Strategy for Success

How keen management and the implementation of high tech products and services accelerated BanCoop’s position to the third largest banking institution as a central bank for the credit union system in Puerto Rico

In times of great economic challenges that have had a direct impact in the Puerto Rican banking industry, Banco Cooperativo de Puerto Rico (BanCoop) has managed to maintain its soundness and consolidate its position as the central financial institution of the Cooperative Movement. The vision and leadership of its President, Mr. Ángel L. Sáez López, have been the key to support the financial success of over 120 state and federal credit unions and all its members.

With an impressive background that combines both financial and administrative skills, Mr. Sáez López, a Certified Public Accountant, has worked hand in hand with the Board of Directors and the top management of BanCoop to implement a series of successful strategies.

“Our priority has always been to identify the needs of credit unions and cooperatives in general and to fulfill them, taking advantage of the benefits of large scale economy so each institution can offer a wide range of financial products and services on a par with the most sophisticated financial services structures. We have also worked very hard to keep all our operations up to date in term of technology, one of the most effective tools to success in today’s business world. Because technology is constantly redefining the way we do business globally”, said Mr. Sáez López, co-author of a book entitled “The Accountants Handbook”, which is considered to be the most comprehensive reference book on the accounting profession.

After 12 years in Price Waterhouse and working as lead senior manager for important projects in financial institutions such as J.P. Morgan, Banco di Napoli, Chase Manhattan Bank, and Banco Popular de Puerto Rico, among others, the executive put together a strategic plan approved by the Board of Directors of BanCoop that guides the day to day operations of the institution. Top management, as well as all BanCoop associates, are fully committed to its implementation and work hard everyday to find creative ways to achieve all its objectives.

Positive results

As of now, results speak for themselves. BanCoop has continued to emerge as a leader among other top financial institutions. While liquidity problems and consolidations had arisen in recent years to hamper and narrow the field of local banking corporations, BanCoop, founded in 1974, carefully laid out plans using high tech products and services to improve operations and broaden its base of members.

In 2010, the total assets of commercial banks fell from $72.5 billion to $71.7 billion. In the first quarter (1Q) of 2011, however, the combined assets of the 119 local credit unions grew some 4% or from $7.3 billion in 1Q 2010 to $7.6 billion in 1Q 2011. This growth shows the great potential of the cooperative model and the effectiveness of the support these credit unions have received from BanCoop.

In September of this year, BanCoop reported total assets of $514 million, $441 million in deposits, and $71 million in capital. With BanCoop’s quick rise to prominence, the state chartered bank boasts that 95% of its shareholders are local credit unions. Those credit unions are found in every municipality in Puerto Rico, except Culebra, and with their over 800,000 members, it creates a strong economic bond. This economic power allows BanCoop to handle approximately more than 12 million transactions per year.

Technology has always been a key player in the development of the bank. Through the careful planning and implementation of high tech hardware and unique software applications, BanCoop has become one of the most successful corporations in the local financial industry. From the implementation of the federal regulation that allowed the use of electronic imaging of checks, to the strengthening of the Automated Clearing House (ACH) platform to process large volumes of credit and debit transactions in batches and e-payment programs, BanCoop has been in the vanguard to give always high quality services to all credit unions and members.

BanCoop’s multiple services have increased the demand of its clients to continue to modify, whenever needed, any necessary software applications because all systems and service platforms are easy to use and available everywhere. For example, through Web Deposit, cooperatives can process checks and deposits via internet in a swift, effortless, and accurate manner. In fact, BanCoop processes more than 500,000 checks monthly

“Credit unions are unique institutions that need highly specialized services to comply with federal and local regulations. We have helped them grow and in many cases compete in equal terms with commercial banking institutions. The eventual success of their plan lays in their ability to sell the concept to their credit union associates who have embraced it as if it were their very own”, pointed out Mr. Sáez López, member of the Board of Directors of the Puerto Rico Society of Certified Public Accountant until 1993.

More access to credit/debit services

The introduction of the MasterCard credit and debit program to all credit unions also provided a solid economic base and opportunities to BanCoop’s over 800,000 members. It provided immediate access to millions of merchants’ locations and ATM’s worldwide. The launching of this program was supported by an advertising campaign with the slogan, “Cut your high interest credit card” because the major advantage of BanCoop’s MasterCard is lower interest and fees.

BanCoop provided the mechanism to offer credit unions and their participating partners and customers a MasterCard with the best market conditions available. The service rapidly extended to most cooperatives who have partnered with BanCoop.

The program also included a card under the brand name MasterCard Estudiantil to university and college students, young adults 18-25 years old. “Once again, we acknowledged the need for a product like this one and the response was very positive. We now have a group of young people building up a solid credit history since early in life”, said Mr. Sáez López, director of the MasterCard Latin America Board of Directors from 2002 to 2005.

Another successful business initiative was the strategic alliance created with credit unions to establish Coop-24 network, a 240 local ATM network. It is the second largest ATM network, giving a more convenient access to accounts 24/7 at no cost for credit union members.

Under the umbrella of credit/debit services, BanCoop has launched two important programs to benefit cardholders. One of them is Recoompensa, a loyalty program in which the cardholder accumulates points with each purchase. Those points can be used to buy at selected stores or exchanged for cash.

The other initiative is related to one of the main concerns of consumers today. The Fraud Prevention Program monitors all transactions 24/7 to minimize the risk of fraud in the use of the credit card. An alert system is activated whenever a suspicious transaction is done, and the cardholder is informed of the situation.

Growth and development

As a financial institution, BanCoop fulfills the credit needs of credit unions, cooperatives, and companies in general to grow and explore new areas of business. Besides managing mortgage loan portfolios, BanCoop has a solid commercial loan program that supports the Cooperative Movement.

The recent approval of an $11.8 million financing to Borinquen Tower Plaza, a subsidiary of the credit union of Aguadilla, to refinance a previous loan with another financial institution, is an example of the commitment of the bank to help cooperative institutions.

Social responsibilities

In accordance with the seventh Cooperative Principle -Concern for Community-, BanCoop works for the sustainable development of the community. The institution is committed to help those institutions that are making the difference among the neediest population, especially those who give shelter and services to children.

“It is part of our nature as a cooperative organization to get involved with the non profit organizations that do so much with the resources they have. When we help those in need, we can be certain that we are contributing to the social development of Puerto Rico, as well as to its economic development”, said Mr. Sáez López, who was director of the Puerto Rico Chamber of Commerce from 1997 to 2003.

New horizons

As part of its continuous quest for new opportunities for credit unions and its members, BanCoop is about to launch a MasterCard prepaid card, which will substitute gift checks and other programs. This card can be used in all places where MasterCard is accepted and will have the additional benefit that can be used to receive cash back on the BanCoop Recoompensa program.

Also, BanCoop will continue to support credit unions through marketing and advertising campaigns aimed at promoting different products and services. From November 25th, 2011, to February 14th, 2112, BanCoop will give away a new Suzuki Kizashi among the MasterCard cardholders who deposit their purchase receipts at their local credit union.

In response to the preferences of consumers, next year BanCoop will offer another service to diversify even more the offerings of credit unions. Through Web Payment, all credit union members and clients will be able to pay some of their bills, like public utilities and others, electronically.

“Our model, based on the concept of large scale economy and the use of high technology, has created a synergy with credit unions, our members, and business partners which is mutually beneficial. It is a particular relationship that has turned us into the financial link of the Cooperative Movement. That’s why we’ll keep developing and strengthening this unique model that has contributed so much to the economic development of Puerto Rico”, concluded Mr. Sáez López