Civic Banking Social Innovation

Civic Banking
Social Innovation to
Better Compete

1 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN

1. Introduction: Spanish market/savings banks
2. Previous considerations about innovation
3. Form lation
3 Formulation of CAN’s strategy
strateg
4. ‘You Choose: You Decide’ the creation of a right
5. The evolution of Civic Banking
6. Economic results, and beyond economics


Spanish banking market

• Highly developed.
• 290 banks serving 45 million people.
people
– 45,000 branches.

• Highly profitable.
– D it l
Despite large number of b
b f branches.
h
– $4.5 trillion in assets.


Savings banks
• Spanish savings banks historically have been based in local communities.
– Typically, their boards are split among local political organizations,
employees and customers.
l d
• All savings banks dedicate a percentage of profits to social work.
– Ranging from 17% to 35
g g 7 35%.
– Caja Navarra returns 30%.
• Savings banks hold half of the overall $4.5 trillion in assets in the Spanish
banking sector.
sector

• Savings Banks are non-profit-making financial institutions whose main
h t i ti is that t f their fit ll t d for i t ’
characteristic i th t part of th i profits are allocated f society’s
development and well-being.
• Spanish Savings Banks are full credit institutions, with freedom to act and
l l i ll
completely operationally on a par with the rest of the institutions i the
ih h f h i i i in h
Spanish financial system. They are incorporated under the legal form of
private foundations with a social purpose… – Caja Navarra


• A savings bank based in Pamplona, Spain.

2007 figures:
• R
Revenues: 406.3 illi
406 3 million euros ($627 million)
($62 illi )
– Up 26.0% from 2006.
• Profits: 175.0
175 0 million euros ($270 million)
– Up 24.3% from 2006.
• Return on equity: 17 0%
17.0%
• Branches: 351
• Employees:
p y 1,913
,9 3
• Market share: above 50% in its geographic area


3. Form lation
strateg


i id i
2. Previous considerations about innovation…
b i i

>> Implemented >> It`s not just brainstorming >> Not the same as
It s
research >> Genetic >> It covers everything >> First and foremost
strategy…. Where we want to compete


An Innovation factory
• Caja Navarra intentionally recruits people who don t fit the standard profile
don’t
of bankers.
– Seeking innovators.
– Highly unusual for savings bank, which traditionally are sleepy and
slow-moving.
– Employees are supposed to devote 20 minutes a day to innovative ideas
ideas.
An employee Blog is focused on innovation.
• The bank’s innovation group is small and new.
– Only 3 people.
– The group both seeks ideas from inside the bank and scans for innovation
examples from around the world
world.
Tying innovation to the business model:
• Civic Banking bases its identity on social innovation and is expressed
in finance, organization, products, technology, etc., penetrating all
areas of our bank. This innovation model gives us the answer of
every step we want to do. Also, it makes our employees to be
protagonists of this process, as they are surrounded by a complete
i f hi h d db l
innovation vision of the bank.


at CAN 1.913 people drive Civic Banking >> 88%
have graduate degrees >> with an average age of 36
>> 1 800 €/employee[+5% day in training] >>
1.800
Survey: 3,78 out of 5.


3. Form lation
strateg


3. Formulation of CAN’s strategy

Civic Banking >> creating rights for
clients/citizens >> by introducing duties for CAN
to follow


3. Formulation of CAN’s strategy

01 Ch
Choosing
i 02 Being Informed
and Deciding

04 Participating
05 Becoming 03 Being
Bankers reported

650.000
650 000 being empowered

3. Form lation
strateg



At the end of 2003, CAN created the right for its clients to choose
the destiny of its social work

1. It all began… with one problem: What can we do to
make the client feel a part of our social work?

2. It occurred to us…
an idea: They should decide

2. We had to make a concession:
Those who made the decisions would have
to give up the power



The clients chose where to allocate the profits earned
by CAN. They chose human needs over activities and things.

4. ‘You Choose: You Decide’, the creation of a
right
Evolution of CAN’s 50,25
allocation of social
4 ,
42,00
spending in millions of
euros

24 00
24,00 26,40
21,50
16,50

2002 2003 2004 2005 2006 2007

‘You Choose: You Decide’

3. Form lation
strateg


5. The evolution banca cívica
3. Evolución a la of Civic Banking

This is an expression of Civic Banking [Civic Account]
650.000 letters to the clients>> 10.000 client reactions collected >>
90% positive reactions >> the clients highlighted transparency, bravery
and and they valued their decisions more >> CAN grows and
competes better.



