Q&A with CARD Banking Group Chairman Dr Aris Alip on Marketing to the Poor

Dr.Aris Alip dreamed of opening a bank for the poor when he was heading the field program operations group of Philippine Business for Social Progress (PBSP). His dream became a reality after 11 years when he set up Center for Agriculture and Rural Development, Inc as a social development foundation with the aim of providing micro lending assistance to the poor. CARD is now a group of mutually reinforcing companies (CARD MRI) with over 2,600 branches and 13,000 employees nationwide, serving 4.6 million member-borrowers and growing by over 50,000 members monthly, with over 99% collection rate. Dr. Alip shares his vision of helping 8 million people and alleviate poverty by 2020.

Q1: You were only 29 years old when you and your group started CARD in 1986. There were many non-believers and struggles in the beginning. What kept you going?

A1: Government programs at that time were directed to small farmers, to the neglect of the landless poor, who I saw from my work with PBSP, needed the help most. I wanted to focus on this sector, and the hope I saw in their eyes as we went from one village to the next kept my passion alive. I was joined by like-minded friends, and their faith in me prodded me to go on despite the skeptics and challenges.

Q2: Many companies do not give credit to the poor. What were you able to see in the poor segment that they do not know yet?

A2: Given the opportunity, their creativity comes to the fore. Given the trust, they will keep their word and their integrity. Given a lifeline, they will preserve their dignity.

Q3: You used to lend money to men during your first 3 years. What did you discover about lending to men versus lending to women?

A3: Money in the hands of women translates to better welfare for the family – more food on the table, children sent to and kept in school, better living conditions. A woman’s priority is always her family. Not so with most men, based on our experience. When men had money, they needed to show off to their friends and relatives what a good earner they are, and their stories get better when the ‘barkadas’ inebriated, at his expense. There is the lure of ‘sabong’, and the ubiquitous borrowing of neighbors (‘madaling mautangan’).

Q4: How were you able to recruit so many borrowers? Are incentives provided in recruitment?

A4: In the beginning, it was difficult. Poor people were afraid to borrow, afraid they will not be able to pay. Many were burned by painful experience from fly-by-night NGOs who ran off with their savings. But as CARD built its track record as a reliable service provider, and as its product offerings cater to the myriad needs of the poor, recruitment became easier. As they say, good news travel fast.

We establish a branch in every municipality; we set membership targets and our staff ‘s performance is evaluated based on the number of borrowers, savers, portfolio.

Q5: Your starting loan amount is about P5,000. How different is your credit approval process versus traditional banks?

A5: We do not ask for collateral, nor complicated documentary requirements. Our loan application form is a one-page document, and when a client files for a loan, she can get the loan in half a day or one day.

We are very decentralized in decision making. Small loans like P5,000 can be approved by our account officers and below P50,000 can be approved by the unit managers at the field level. This ensures fast delivery of financial needs of our clients.

Q6: Your interest rates are low (6% to 22% per annum). Not only did this drive out the usurious lenders, but also challenges banks charging higher rates (e.g. 14%) for a non-collateral franchise loan. How do you manage to do that?

A6: We have a very efficient system. Our clients are grouped into centers composed of up to 40 members which our account officers meet every week in their barangays. Credit with Education, collections of CBUs/savings and loan repayments are conducted in the centers. An account officer handles at least 350-450 members, which contributes to the efficiency and productivity

Simple procedures, simple forms, simple offices – all these translate to lower operating costs.

Q7: Why is it hard for big banks to replicate the success of your microfinance model?

A7: Most of our staff comes from poor families ‘na iginapang talaga ng mga magulang para makapagtapos ng pag aaral’. in fact, about 80% of our staff are sons and daughters and or relatives of our members. Hence the empathy for the poor is already there. There is the strong desire to help poor people lift themselves out of poverty ‘kasi dinanas din nila ang maghirap’. Our organizational culture and values are aligned with our mission of eradicating poverty.

Q8: How is technology enhancing or affecting your microfinance operations?

A8: We are now testing mobile banking so our clients can pay their loans, deposit their saving, remit money or make microinsurance payments. This brings more productivity and efficiency to our microfinance operations – lower cost and more clients are being helped through technology since we have lesser documentation and record keeping.

Q9: From microfinance and foundation, you now have several banks, insurance, educational institution, pharmacy, Mga Likha ni Inay (MLNI) branded products in large retail stores like SM. What are the roles of each in your product portfolio?

A9: The banks cater to the savings and credit needs of the clients, from microloans to SME loans as well as remittance service; the microinsurance group offers life and nonlife coverage for clients and dependents; the pharmaceutical company (BotiCARD) offers generic medicines at lower-than-market price, free clinics and discounts from service providers; the Business Development Service links clients to the value chain while MLNI showcases our clients’ products and help in marketing them.

Q10: You are proud of your “1:3:5″ differentiation. Tell us about this.

A10: Microinsurance claims are released within a day when all requirements are submitted to our Mutual Benefit Association office, of which we have more than 60 provincial offices; within 3 days if there are incomplete documents; and within 5 days with finality whether the claims is approved or not. We often hear clients say: “Sa CARD, mainit pa ang namatay, nariyan na ang mga staff para makiramay at magbigay ng tulong.” In fact, we are able to pay 96% of the claims within a day!

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