FINCA Impact Finance (FIF) is a network of 20 microfinance institutions and banks that focuses on reaching low-income clients through responsible financial services. It currently has approximately 2.3 million clients globally, more than half of whom are women.
With an average loan size of approximately $800, FIF delivers a double bottom-line of both profitability and positive social impact. As such, it serves largely unbanked individuals, families and communities – both through branch banking and branchless channels like agent networks, mobile banking and digital field automation.
FINCA Impact Finance provides business loans savings accounts, facilitates money transfers, and oversees insurance, e-wallets and other financial services that are beneficial for low-income people.
Responsible financial services
FINCA Impact Finance was founded by US-based FINCA International in 1984 to support the development of micro-entrepreneurs through access to responsible finance. Its success has led to many subsidiaries being formed across Latin America, among them Banco FINCA Ecuador, which was established in 1993. In 2008, Banco FINCA Ecuador transformed from a microfinance institution to full-service bank. Ten years on, it received a SMART certification as recognition of its long-standing commitment to client protection.
Recently recognised as ‘Best Bank for Social Responsibility – Ecuador 2018’ in the International Finance banking awards, Iván Tobar, General Manager of Banco FINCA Ecuador highlighted why the bank is having such success: “At a social level, microfinance makes a strong impact in a community, which is proven to produce greater standards of living and increased employment.
“Banco FINCA Ecuador has shown remarkable growth with a portfolio increase of over 25% as well as growth in total assets. The solutions it provides have been developed over more than 20 years.
“This growth rate shows us two things. First, that we are contributing to the economic well-being of individuals, families and communities, and second, that we are offering a portfolio of products and services that are attractive to the Ecuadorian market. Our mission is to help our clients take their business ideas and turn them into concrete action.”
This year, Banco FINCA Ecuador celebrated 25 years of serving the domestic market. It hosted FIF’s Global Management Meeting in Quito, Ecuador, an event held over four days and attended by senior management from across the FIF network. Andrée Simon, President and CEO of FINCA Impact Finance, spoke at the event about the importance of innovation across the network in the digital era.
The European also caught up with Ms Simon to discuss the work of FINCA Impact Finance, and some of the ways Banco FINCA Ecuador is excelling.
How is FINCA Impact Finance leveraging technology to develop new products and services to have a positive social impact?
Andrée Simon: Our company views technology as a huge opportunity to expand financial inclusion. Technological innovation was the focus of our Global Management Meeting, which gathers leaders from all 20 countries where we operate. A big part of the meeting is devoted to the technological investments that must be made to offer more efficient services.
For example, in Tanzania we started tablet banking and can now disburse loans in eight minutes with a loan officer taking a tablet into the field. It is not possible to do it the same way in every country because of differences in regulation, but the principle is the same everywhere we operate – optimise time and reduce expenses to deliver a better experience to our clients.
In Ecuador, we plan to introduce tablet banking in 2020. Moreover, mobile apps and online banking also provide opportunities to create more efficient services and deliver valuable information to our customers. We have worked for more than 35 years with micro-entrepreneurs with limited access to credit. The idea is to understand in-depth the needs of our target audience, that differ from those of larger business owners. The close relationships we have with our clients is one thing that sets FINCA Impact Finance apart.
As a bank that seeks to empower low-income communities, would you say your work is aligned with the UN’s Sustainable Development Goals?
AS: Our purpose goes back to before the SDGs, and from the beginning we have been focused on offering responsible services to clients ™
who previously had zero or little access to a loan. For us, it has always been important to make sure that our clients understand what having a loan implies. That’s why we advise all our clients on how to manage credit effectively in order to grow their businesses. While responsible finance includes in-person training activities, it also involves providing advice in real time and developing products that encourage behaviour like responsible borrowing and saving.
We started with group lending, which gave us the opportunity to provide financial literacy training to large numbers of people. Now we offer credit in larger amounts because we have clients that have grown and built larger companies. There’s also a wider base of people to whom we can offer savings products. As our client base evolves, we adapt the products and services we offer, but our offering always reflects the fact that the customer is at the centre of our operations. We are an unconventional bank that focuses on both social impact and profitability. Without the purpose of contributing to positive financial outcomes for our clients, FINCA Impact Finance would not exist.
How would you define socially responsible financial services, and why are they crucial?
AS: For us, responsible financial services come with transparency and financial education for our clients. This ensures that each client understands the purpose and implications of each of our products and services, so that granting a loan is beneficial and empowering for the recipient. That is what sets us apart, our commitment to this social purpose.
Tell us about the digital strategy Banco FINCA Ecuador has set out for this year. How does this fit into the FIF’s social purpose?
AS: At FINCA Impact Finance we plan to create platforms and services that increase accessibility for our clients. Examples include internet banking and mobile banking apps. This allows us to reach our clients through more flexible channels and provide them with responsible services adapted to their needs. Microfinance is about creating positive social impacts, and digital technology can be a great enabler in achieving this goal. I am therefore delighted with the work of Banco FINCA Ecuador.