From Pilot to Reality, Individual Loans Come to Pro Mujer in Mexico
11 agosto, 2015
Blog, Mexico, Partners, Voices from the Field
With the support of the MetLife Foundation, Pro Mujer is developing, piloting, and rolling out new financial products that provide low-income women with more flexibility and options. Our new product – the Individual Loan within the Communal Bank (ILCB) – offers women the ability to take out individualized loans for the first time with Pro Mujer as opposed to the traditional loan with a group guarantee. This new loan product also enables women to continue meeting with and receiving the support of their communal banks.
This important product expansion offers new opportunities for clients. The brilliance of communal banking lies in its simplicity: instead of any kind of formal guarantee process, low-income people guarantee one another’s loans as a collective. By leveraging friends’ and neighbors’ knowledge of one another’s trustworthiness as potential loan recipients, the communal banking methodology both mitigates risk and provides formerly underserved populations with unprecedented access to financial services. This also means minimal paperwork, no physical guarantees, and very simple loan applications.
This new product innovation also provides new challenges for Pro Mujer staff. Individualized guarantees, such as with Pro Mujer’s ILCBs, require an entirely new loan processing methodology. In Mexico, where the MetLife Foundation is currently helping Pro Mujer expand access to this product, this means that our loan officers are in the process of learning a completely new skill set. Of course, this also requires professional development to help loan officers through the process.
On July 8th, Pro Mujer in Mexico held a supplemental training with four loan officers at the Xochimilco neighborhood center in Mexico City. The Xochimilco center currently works with more than 1,000 women, of which just over 100 have the ILCB (called Credito Exclusivo in Mexico). It is one of Pro Mujer’s strongest centers in Mexico, with very low portfolio at risk>30 days (roughly half the national rate at 2.8%) and a well-established presence in the local community.
The training highlighted the fact that learning a new skill is an ongoing process which requires constant reinforcement. Loan officers in Xochimilco are still working through the initial learning curve, and some important lessons for loan officers surfaced during the professional development session, including the following:
- It takes time to master the new paperwork: Loan officers are learning how to fill in much more detailed paperwork regarding clients’ businesses and home lives and must use a different lens for analyzing loan approvals. Different fields might not match up (i.e. inventory versus sales), and it may take some time to get used to these calculations and categories.
- Loan officers are getting used to assuming more risk: The ILCB loans are larger, have longer terms, and a new approval process; they are inherently riskier products than the communal bank loans. Loan officers are getting used to undertaking this new responsibility.
- Filling in the loan application should be a dialogue, not a survey: Pro Mujer loan officers know from experience that getting the right information from our clients can sometimes be an iterative process. Critical details might emerge in unexpected ways, and may not emerge at all when addressed head-on. The loan application involves a significant amount of personal financial information, ranging from salaries to household consumption patterns, and loan officers are being trained in how to ask questions and initiate conversations that yield the most accurate answers.
In spite of the initial learning curve, Pro Mujer personnel are very positive about the new product. Mirna Leticia Barrio Silva started out as a Pro Mujer client and was subsequently hired as a staff member in Xochimilco. She has been a loan officer for the past two and a half years and has been pleased with the ILCB implementation in Mexico since the product was launched in the Xochimilco.
In her experience, some women find the loan application process to be useful for managing their businesses, as it forces them to think through their finances in new ways. “They’ve never thought about their total expenses—the gas, the electricity bill, clothing,” mentions Mirna, “and this helps them.”
She has also found that clients enjoy receiving visitors and showing off their businesses. Most of all, clients appreciate the opportunity to receive the ILCB and consider qualifying for the loan as a sort of reward, especially given the more favorable loan terms. Mirna continues, “when they don’t qualify, the women understand, but they also say ‘I’m going to give it my all because I really want that Exclusivo.’”