New Member Spotlight: BanRegio

Wednesday 27th September 2017

Rene Lankenau BanRegio GBA newsletterGBA recently welcomed our first member in Mexico, BanRegio. With a strategic focus on small- and medium-sized businesses, BanRegio has a market share of almost 10 percent of the Mexican SME market and has attained annual growth rates of 20 percent in the last 5 years. In this interview, Rene Lankenau, Chief Innovation Officer, spoke with the Global Banking Alliance for Women about the financial inclusion of women in Mexico, the bank’s decision to join the Alliance, its hopes for its Women’s Market program and the role the bank plays in supporting women.

GBA: With a total population of 130 million, a plurality of Mexican adults do not yet have a bank account, why do you think that is the case, and why don’t more banks in Mexico see the unbanked as an opportunity?

RL: I am a former entrepreneur, and I have only recently become part of the financial services sector by joining BanRegio, so my answer may not be popular. But this is a very complex problem. Firstly, the banking system in Mexico is extremely profitable. This has to do with a number of factors: regulation, the size of the banks, and the fact that banks have been able to build very large businesses targeting a small part of the population. This means that they don’t need to do more.

Second, trying to focus on the unbanked in Mexico can be complex. One reason is that the people and communities themselves may not want to formalize businesses or get closer to the financial system, and whatever you do as a bank is not going to be popular. Finally, few banks have focused on developing new risk parameters and technologies necessary to reach some of the unbanked populations. That is something that only a few organizations — such as Compartamos, a large microfinance bank — have done.

GBA: Looking now at SMEs, according to the IFC Enterprise Surveys, 49 percent of small and 37 percent of very small women-owned businesses in Mexico that seek credit are either unserved or underserved. Why is this the case? 

RL: There is still a huge gap in financing for SMEs regardless of the gender of the owner. One of the reasons is that large banks have practices, procedures and cultures that were developed to serve large businesses, and those run by women tend to be smaller businesses, so that makes it harder for them to be properly cared for by a bank. This where BanRegio comes in. We are focused on SMEs, and we understand their issues.

GBA: BanRegio is a relatively new bank with a strong commitment to serve underserved communities — especially SMEs. The bank has been recognized internationally for its innovative work with this segment. Why did BanRegio make the decision to target the SME market?

RL: BanRegio is 24 years old and has always had a focus on SMEs. Although our presence has grown to the national level, we still have a regional feel. We are very focused on innovation, are very fast adopters, and know how to use and invest in technology. We are also an old-fashioned bank in the sense that we rely on bankers who know their clients and get involved with their companies. It is this combination of an old-fashioned approach and new technologies that make us unique.

GBA: As the Chief Innovation Officer, tell us a little about what you are doing on the tech side. 

RL: We launched a tech lab 2 years ago that focuses on leveraging the latest technologies. We have developed new banking technologies such as mobile banking, payments, etc. We are also looking at different technologies and how they can be integrated throughout the financial services delivery mechanism, as well as ways to expedite our processes for our clients. For example, we are looking at BlockChain and how that can be leveraged for identity purposes. We’re also looking to launch a completely digital bank under a new brand. This is a smaller, limited bank for a different customer segment.

GBA: Moving to the Women’s Market, why has BanRegio integrated women-owned/led businesses into its strategy?

RL: When I joined the company two years ago, the team was already very focused on women. We saw that women were very successful in starting and operating businesses, although they were facing a number of obstacles. So we saw a lot of potential in supporting them.

GBA: Is there something about the organizational culture that supports this thinking?

RL: Yes, the bank has two cultures: the more formal, established side — folks who understand banking and lending to large businesses — complemented by a younger mindset, which includes a young CEO who is obsessed with providing great solutions to customers. There are also a lot of women on staff who really want to provide solutions by looking at customer experiences and understanding the role that banks play in clients’ lives. You have guys like Pedroluiz [Ibarra Osuna, BanRegio’s Experience Design Director], who is really focused on the customer journey, and you have people like Brenda [Treviño, Creative Consultant] looking at how BanRegio can really make a stronger impact on the community. You have Melissa [Hinojosa Hinojosa, Assistant Director of Marketing], who really understands the banking side of it, but who is also really interested in how a bank can be something more. These two cultures co-exist and make BanRegio very unique.

