Word: mibanco
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Dates: during 2008-2008
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...organization Llosa runs, now called Mibanco, converted from a nonprofit into a bank, demonstrating what other microfinance institutions around the world knew too: that the poor are good risks who repay loans on time; get enough of them together, you can not only chip away at poverty but also turn a profit...
Today Llosa has a very different marketplace to contend with. Success at Mibanco has piqued the interest of the commercial banks, which historically have shunned the 45% of Peruvians below the poverty line. Now big banks are going after Mibanco's clients with low-rate loans and--realizing it takes special know-how to work with the unbanked--hiring away Mibanco's employees as well. "They are very good competitors," says Llosa...
Back in Peru, Mibanco now offers consumer loans. It pretty much has to. "Our main business is for microcompanies, but people also want to buy a TV or a refrigerator, and we need to have the capacity to give a loan," says Llosa. "If we don't, they will go to another institution...
That is just one small slice of how Mibanco is changing in the face of competition. In 2004 Mibanco had 30 branches; today it has 81, as the firm pushes into remote areas--the coasts, the mountains--trying to hold off commercial banks. Mibanco has started offering savings accounts and has gone to the likes of North Carolina--based Wachovia to finance growth, which helps Mibanco reach more than 5,000 new clients a month. All of that ostensibly benefits borrowers...
...there are other changes to Mibanco's operations that aren't quite so easy to categorize. To grow quickly and preserve market share, Mibanco is offering incentives to current customers to get friends to sign up. That's hardly insidious--as anyone with a gym membership can tell you--but it does flick at the concern that lenders might start driving demand. And now Mibanco is contemplating an ipo. "We have two objectives," says Llosa. "One of them is to have a social impact, but we also look to be profitable. If we decide to only have a social impact...
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