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Graduate Students Get Inside Look at Mexico's Microfinance Market

November 04, 2014
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Pictured: Carolina Velazco Bernal, head of external relations, Gentera.

By providing small loans to entrepreneurs in small villages, Gentera is helping to bring Mexican families out of poverty while earning small but steady profits.  "One way to address social problems is to develop a sustainable commercial business model," said Carolina Velazco Bernal, who is in charge of external relations for the growing Mexican financial organization. 

Velazco provided her insights into the world of Latin American microfinance in an October talk to graduate students in management lecturer Joseph Ganitsky's class. "Her presentation expanded on the themes we discuss in class," said Ganitsky, who is also director of the University’s Center for International Business Education and Research (CIBER).  

Prior to her talk, Velazco presented a case study on the issues associated with multinational expansion into emerging markets. "They really identified the key challenges that Gentera faced when we decided to enter the Peruvian and Guatemalan markets," she said. "We enjoy our relationship with the School of Business Administration, which includes student internships as well as guest lectures."

Velazco noted that Gentera has stayed true to its mission of bringing financial services to rural villages and urban neighborhoods since its founding as a non-governmental organization (NGO) in 1990.  Initially, the Asociación Programa Compartamos (IAP) offered loans to women to help them support their families while men were working in agricultural or industrial jobs in other locations.

"We provide entrepreneurs with access to affordable financial products," Velazco said. "Our key to success has been building trust through an ecosystem of stakeholders and generating world of mouth referrals from satisfied customers. We also share our profits with local communities, donating money for schools, parks and public spaces." 

In 2000, IAP evolved to become a non-regulated financial institution called Financiera Compartamos, which became Compartamos Banco in 2006. After becoming a publicly traded company with more than 2.5 million customers in Mexico, Compartamos Banco in 2011 became part of Gentera, a holding company that acquired a bank in Peru and established a new financial company in Guatemala. Since then, Gentera acquired Yastás, a non-banking payment company and launched Aterna, which provides life insurance to families.

"We have found that emerging markets are an excellent arena for doing business," Velazco said. "But you have to be flexible and realistic about your operations. An open mind is the most important asset for any business considering a venture into an emerging market."

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