ABN AMRO's Real Microcredito: A Multinational Bank's Entry into the Micro-credit Market

This paper discusses the performance of Real Microcredito, and offers suggestions for its future growth.

Real Microcredito was launched jointly by ABN AMRO and ACCION in July 2002. Real Microcredito offers small loans to growing businesses that lack access to conventional forms of credit. Its agents visit customers at their homes and/or businesses to explain the product and sell them credit services. Real Microcredito faced strong competition from moneylenders and other banks in its first year of operation.

The paper states that Real Microcredito should effectively communicate the benefits of its products and services and positively differentiate itself from informal lenders in order to grow and start making profits. It should:

• Adapt its product to the needs and culture of the target market;
• Use strong business measurements and incentives;
• Analyze its processes and incentive structures to ensure that they are aligned with its social mission;
• Transition from being a cost center to becoming a profit center;
• Provide tangible improvements to the community to determine its level of success in achieving its social mission;
• Expand its program to savings accounts.