CREDIT UNIONS

Mexico 2017 | FINANCE | B2B

Cooperatives play a key role not only in financial sector but also in the country's social fabric.11

José Manuel Cruz
JOSÉ MANUEL CRUZ
Director General
Cajas Alianza
Sanjuanita Garza Benítez
SANJUANITA GARZA BENÍTEZ
Director General & CEO
CSN Cooperativa Financiera

What is the history of the company?

JOSÉ MANUEL CRUZ Alliance is a network of cooperative savings and credit unions. Today, it consists of 20 cooperatives, each with autonomy. Each usually has the name of the region where it was created. In 1994, all the cooperatives in the country were local. Then, the Caja Popular Mexicana (the People's Savings Bank) was created to unite all the savings and credit unions. However, some unions did not want to participate. Ours were among those; however, we realized that we needed to unite somehow, so we created Cajas Alianza. The idea was to create a framework in which the cooperatives conserved their autonomy and made more decisions locally and faster. We looked for economies of scale and the Alianza project was born. In 2016, we had more than 500,000 associates and more than 100,000 children. We have about MXN11 billion in assets, a staff of more than 2,000 employees, and 200 managers. Today, we are the largest corporate network in the center of the country and perhaps the only model that prevails with all these characteristics.

SANJUANITA GARZA BENÍTEZ We are turning 44 years old in 2017. Before the 1990s, banking was elitist, so people with lower resources didn't have access to opening a savings account or obtaining a credit. I joined in 1986 as an accounting assistant, while I was still studying. We were five employees back then. In 1989, we managed to obtain our first property, and from then we started to acquire other offices too. Every year we are growing in members, assets, and our portfolio as well. Now we are the fifth-largest authorized firm in credit portfolio, with over MXN1.5 billion in placed. We have over 130,000 members with 340 employees and our assets have reached MXN2 billion. We have 37 branches and in the past three years we decided to consolidate the cooperative and look for the rentability of each branch, strengthening our credit products specializing them with characteristics and requirements according to our target market. In 2008, we absorbed another cooperative in Coahuila. It had an important social base and number of branches and we wanted to expand, achieving up to now, a 300% growth in assets in such zone.

What distinguishes the cooperatives and unifies its member organizations?

JMC We have a great advantage; the cooperatives that make us up can make decisions quickly. The operating structures are light, economically and in decision making. We have three operational patterns, the first being the intimacy or relationship with our associates; second, adapting products to the market we develop quickly and efficiently, and finally, operational efficiency. We value how competitive it is with respect to the market. We always seek the competitive advantage of our model according to other cooperatives.

SGB There is a substantial difference between cooperatives and banks, the main being that it is the members that are the owners of the cooperative and benefits do not go to a shareholder or capitalist that is financing. Most surpluses should capitalize inside the cooperative, as it is crucial to have institutional capital. This protects us from a massive exit from our members. Another part that is obtained with the surplus is destined to a social fund that benefits our members; for example, we cover funeral costs. We also have life insurance, and their savings duplicate for the beneficiary, encouraging them to increase their patrimony.

What are your goals for the future?

JMC We want to increase management, technical, and IT assistance efforts to develop the work plan for next year's cooperatives, create a bank for the sector to invite the most important cooperatives, and work in economies of scale with insurance for fleets of cars. In IT, we want to work in the use of technology so that more cooperatives join the growth plan in a cost-effective way, for example generating our own solar energy, using token technology, and notifications with text messages, for example.

SGB One of our priorities is security for our members' resources. The regulatory side is an important weight for us. In the next few years many small cooperatives will not be able to survive, so there are scenarios of absorbing other cooperatives as an area of opportunity for growth. We also have innovation as a priority; this is something we cannot leave behind. Keeping in mind the constant technological evolution of financial services, we are about to launch an app for mobile devices to be able to do transactions from the application. We are always looking at mechanisms to keep being sustainable and not fall behind.