGO/citizen sector organization
How long has your organization been operating?
Has the organization received awards or honors? Please tell us about them
Não, este é o primeiro prêmio que concorremos
The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..
Select the stage that best applies to your solution
Growth (your pilot is up and running, and starting to expand)
How long have you been in operation?
Operating for 1‐5 years
Which of the following best describes the barrier(s) your innovation addresses? Choose up to two
The Need: What problem are you trying to solve?
Inclusive businesses &social enterprises are drivers for sustainable development of the country. That said, these businesses still face numerous difficulties to get financing. This can be explained in part by the traditional credit market of commercial banks, which in addition to being expensive also impose legal restrictions that inclusive enterprises cannot satisfy. The microcredit market, in turn-is comprised of public &community banks, as well as Public Interest Organizations (OSCIPs. These microcredit OSCIPs are still largely subsidized by the government &apart from their small portfolios-lack adequate capillarity & do not provide financial assistance to their customers.
Thus-the IBB seeks to develop a management model that is self-sufficient-inclusive&Supportive of theseEnterprises
The Solution: What is your solution? Be specific!
The solution found was the creation of a cloud management model through cloud banking. Two interlinked networks were created: junior banks, that operationalize the credit within universities, bringing academic management solutions to a practical dimension, providing financial assistance to clients while involving students. The second network is that of the community banks, located at the hearts of poor communities, which give the project greater capillarity, developing these localities through microcredit and social currency, while disempowering the formal credit community.
The management of these networks is done through the IBB OSCIP, integrating them through a free “social franchise” that distributes the technology and the infrastructure for training the inclusive banks, finds partners, performs more effective benchmarking and reduces costs.
The Model: Walk us through a specific example of how your solution makes a difference; include your primary activities
The IBB partners will access the network similarly to the way computers access an external memory through the Internet. In our case, a credit agent will operate the lines of credit, for example in a Junior Bank (currently there are only two banks in operation, the IBB-FGV and the IBB-UFPR), with the goal of managing the loans and advising the customers using a variety of instruments from a previously developed toolkit. Access to money by the cooperatives happens through this credit agent, with full autonomy for approval and use of credit, through an online platform, the website of the model. In other words, the entire management and control structure is located in an external center to the agent operator, reducing the costs and increasing the efficiency. In the same way, when interlinked networks are developed through this system of “solidary franchises”, the bank increases its capillarity, reaching a greater number of customers around Brazil and disseminating the sustainable and productive microcredit ideal.
The cloud model solution is more efficient because it helps to reduce costs: the community and junior banks that access our online platform and use our technology reduce their operation costs, as the IBB has fee exemptions at the bank where it has an account. Another cost reducing factor is that it is operated by students and volunteers, without a payroll that makes the credit more expensive. An additional advantage is the proximity with the university.
The Marketplace: Who are your peers and competitors? Identify others also working to address the needs you are and what differentiates you from them. What challenges could these players pose to your success or growth?
Our competitors, in a certain way, are all microcredit operators. However, the market, in particular the market-oriented productive microcredit still has more demands that what is available. Having said that, our project does not have direct competitors for inclusive bank network management, and that is why this is a pioneer initiative.
This Entry is about (Issues)
Founding Story: We want to hear about your "Aha!" moment. Share the story of where and when the founder(s) saw this solution's potential to change the world.
The IBB was born from a practical realization: a cooperative partner with the ITCP-FGV received a request from a large business, however the payment would only be made 90 days after the delivery. While on the one hand commercial banks present legal restrictions and high cost for loans, community banks and OSCIPs have very reduced portfolios for this kind of demand. As such, we chose to provide the loan by the incubator. The cooperative was able to deliver the request, and presented an increase in revenue of 280%. From this result a new line of market-oriented productive credit was created. In addition, the first junior bank in the world was created, focusing on efficient operation and social technology development. This kind of problem is endemic to the Brazilian system, and the experience easily multipliable nationwide, through the universities, while the technology could be centralized in a platform that facilitated benchmarking and financial sustainability, as well as financial guid
Please describe the goal of your initiative; outline what you are trying to achieve
The goal of the project is to create a double network: one of junior banks and one of community banks that cover the national territory, supplying the demand for market-oriented productive credit and generating income in network.
