In September 2022 two of Opportunity EduFinance’s Financial Institution (FI) partners from Latin America took part in a knowledge exchange:

COSAMI is a financial cooperative established in 1966 with headquarters in Totonicapán, Guatemala. Their mission is “To provide quality financial products and services for Guatemalans, through an effective and committed human team, applying cooperative principles, values and practices.”

ABACO is among the three biggest Saving and Credit Unions in Peru. It provides financial services to its clients as well as loans to small and medium financial institutions that lend to over 100k low-income borrowers. The company was established in 1981 with headquarters in Lima, Peru. Its mission is consumer-centric: “To be recognized as the best financial solution for our partners.”

Both FIs are considered the biggest cooperatives in their respective countries and signed technical assistance agreements with EduFinance to develop their education portfolios. Abaco originally focused their efforts on saving for education and higher education products. Now Abaco offers School Improvement Loans to affordable non-state schools as well. Cosami started within their current clients to offer School Fee Loans and have recently begun offering School Improvement Loans and school fee management services.

Representatives from Cosami’s staff team visited Abaco’s headquarters and offices in Peru. The objective of the visit was to foster a knowledge exchange aimed at improving management of growth and risks within their respective EduFinance portfolios. Both FIs were open to mutually sharing knowledge and experiences – including challenges they have experienced – to learn from each other.

We interviewed five participants who took part in the exchange to learn more about their experience:

Luis Ernesto - Director de Gestion Commercial. COSAMI

Ronald Cabrera - Director de Administracion y Finanzas. COSAMI

German Ovalle - Gerente de captaciones. ABACO

Katty Kanashiro - Gerente Division Negocios, Cooperativa de Ahorro y Credito. ABACO

Romina Smith- Especialista en gestión de proyectos de fortalecimiento institucional, Cooperativa de Ahorro y Credito. ABACO

What were your key takeaways from the visit to Abaco? What learnings will you apply in your institution after this experience?

Cosami: We are very grateful for the experience. We were able to share discussions and comparisons on a lot of the topics. Although we focus on different client segments and countries there are very clear synergies. We were very grateful to discover that we converge on important matters such as risk management and the relationship between education and clients. With this experience we built a friendship crossing borders and shared learnings from the education path.

Cosami is planning its strategy for the next 4 years and are considering restructuring their tactics to include a deeper value proposition focused on education. This will be delivered through customized services, products, building clients trust, and mentorship.

Client relationships

Abaco’s strategy of accompanying clients throughout their life cycle is a new concept for us. At Cosami we have some products for 0-17 years, but we don’t have any segmentation. One action upon our return will be differentiation between kids, teens and youth by using an evaluation metric.

We had the idea of considering clients’ evolution from childhood and to include this in our banking decisions and now we are going to apply it. This exchange allowed us to openly discuss the different aspects of each segment and their behaviors. Abaco’s honesty in sharing their experience confirmed our hypothesis and we are going to consider re-engineering our products. There is a big opportunity in youth banking, which most of the time is overlooked as there is no credit history and there are no savings habits. Our idea is that we will use digital channels and education loans for higher education, professionalization and entrepreneurship to empower the young population.

Focus on financial education

After visiting Abaco, we ran an internal exercise on the social-economic balance of Cosami’s impact. We found that our financial literacy education has a tremendous impact on communities (non-members of the cooperative) but not so much on our actual clients (members). The action for us is to leverage targeted financial literacy as part of our sales pitch, especially with education centers looking for a loan. We will use financial education as the means to grow our clients.

Another observation we made on Abaco’s methodologies is that they adapt financial education accordingly to their audience using webinars and YouTube videos that cover personal finances, innovation, etc.

Critical partnerships

We could leverage Abaco’s approach to “saving for future education” so that parents can save up for 10 or 15 years and ensure funds for the higher education of their children and combine this with a tertiary education loan for graduates and post-graduates. We want to explore how to generate and add value for the new generation of young people by being their ally and by building partnerships with universities and technical schools.

We are aware that in order to build a commercial relationship with schools of any type, trust is important. We need to engage the decision-makers and let them know who we are; this goes far beyond a first visit. It is and will be a long process for Cosami to unlock the full potential of working with schools.

The most important thing in the education market is to consolidate partnerships and to meet the challenge our clients are experiencing. At Cosami we look at self-sustaining products with a differentiating factor (low-interest rate). We are shifting our focus to our membership.

Data management

What we have started at Cosami is strategizing education loan disbursement: using business intelligence with the schools, marketing campaigns, defining financial exposure limits and targets, and loan monitoring.

We were impressed with how Abaco combines risk management with data management. They put together decision-making with risk analysis and this has an impact on segmentation. We both have similar market visions, and we want to base our business model on data-driven strategies.

Supply chain as a business model

We explored opportunities to build supply chain financing around schools with parents, teachers, and school suppliers with a similar approach to Abaco’s model: organization, commercialization, technical assistance, and financing.

Abaco is the middleman between demand and the supply of transaction flow by managing [school fee] payments. Cosami wants to do this with schools and other education centers. The challenge is building the infrastructure behind the supply chain financing.

Information management

Technology management is an opportunity to identify new markets and new sectors to be served, to find out about innovations and trends. We started drafting a new plan for data dynamics and how we manage information securely. By looking at Abaco’s framework we could see that we were on the right path.

Looking at Abaco’s implementation timeline for their data plan showed that we are fully aligned and we could recognize similar complexities to what Abaco have experienced in developing theirs.

Installation focused on clients

Abaco’s actions are all focused and aligned with their value proposition, from the leadership mindset to their facilities. We visited their headquarters and two service branches; we were impressed with their branding with very modern and on-point installations. Of course, we are in different market niches but there are several ideas we could explore ourselves on facilities adaptation. It’s the client’s experience that matters.

 

What did you learn from this exchange visit with Cosami?

Abaco: We were very impressed by Cosami’s volume management, their structure, and how they can engage with small businesses as clients. We learned how they expanded their outreach while not being based in the city center and how their collection accounts work.

It felt like two sides of the same coin coming together from thousands of kilometers away: Cosami with their retail approach and Abaco with curved maturity models for innovation, penetration, and market saturation.

This exchange helped us rethink our strategy on how to downscale to the mass market. What really caught our attention was Cosami’s leadership and how they manage resources and generate opportunities, their product adaptation, and advances in technology. The penetration of cooperatives is greater in Guatemala than in Peru, meaning higher client volume and more opportunities to impact people. Another difference is we do not offer credit cards yet, while Cosami has already experience with these.

After this visit, we would like to explore a payment collection platform to add value to the services we offer to schools. This experience also made us want to offer cooperative education to children and offer our digital resources on financial inclusion and environmental protection to more schools.

 

What were some of the similarities and differences you found between institutions?

Abaco: Cosami is more focused on volume, while Abaco is more concentrated, but the financial management is similar. We are resilient institutions and through our own models we seek innovation and we both continually seek to excel and to be at the forefront.

We may be at different points in our own development, but we have experienced the same developments in terms of risk adaptation, regulation, technology, etc. We have different cooperative models, but we are very similar as we both focus on providing the best services for our members.

Cosami: Yes exactly, we both focus on clients – that is our raison d'être. We also have two big challenges in common: data governance and risk-based management, we understood each other very well. We both want to keep growing, keep innovating and take advantage of market opportunities.

 

Read the Opportunity EduFinance blog about another Knowledge Exchange between partners Cosami in Guatemala and Crezcamos in Colombia.