TBY talks to Carlos Eduardo Polo Parada, General Manager of Inversiones La Cruz, on expanding credit, diversifying the client base, and guerrilla promoting.

 Carlos Eduardo Polo Parada
Carlos Eduardo Polo Parada is the founder and CEO of the bank Inversiones La Cruz, which has been in the Peruvian market for 20 years. An accountant by profession, he received his MBA from the INCAE Business School and the University Adolfo Ibáñez. He is also Partner-Director of the chain of secured loans, Credimás of Honduras, Nicaragua, and El Salvador, in addition to Prendamás in Bolivia.

What are the defining trends in the lending environment in Peru?

What we have been seeing in the past couple of years are examples of larger companies acquiring smaller ones, leading to a more competitive industry. During these buyouts we are also seeing foreign companies trying to enter the Peruvian market, which means we are still a growing market without being a saturated one. As of now, we are the leader in the collateral loans industry, with a USD25 million portfolio. Last year alone, we expanded our business activity by 15%.

What are your company's competitive advantages?

We have been operating for 20 years and already have 84 offices across the country, the largest network of agencies in this industry in Peru. In the last few years, we focused on branch expansion in the provinces, where we have received a warm welcome and reached areas where our competitors are still absent. We have also strengthened our equity over the last few years and are at 42% of global capital, while the system only requires 10%. Our future plans include expanding our network to 150 agencies in the next five years and increasing our product portfolio.

What segments offer the greatest growth potential?

We currently accept jewelry, vehicles, and general items as collateral, but we plan on expanding our portfolio in 2016. We want to enter the consumer loans segment, especially for those in the USD150-500 range. Since we are focusing on low-range loans as an add-on tool for evaluation, we will use a quick psychometric evaluation on potential customers to better understand their payment behavior and willingness. We have also recently entered the retail segment with used goods stores. Our main goal is to be present in all commercial and non-commercial segments.

What role does innovation play at Inversiones La Cruz?

There are few financial institutions offering the types of microcredits that we do. By using psychometric evaluations, we understand their willingness to pay rather than just their payment capabilities, a tool being used with great success in Africa and Asia, especially in small loans. We also began offering an online loan service course which allows customers to detail the amount of money they need using their basic information. If they qualify after a quick evaluation, we extend the loan. Finally, we have coverted some of our loan agencies into retail hybrids by becoming used–goods stores that double as loan agencies.

What are your main areas of focus when communicating with customers?

We utilize several channels. We had a strong focus last year on guerrilla marketing, meaning that we work a lot on the road promoting our products and making sure potential customers recognize our brand and what we do. This was a successful strategy, because people are often unaware of what we do and what loan options are available to them. This year we began a door-to-door sales program with trained salespeople “walking the streets" to contact potential customers that might require a quick loan. These are small actions that will pay off in the long term. Lima currently represents 60% of our business activity, while the remaining 40% comes from the provinces. These figures have been changing over the last few years as our focus on the outer regions increases. In the next couple of years, we may see more activity from the provinces than Lima itself.
We are also focusing on improving processes, as well as our online presence, both of which are important for communicating with customers. Our goal for 2016 is to achieve 15% growth in all our products and increase the share of consumer loans in our business portfolio, with a particular focus on the provinces. Inversiones La Cruz has over 84 agencies all over Peru and is the largest lender with guaranteed collateral in the Peruvian market, issuing more than 150,000 loans last year alone.