Data guide us… But the people behind them inspire us
¿What kind of progress are the entrepreneurs taking up our financial products and services making? We tackle this question in BBVAMF’s social performance report, a document we have been publishing every year for the last seven years. It reflects the impact of data-driven management, and the particular importance of data on our borrowers. After all, these entrepreneurs are at the heart of everything we do. So it is vital to have the means to see how we are supporting the development of people in vulnerability running productive businesses. How they get ahead, make decisions and improve their standard of living. In short, with data, we measure what really matters.
The report focuses on people but also on their environment. The surroundings in which entrepreneurs live can change as they take up our services and move their small businesses on to the next level. The social impact of our client relationships is key and, together with financial and environmental sustainability, forms our underlying purpose as a Foundation (threefold sustainability).
Measuring is essential if we are to ensure that goals are not impaired, and for that reason we assign quantitative performance indicators to the most important impacts. There is also a qualitative dimension to take into account, one that takes us beyond the numbers to give us insight into the progress experienced by our entrepreneurs: their empowerment, their self-esteem and the creation of their own networks.
We must have timely and relevant reporting in order to develop these indicators. Although we live in the era of Big Data, the technology gap in Latin America limits access to information, making it more difficult and more costly to know our customers. We are aware of this, so our measuring model is based on the data that microfinance officers collect during their trips to the entrepreneurs’ home-based businesses, mainly in the lending process. This is sufficient to get a handle on the current situation and thus track changes many of the 2.1 million entrepreneurs we serve have lived through.
Cleansing and standardizing data is a science in itself. We have rigorous processes for data storage and processing, so we can understand the numbers better, drill down deeper to spot the nuances of their performance. Then we cross-reference them and add color to them with external information. Context is important, since countries’ economic growth and social policies have an enormous effect on the most vulnerable and on their economic cycles. We also search through other in-house sources, such as questionnaires and qualitative assessments. This year, for example, together with our partners we have conducted several surveys (Innovation for Poverty Action, Bill & Melinda Gates Foundation, etc) that have enabled us to understand how clients feel about their financial health: whether they are unsure about their businesses, whether they plan for the future, whether they save or how they deal with economic mishaps.
The reach of our information (sociodemographic and business features of our clients in several countries, surroundings and sectors) is one of our strengths, as is the process we follow, such as our statistical and mathematical analytics to identify key factors predicting whether entrepreneurs might develop more or less. For example, we have confirmed that clients in rural areas working in non-farm businesses are more likely to overcome poverty, possibly because the market conditions are different, there is less competition and loans have a more direct impact. We can also see that clients’ asset levels have a major effect on their capacity to generate future revenues.
In order to reduce inequality in the region, contribute to eradicating poverty and guarantee equal opportunities, we need to discover, analyze and extract information that lets us move into action and drive greater impact. Technology and research must trigger disruptive changes and mark out a new path.
Financial inclusion, a gateway to new opportunities
Access to financing for low-income entrepreneurs, as well as other products and services for people at the base of the pyramid started over 40 years ago and represented a revolution. However, it is important to bear in mind that staying with clients over time is fundamental if they are to retain the improvements they achieve and steadily build up financial buffers for their future. These, whether they are savings, insurance or the purchase of alternative assets, help entrepreneurs to cover their expenses and contingencies, to reduce the instability of their incomes and achieve a better quality of life.
Our entrepreneurs always participate at the presentations of the Social Performance Report in the countries where we operate. This gives us a chance to listen to them talk in their own words about the progress we can see in our measuring. Staying in contact with them, listening to their stories and the difficulties they face, inspires us to continue improving. The life stories of women stand out in particular. Women account for 57% of our clients and their needs and experiences are crucial if we are to continue serving them as well as we can and narrow the gender gap, which is vital in order to end inequality in their countries.
We very often hear the word “trust” from them, because for many women financial inclusion is precisely that. It is someone who believes in them and their ability to take their businesses forward. And with that trust, that is something they then go on to achieve. Yamile, in Colombia, shared her concept of success with us, based not on making more profits, but on making it possible for more women to make a go of their lives, giving them jobs in her workshop making children’s clothes.
Data do indeed guide us. However, it is these kinds of stories that inspire us and mark out the way: they show us what is important for entrepreneurs and how through measurement (and action!) we can help them fulfil their goals. This report is a self-assessment exercise delving into our purpose, our service to society and the populations we service. It also documents the hard work of thousands of people who work on the ground to bring opportunities within reach and improve the lives of millions of entrepreneurs, contributing to their countries’ development.