Advisory Services helps AlSol to grow

JULY, 2011 - Triple Jump Advisory Services has helped the Mexican microfinance institution ElSol in successfully making some very difficult decisions and picking up growth.

AlSol is a profitable, socially oriented MFI in Chiapas, Mexico, focusing on rural clients and exclusively women. It is considered a best practice example of socially responsible microfinance in Mexico. In a country, infamous for its sky-high interest rates, AlSol is expected to be at the forefront of lowering effective interest rates. Additionally, AlSol decided to transform from an A.C. (Asocacion Civil =CSO) to a SOFOM (Non Bank Financial Institution) in order to leverage fiscal advantages and attract investors. In order to achieve this transformation, AlSol will have to re-invent its social identity in a more professional context, pick up growth, cut costs and serve its rural niche market while lowering interest rates.

Services Delivered
Triple Jump Advisory Services has been providing technical assistance to Alsol since 2009 in a variety of business areas, such as improving client outreach, strengthening marketing and enhancing products. In order to support AlSol with their transformation goal, since 2010 Triple Jump Advisory Services has been supporting AlSol in the key areas summarized in the 7S diagram:

1. Strategy – In early 2010 Triple Jump Advisory Services supported the development of its new strategy and business plan. The strategy included: splitting non-financial & financial services, transformation, professionalizing, rolling out branch/agent infrastructure (see below), increasing growth and lowering interest rates.
2. Style (leadership) - Triple Jump Advisory Services coached the board throughout the process of strategic re-orientation, reflecting on its current role and future role, identifying points for improvement and setting up a new structure. TJAS helped to identify the need to reinforce the senior management team to be able to implement the ambitious plan and supported the recruitment of a new COO.
3. Structure – The NGO is now split into a foundation and a non-regulated financial institution (SOFOM) that can focus on financial services, professionalize and attract equity. Profits will flow into the separate foundation to execute social projects.
4. Systems – in order to decentralize and sustain growth the IT system needed replacement. Triple Jump Advisory Services has supported the selection of a new system. The implementation is ongoing and supported by Triple Jump Advisory Services as well.
5. Staff – Apart from the recruitment of the COO, Triple Jump Advisory Services has supported the definition of job profiles, recruitment and selection of qualified staff for the roll out of new products (individual loans).
6. Skills – Triple Jump Advisory Services has trained AlSol staff on sales techniques and knowledge transfer and capacity building are at the forefront in each of the projects.
7. Shared Values – as an outcome of all of these efforts the MFI now has a common vision of professionalism, leading to growth, improving efficiency and realizing a social impact.

With the support of Triple Jump Advisory Services, a change team was formed and is responsible for :
- designing and testing the new approach,
- developing training material,
- continuing to support implementation throughout the organization and
- overcoming potential resistance to fundamental changes.
Upon Triple Jump Advisory Services’ advice, the team is receiving strong back-up support from senior leadership in the organization.

Results
The main changes that were proposed and tested were the simplification and standardization of the credit cycle, stricter control over the application of the methodology, new set up of branches/agents and new forms of supervision. At the time of writing, the new set-up has been piloted and rolled out in 3 of 5 branches. A recent project audit showed that the changes have been implemented successfully in these branches and have led to more standardized, efficient procedures, services closer to customers, while increasing internal control.

Expected Impact
It is clear that AlSol has been able to make some very difficult decisions and implement them successfully. Growth has picked up, and the main expected impacts of the organizational change project will become more visible in the coming years:
• Maximizing client satisfaction (decrease client turnover from 22% to 10%)
• Decreasing the portfolio at risk (PAR30 from 5% to 3%)
• Decreasing AlSol financial services cost (global flat interest rate from 52% to 38%)