A Credit Product for the Base of the Pyramid

Q: What elements allowed BanCoppel to succeed in penetrating the base of the social pyramid?

A: BanCoppel is the sole bank that offers clients a credit card even if they are unable to fully prove their income. This does not mean that BanCoppel is irresponsible when lending money. In fact, the bank invests heavily in technology, systems, software and educational strategies so its clients can avoid nonpayment.

We adapted our products to our customers’ needs. For example, our credit card has a longer expiration date than those offered by other banks. We lend money to carpenters, plumbers, taxi drivers, housewives, teachers, small businesses owners or other people who would normally be excluded from mainstream banking, leaving them without options because they are unable to prove their income. The base of the social pyramid has been neglected too long. BanCoppel decided to pay attention and serve this social segment, creating a uniquely innovative and efficient business model that has attracted more than 30 million clients, issued over 4.5 million credit cards and granted almost 700,000 personal loans.
BanCoppel is the second-largest issuer of debit cards in Mexico and the third issuer of credit cards. The bank has more than 16 percent market share in remittance flows, which ranks BanCoppel as the second-biggest remittance payer in Mexico. Over 50 percent of the customers who open a bank account with BanCoppel do not have another account with other banks and 40 percent of those who get a loan from us lack a credit score. Approximately 54 percent of BanCoppel clients are women and the bank opens 600,000 new accounts every month. We have over 1,100 offices located in more than 400 cities in Mexico. Cities with over 100,000 inhabitants have a Coppel store and a BanCoppel office. Although the bank’s offices are located inside the stores, their operations are independent.

Q: How does BanCoppel adjust its business model to meet the needs and interests of its clients?

A: We are a regulated financial entity and strictly comply with legal and operational regulations. These are designed to protect our customers’ money, investments and savings. In addition to complying with all regulations, we created a model that allows us to determine if we can lend money to a person or not.
When we welcome a first-time customer, we digitize their fingerprints as a personal identification. This technology eases the management of our clients’ needs because, frequently, they do not carry official identification. Also, we personally visit our clients at their homes to verify three facts: that the client is who he claims to be, that the client lives where he says he lives and that he is employed where he says he works. Although these visits represent higher operating costs, they are helpful tools to provide us with a clear vision of our credit portfolio.

Q: How does BanCoppel integrate technological solutions to its offering?

A: A few years ago, our competitors were financial institutions like Banco Azteca, FAMSA, Compartamos, pawn shops or SOFOMES. Today, the competitive boundaries have expanded due to technology, which is why we have made substantial investments in technology. For example, more than 95 percent of the phones sold in Mexico are smartphones and, although not everyone who buys a smartphone can afford internet packages, there are many open Wi-Fi networks that give people access to a free internet connection.

When it comes to high-tech solutions, it is important to remember that we meet the needs of different generations. Millennials do not want to go to a bank and wait their turn; they want everything to be quick and simple. But we also have customers who prefer to visit a bank. Although millennials are the customers of the future and we understand that they prefer to use the internet, we believe that our offices will not disappear. It is possible that in years to come technology and digitalization of services will lead customers to visit banks less frequently but they will continue to do so.