Banca Comunitaria Banesco: The bank goes to the barrio

In December 2016, Hector Albarrán, Vice-president of Banca Comunitaria Banesco (BCB), the microfinance business unit of Banesco Banco Universal (BBU), the largest private bank in Venezuela, was concerned with the sustainability of BCB’s inclusive business model and distribution channel. By 2016 BCB was one of the leading microcredit institutions in Venezuela, serving more than 85,000 people in more than 8,000 low-income neighborhoods throughout the country,  with 10% market share. The results of BCB’s ten years of operations were encouraging, with more than 45,000 microcredits granted annually, 48,000 microentrepreneurs trained, and 93% of BCB customers stating that access to credit had improved their quality of life.
BCB’s main differentiating strategy had been its inclusive distribution channel, designed to achieve the greatest possible coverage in low-income areas where other institutions had no physical presence, without incurring the costs of a wide network of traditional branches. BCB’s distribution channel exhibited a multiple structure with a “business model to serve the massive segments under an omnichannel strategy, with a simple, economic, dynamic and scalable architecture”. It combined a network of community branches, service bars, community promoters, non-bank correspondents (NBCs) and community advisors Among the objectives of BCB’s distribution channel were involving BOP communities, working with social leaders, neighbors, education institutions and socially driven groups, to promote BCB’s penetration, gaining community trust and producing economic and social value for all stakeholders.
However, serving BOP customers (80% of the Venezuelan population) posed several challenges. On the one hand, although BCB’s creation was strongly supported by BBU’s President Juan Carlos Escotet, a strategic shift towards BBU’s internationalization had diverted his attention and focus. While BCB’s social impact was still central to its mission, BBU’s management repositioned the unit as an additional