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Bringing basic financial services to near and far away locations

Jorge Stuardo

General manager/CajaVecina

Published  Friday, October 9, 2009

Chile's BancoEstado has been a key force in the country's bank penetration drive for many years, and the CajaVecina program is playing a significant role in this process. The state bank launched CajaVecina in November 2005 to bring basic financial services to the poor and micro-enterprise owners in remote locations through the installation of POS terminals at small grocery stores. BNamericas sat down with the general manager of BancoEstado's CajaVecina subsidiary, Jorge Stuardo, to talk about the program's evolution so far and about its future goals.

BNamericas: Where are we today in terms of number of CajaVecina and the reach that the program has nationwide?

Stuardo: CajaVecina was launched several years ago and we recently celebrated the milestone of having CajaVecina terminals at 2,500 locations, by which we practically cover 100% of the country with this banking model.

BNamericas: What is the next goal or milestone that you're aiming for?

Stuardo: Our goal now is to double the number to have 5,000 on December 31, 2010. The initial goal was to have 2,500 at that same date, but we reached our goal much earlier and it allowed us to cover 100% of the country's municipalities, or 99.9% as we don't have a CajaVecina yet in Antarctica.

BNamericas: Is a CajaVecina going to be in Antarctica next?

Stuardo: There are only some 50 people living there at an air force base, but we may install a CajaVecina there some day to reach a nationwide coverage that is truly 100%.

BNamericas: Antarctica is indeed a place you can call remote. Is the focus in your expansion still on remote locations?

Stuardo: First we focused on covering remote areas through a great technological effort. For example we installed POS terminals at 4,600 meters altitude in the north of Chile on the border with Bolivia and Peru, and also on several islands. These were places where there was not a single bank branch or not even an ATM so people had to travel to other towns and cities to do their financial transactions. And when these people were in these other towns and cities they usually took the opportunity to buy things, so in that sense CajaVecina has also benefitted the local economies where these people live.

This is also the main benefit for the store owner that has a CajaVecina because it helps to bring in new customers and increase sales.

BNamericas: And now the focus has changed?

Stuardo: Now the focus is more on installing CajaVecina terminals in densely populated areas. The objective with the focus on remote locations was to increase bank penetration, and now the objective is to bring BancoEstado's services closer to the people in densely populated areas.

BNamericas: So instead of going to a BancoEstado branch they can go and use a CajaVecina terminal at the nearest grocery store?

Stuardo: That's correct. You can say that a CajaVecina terminal is an ATM that is operated by a person and the CajaVecina terminals and the bank's ATMs both help to clear the BancoEstado branches that are the most crowded. So if we have branches with lots of congestion, then we start to install CajaVecina terminals in the area very close to those branches.

BNamericas: How is the cash-management issue handled at the grocery stores that have CajaVecina terminals?

Stuardo: Basically it is built around the principle of what is going in, is going out. Today store owners with CajaVecina terminals usually receive more money than what people take out as deposits and bill payments are very popular. The store owner then has to go to a BancoEstado branch to deposit the excess funds and we are therefore now trying to convince people to make more withdrawals at the terminals.

BNamericas: You mentioned bill payments, what types of bills can be paid at CajaVecina?

Stuardo: You can pay bills like telephone, water and electricity. Bill payments are something that have been increasing at the CajaVecina terminals. In terms of banking services, besides deposits and withdrawals clients can also make transfers between accounts and pay loan installments. Buying minutes for mobile phones is also possible.

BNamericas: Are all your CajaVecina terminals in small grocery stores?

Stuardo: Approximately 90% are and the remainder are in other types of micro or small-sized businesses like internet cafes for example.

BNamericas: Is the CajaVecina banking model a local model or did you import it from some other country?

Stuardo: There are similar models in countries like Brazil and India, but they do not operate in exactly the same way as CajaVecina does. We looked a little bit at some models in Brazil, but basically CajaVecina is a local model made in Chile.

BNamericas: What about the technology that is being used in the CajaVecina model, is that something that you developed in-house or did you rely on third parties?

Stuardo: The technology that we use for CajaVecina has been provided by local external firms. All the technological back-up support for example is provided by an external firm.

BNamericas: Speaking of technology, do you have anything new coming on that front for CajaVecina?

Stuardo: Yes, we are trying to implement a biometric system, which currently is at the pilot stage. If this is implemented it would represent a big benefit for people who are illiterate.

ABOUT THE COMPANY:

BancoEstado is Chile's only state bank and the third largest lender in the financial system.

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