Quintín Quispe Tunqui lives in the Cuyo Grande Community, a community of less than 300 households, near Pisac, in the region of Cusco-Peru. Quintin has a carpentry workshop, he is also a farmer and a sheep breeder. To get to his home from Pisac, one has to go through an affirmed dirt road, and although there is cell phone coverage, electrical energy and a medical post in the same community; the nearest hospital is two hours away. Security in this community is not managed by the National Police, but by peasant rounds. Quintín lives and works at 3500 meters above sea level, at the limits of the physical infrastructure networks and at the limits of social safety nets.
Quintín presented his experience in Madrid, during the celebration of the 10th anniversary of the BBVA Microfinance Foundation (BBVAMF). He told us very clearly that no other bank came to where he lived and worked. That the banks cannot understand his situation and demand so many requirements that it is impossible for him to meet them all. For a bank, working with Quintín is not only a matter of risk appetite, it is also an issue closely related to the scale and costs of operations, delivery and follow-up. It is very difficult for anyone to contract at the limits of the networks of physical infrastructure and social protection.
To better understand any financial inclusion strategy, it is crucial to understand how the different networks that support the development of financial systems are articulated. Very few people confuse hardware with software; It is very simple to distinguish between a computer and a program. Between a phone and an application. But when we think about the internet and the web, things are a little less clear. It is no longer so obvious that the internet is a computer network and the web is a network of documents; that in one case it is a physical network and in the other it is a logical network. That, just as a program runs on a computer, a logical network also needs a physical support. The same is true of financial systems: financial systems are essentially logical networks of financial contracts. Networks of financial contracts, where the nodes are the financial institutions and their clients, and the links are the contracts. From this point of view, the problem of financial inclusion is simply the problem of extending this logical network to unattended sectors.
Naturally, to extend the scope of this logical network of contracts, it is also necessary to expand the physical network that acts as the platform that supports it. This physical network is the overlap of three sets of complementary networks: (1) First, there are physical infrastructure networks: roads, energy, telephony, internet, etc., which are an important component in determining the costs of transaction; (2) second, there are institutional or social protection infrastructure networks: schools, medical posts, police stations, courts, etc., which determine a good part of operational risks; and (3) the third network of this network overlap – the most important and the one that represents the scarcest factor – is the network of human capital, made up of the business advisors that comprise the commercial force of the microfinance industry.
Financial inclusion, understood as the extension of a logical network of contracts, is built on this living network of human capital that moves at the limits of physical and institutional infrastructure networks. The war against exclusion is fought at these limits, by teams that move carrying all the firepower they are capable of, united by a shared mission, autonomous and dispersed. The war against exclusion is not aerial warfare, from afar, it is an infantry war, one-on-one, every day. For the living network of human capital to successfully confront this war and to generate better personal relationships and more real connections, the condition of locality, the capacity for empathy and the capacity for cultural understanding are fundamental.
Because what really makes this network alive is its ability to carry and transmit relevant knowledge using a financial protocol. However, this protocol is just a form of registering the transmission of knowledge. In this sense, the most important thing for achieving inclusion is that human capital networks reach, make contact, listen, understand, close the circuit, transmit, and increase collective knowledge.
In the BBVAMF our strategic intention is not only to identify clients of a certain scale that satisfy a certain risk appetite, in order to reach a certain efficiency. If that was all our strategic intention, we would never reach Cuyo Grande. What we do at the BBVAMF is to create and test the best technological alternatives for being able to accompany clients like Quintín in their effort for a better future. Our innovation effort seeks the best ways to build better, trusting and more personal relationships.
When we multiply the effort of connecting with a single client by 1.8 million, we immediately notice the magnitude of the challenge that today, after a decade, the BBVAMF has solved in the delivery, supervision, control and sustainability of a portfolio composed of very small operations. And when we multiply by the number of families still excluded, we immediately notice that we are just at the beginning, that solving the problem of scalability will require all our inventiveness, and that giving up is not an option.
The better the three complementary networks mentioned are, the more efficiently can financial inclusion be achieved. It will be possible to transmit relevant knowledge more efficiently and it will be easier to contract with Quintín. Financial inclusion is therefore not exclusively a financial problem, it is a general problem of inclusion to networks; a complex and general problem of transmission of relevant knowledge in both directions. It is, fundamentally, a problem of efficient deployment of human capital, a problem of communication and human interaction.