Latin American has witnessed and been involved in a large revolution to develop an entrepreneurship amidst the generation of micro businesses. This fact has allowed the insertion of many people that were in extreme poverty into the economy market of business. Therefore, the microfinance movement is responsible for playing an important role in this revolution. The microfinance movement is responsible also for the creation of microbusinesses all over South America. Ordinarily, in South America, many of these people were immigrants that had migrated from the countryside to the big cities such as capitals or metropolitan cities. This microimmigration is very common in South America since there are plenty of rural towns without resources and isolated areas. The reason why these settlers migrate to larger cities is they are driven to pursue a better quality of life.
Meanwhile, as the economic revolution began to grow, it was obvious that the demand for basic microcredit service was coming at a greater demand. This micro credit service was also offered in an unlimited amount. However, many innovative options were needed to accomplish the social goals that were required by the banks. One such option that emerged was the “Cajas Municipales”. This option was supposed to change small banks into larger rural banks. The micro financial institutions in Latin America, the non-profit organizations, and the cooperatives have been recently offering financial services to lowincome households during the last twenty-five years. However, during the last eight years, traditional banks have expanded financial services to different institutions. This assistance in financial needs has helped solve potential problems. This particular approach forced the traditional banks to decide whether they would be able to take on the challenge of providing financial services to lowincome clients.
Peru particularly contains an interesting case study. A bank called “Mi Banco” was opened specifically to satisfy the financial needs of low income people in need of credit. These low income people were in need of help to build up their credit ratings. This particular bank’s performance within the microfinance market began to provide service to low-income entrepreneurs. These successes were direct results of the exploration that “Mi Banco” developed before service was given to the public. Undoubtedly, the incredible growth that “Mi Banco” made because of this new development gained the attention of many businesses. Many of the traditional banks and the local banking industry as a whole were interested in learning about this new development. Therefore, this development brought about new potential for many traditional banks to gain more knowledge about this potential market.
There are many factors that contributed to the success of Mi Banco. First of all, it is their commitment to low-income population. The general public and the customers themselves were aware of the bank’s commitment to providing prompt and superior service.The bank was committed to treating all customers the same whether they were of low or high income. Microentrepreneurs appreciate being regarded as equals. Second, “Mi Banco” provides services that are flexible, convenient, and responsive to the size of demand.This flexibility provided a wide range of innovative services. Therefore, Mi Banco provides services based on the needs of the client, not the constraints of the company. This preference to help the less fortunate and those with lower income would usually be considered risky, but it is the true reason for the success of Mi Banco.
This case is interesting since Mi Banco has tried to develop the internal capacity to actually meet the real demand of the sector, instead of forcing the sector to grow in accordance with the capacity of the institution.Mi Banco has developed a bank network in remote zones and rural places with the aim to promote local development and to reduce the migration of people to larger cities. Mi Banco has allowed the movement of capital throughout every community helping micro entrepreneurs to achieve success. This strategy of relocating offices to where they are most needed by the less fortunate people has helped to create network agencies countrywide. In conclusion, this case cited is a great example of what has been replicated over and over in the same manner throughout most countries in South America. This case has also allowed traditional banks to realize their potential in growth and service rendered to the customers. This case study can be thought of as a new revolution of thinking for the banks of South America. South American revolution of the Microfinance helped greatly in aiding the needy people. This revolution helped many people achieve the dream of owning their own assets and generate socioeconomic wealth based on hard work, responsibility, and sacrifice.