GBA: What are the main barriers women entrepreneurs face in Mexico? Are these different to what male entrepreneurs face?

RL: You have all the usual barriers like lack of collateral, but something I’ve seen in Mexico that is very complicated is the cultural aspect. A lot of the messages that women are receiving are completely at odds with what they might want for their business and professional lives: things like, “Why are you talking about business when you should be taking care of your family?” I have four daughters, so I am passionate about making society change the way it thinks about women.

Because society has always told them that owning a business is not something they can do, women tend to have self-doubt. So in a sense, if we can be a company that is always telling them that we believe in what they are doing, and we provide them with tools to support their success, then we will win. The most important thing at this stage is for us to develop a team that can really understand women’s needs. This sounds very easy, but it is not. Being a company that can attract that kind of talent and provide women clients with these tools and guidance will be a challenge.

GBA: Currently you are offering women business loans with limited guarantees. Can you give us the details of that and how the bank is able to offer it?

RL: This is through the NAFIN [Mexican National Development Finance Bank] program. It’s a nice product, but it is something that has not really grown, and that is one of the things that we need to focus on next year. I believe that this has something to do with lack of alignment of the Relationship Managers’ goals (KPIs). They’re incented toward larger loans, and they know women generally want smaller loans. On the other side, these loans are currently administered using traditional underwriting policies. Technology must be introduced to streamline the process, to make it more transparent and also to communicate to small-business owners that we are an option for them.

In two weeks’ time, we are starting a project with a FinTech company that has developed a very user-friendly way of organizing SME finance documentation, We love their platform. If it works, this will allow small companies to have all their financial information ready ahead of time, and allow us to cut a lot of cost out of the loan application and processing process.

GBA: A main thrust of your non-financial services offer is the NEXO platform. Can you explain it?

RL: NEXO is a platform that provides entrepreneurs access to a community, knowledge and mentoring and has been a huge success for BanRegio. One of the biggest achievements has been the mentoring program. Through the platform, we provide professional mentors to small companies, matching them according to their needs. We have found that companies that participated in this program have achieved higher sales.

Now we are taking NEXO to a whole other level. First, we will have full-time mentors in all our branches to provide advice and support companies. Women-led companies will benefit from this and also from the peer-to-peer communities that we are building. The second new dimension of NEXO is a specialized team that offers financial products developed specifically for high-impact entrepreneurs — venture debt and different types of financing. 

GBA: How will these non-financial services be tailored, if at all, to women?

RL: Some of them do not need to be tailored to the Women’s Market, but the mentoring program and some elements of the advisory program will need some tailoring.

GBA: The bank also has some strong internal diversity and inclusion policies and practices. Can you share some highlights?

RL: We have implemented a number of policies related to creating work/life balance and making the company more attractive to women employees, such as maternity leave and financial bonuses for maternity. We are now focusing on the career paths of our women employees, as about 50 percent of our staff are women, but the percentage is much lower in leadership roles. So on the one hand, our diversity and inclusion practices involve strong human resources initiatives, and on the other side, commitment from the CEO and top management to ensure greater female representation in the leadership of the organization.

GBA: How did you first hear about the GBA? Why did you decide to join?

RL: The team participated in the NAFIN event this March in which GBA showcased their work, and Banco BHD León from the Dominican Republic shared their experience to date, as did Itaú Unibanco from Brazil. The team has been really happy to get to know your work. We hope to learn from those that came before us and replicate it in Mexico.

GBA: Some of your staff recently attended a GBA All-Stars Academy. What was their feedback, and would you recommend it to other banks?

RL: Oh definitely. I spoke with them, and they said the fact that they saw other banks’ actual results and practices, not just the theory, was very helpful. I suppose most of us can agree on the big declarations, but they saw those ideas in practice, and that makes all the difference.