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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 1 / January - February 2004 |
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News | Guatemala With Technical Assistance from UNCDF-UNDP Microstart, Commercial Banks Reach Poor People in Underserved Areas of Guatemala. In the past year, two commercial banks have expanded their operations to address the demand for financial services in rural parts of Guatemala. One of these, Bancafe has recently incorporated microfinance into its small enterprise program as part of the UNCDF-UNDP Microstart Guatemala program. For three years, Bancafe, one of the leading banks in Guatemala, operated a small savings program in the target region arming it with knowledge of the market and established name recognition. Bancafe was able to downscale its operations with technical assistance from Innova focusing on the areas of human resource training and new product development. The impact after only about one year can be seen in the 11,000 new borrowers, mostly engaged in trade and small commerce activities. In comparison to other lenders in Guatemala, Bancafe approves and disburses loans in a shorter period of time, usually about three days. With an average loan size of $645, most are given on an individual basis and do not require participation in a group lending program. Banrural, on the other hand, with its extensive network of partnerships with local and international institutions was not new to microfinance in Guatemala but has increased its number of poor borrowers to 31,725 from 22,469. The average microfinance loan is $258 and the average size of the Small and Medium Enterprise product is $2,900. With the largest number of retail outlets in the country, the reach of these banks has even extended to Zona Paz, a region with a highly illiterate and largely indigenous population that was devastated by years of war. One force behind this expansion is a new technology that has enabled many, who would otherwise have been excluded, to have access to a range of financial services. Biometric fingerprinting empowers the illiterate in this area with a turbulent history by giving them access to credit and savings. A client can walk into a branch and gain access to his or her savings by placing a thumb up to a biometric reading device. In addition to giving clients the power to easily and quickly deposit and withdraw funds from remote locations, this system lowers the risk of fraud and strengthens both the lender and the borrower's sense of security. Marc Jacquand, Program Officer at UNCDF who recently traveled to Guatemala to capture the emerging lessons from the Microstart program, says that this use of technology "is great from a client perspective because when you are a client of a recognized bank, people will be more likely to do business with you." The technology has removed significant barriers as many residents of this area also lack personal identification documents. Bancafe is also interested in broadening its outreach through digital fingerprinting in the future and is examining the options that fit best with its existing structure. |