With the consolidation of this banking system, in addition to regional development and income generation, it is hoped that microfinance will be a central element of university extension, empowering the base of the social productive pyramid, until very recently excluded from the traditional financial sphere.
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)
Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,, Powerful incentives for financial service providers to move up-market, Other (Please describe below).
If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
The gap between the technologies produced in universities and their application / Benchmarking between inclusive banks
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?
The IBB seeks to provide disadvantaged communities, such as favelas or remote communities, who have or demand community banks. The project also seeks to be in public universities in all regions of Brazil, thus increasing the approach with communities served by the model. Therefore, the project hopes to expand, and within 3 years, be in 15 public universities, and impacted 1200 inclusive businesses.
Could your solution work in other geographies or regions? If so, where?
The solution, in order to be efficient, should add a large number of communities and universities to the network, spreading across regions in the country. Similarly, the operationalization of market-oriented productive microcredit in universities is an easy application model in other countries in Latin America, especially considering the labor is carried out by students interested in income generation and the cost of operation is relatively low.
If your solution is dramatically successful, how will things be different in 10 years?
If the solution is very successful, we hope the IBB will become a credit cooperative, which will integrate and supply community banks around the country, capturing savings and managing inclusive banking accounts of NGOs and inclusive businesses, offering low interest rates and bureaucracy. In case of success, we hope the project will multiply through Latin American universities, forming an international network of junior banks.
What will have had to have changed to make this happen?
What has been the impact of your solution to date?
Within a one year and two month period we have provided services to over 30 cooperatives, created 3 partnerships with NGOs, lent R$56 thousand, set up two junior banks, expanded the portfolio of two community banks and helped set up a community bank.
What is your projected impact over the next five years?
Over the next three years we have projected establishing 15 junior banks in Brazil, which translates to supporting 750 groups and the capacity to lend approximately R$1,125 million a year.
What barriers might hinder the success of your project? How do you plan to overcome them?
The main risk our project faces, especially due to its reliance on the support and commitment of unpaid undergraduate youth for asset management and credit grant analysis, is the possibility of lack of commitment and criteria by our members. This may contribute to an increase in default rates beyond sustainability in certain franchises, culminating in the unfeasibility of these in the medium term and even for the network as a whole. We attempt to mitigate this risk by centralizing the credit operation and creating mechanisms that encourage continuous communication between the network and the franchises, in addition to planning on having trained and paid staff that guarantee the professional management of each franchise.
Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact
Increase the portfolio to R$300 thousand, consolidate the online platform and bring 5 junior banks and 5 community banks to the
Identify three major tasks you will have to complete to reach your six-month milestone
Create a governance and communication structure between the franchises.
Create credit analysis instruments adapted to the reality o four customers.
Guarantee the necessary funding for the expansion of the network.
Now think bigger! Identify your 12-month impact milestone
Expand the portfolio to R$1 million, establish partnerships with 5 businesses and consolidate a network of 15 junior banks and 3
Identify three major tasks you will have to complete to reach your 12-month milestone
Undertake fundraising plans.
Keep the default rate below 2%
Make the IBB known at the national level through partnerships with large businesses.
Tell us about your partnerships
Establishing partnerships is essential for both the operation and funding of the project: the business model is based on the capillarity achieved through partnerships with universities and the establishment of junior banks, with community banks and NGOs that strive for income generation in poor communities. In addition, the structuring and expansion of the portfolio has happened through the consolidation of partnerships with businesses and foundations interested in implementing their social corporate responsibility through our project.
Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?
The IBB is in expansion to new universities and communities. Our goal is to develop a network of junior banks that encompasses all public universities in the country, reaching over 100 localities in all states. In the same way, we aim to establish partnerships and create community banks in the areas where there are junior banks.
What type of operating environment and internal organizational factors make your innovation successful?
One of the main characteristics of the project is focus on autonomy, both of those involved as well as of the banks. The IBB does not have an internal hierarchy, by valuing democracy, the decision loci are the assemblies and department meetings, decisions are deliberated upon and consensuses are reached. This environment aims to stimulate innovation and transparent communication between all those involved.
In the same way, the network structure allows the junior and community banks to have autonomy to adjust their credit analyses, the forms of collection and the stipulation of fees charged in a way that better suits the communities and the social environment, being IBB´s responsibility to establish the operational parameters and stimulate positive results.
Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list