• The “Volcan” program allows Caja Navarra customers to do
volunteer work for the social projects and institutions that
they choose to support through “You Choose: You Decide.”
– “Volcan” puts customers in touch with nonprofits.
– Also provides training.
• “We are heading towards a new society and we are building
the future together.”

Volunteers in
Zaragoza


[Meeting points and Accountability]
In 2007 > 6.000 volunteer opportunities
offered by projects > 2.750 volunteers in
372 Projects > 22.000 volunteer hours>
200 accountability sessions > More than
7.500 have attended accountability sessions

In 2008* > 16.878 volunteer
opportunities offered by projects > 5.857
volunteers in 697 Projects > 37.318
volunteer hours >209 Accountability
Session > More than 9.500 people have
attended accountability sessions

* June 08 20 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN


The newest customer right: “Know and Decide
Where Your Savings are Invested
Invested”

• Customers can choose in between 6 specific purposes for
their savings accounts to be invested into.
– “You Choose: You Decide” concerns only how the bank’s
ll fi d
overall profits are returned to the community, not what i
h i h it
does with assets of specific customers.

• All this transparency in investing is causing nonprofit
organizations to send their patrons to Caja Navarra.
Navarra
– For example, a priest in Navarre encourages parishioners
to vote for his church so that it can be rebuilt
rebuilt.



This is an expression of Civic Banking [Canchas]
The physical space of civic banking…


• These branches are called
“Canchas” because in Spanish “dar
cancha” is to give an opportunity
g pp y
and to give exposure. A “Cancha” is
a place where people share, and
this branch is as much ours as it is
our customers’.’

• Canchas are places where, besides • Currently 175 Canchas.
Canchas
making financial transactions, our
customers and non-customers can – Half of the bank’s branches,
have a coffee, read books or including all new ones.
newspapers,
newspapers connect to the – “In the future, all our branches
In future
Internet, enjoy shows, talks and will be like this. Without barriers
concerts. between our financial advisers
– For children: magic shows,
shows and ou custome s. In line with
our customers. n
clowns and puppets. our strategy.”
– Book groups are encouraged. – 40-50 Canchas opening each year.
Canchas are equipped with •
– All C h i d ith 12.5%
Operating costs for Canchas are 12 5%
wifi and webcams. higher than for standard branches.


This is an
expression
of Civic Banking
[Cancha offices]
[C h ffi ]
In 2007, 65.000 people entered
>> they surfed the internet for
18.000 h hours >> they enjoyed
h j d
12.000 hours of lectures >> they
developed more than 1581
activities >> 300 concerts >>
More than 47.000 hours of
children’s games >> they freed more
than 1.000 books through the
movement Bookcrossing.
In 2008*, they have passed, more
than 71.000, …..

* June 08 24 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN

What civic banking means for Caja Navarra customers
•They choose and decide 100% of the social works and
present projects. [You choose: you decide]

•They know how much we earn with them and how much they
contribute to social projects they choose. [Civic account]

•They receive information from the association, NGO or
body, which indicates what they do with the money allocated to
them for social projects. [Social profit and loss account]

•They participate as volunteers in projects of their choice.
[Volcan]

•They share our spaces, enjoy them, use them. [Canchas]

•They understand us because we talk to them in their
language and gender, with clarity and transparency.
[Contracts]


3. Form lation
strateg



2007 Results
CAN 2001 / 2007 2001 2007

MM € MM € Multiplier

CREDIT INVESTMENT 4.500 12.500 x 2,8
RESOURCES MANAGED 6.467 11.860 x 1,8

CONSOLIDATED PBT 64 182 x 2,8

NO.
NO OF EMPLOYEES 1.413
1 413 1.913
1 913 x14
1,4

NO. OF OFFICES 231 351 x 1,5

EFFICIENCY 64% 50% x 0,78

Profit d L
P fit and Loss Account
A t dic07 dic06 VARIACIÓN

Importe %

CONSOLIDATED TURNOVER 406.281 322.427 83.854 26,01

Operating expenses 202.810 158.587 44.223 27,89

MARGEN EXPLOTACIÓN 203.471 163.840 39.631 24,19

Other net results -21.218 -11.976 -9.242 77,17

RESULTS BEFORE TAX 182.253 151.864 30.389 20,01

Income taxes and others 6.643 10.917 -4.274 -39,15
RESULTS AFTER TAX 175.610 140.947 34.663 24,59

GROUP RESULTS 175.037 140.848 34.189 24,27



1st semester 2008 Results
Junio-08 Junio-07 Variación
CONCEPTOS
Miles € Miles € Importe %
MARGEN INTERMEDIACION 167.686 130.187 37.499 28,80
MARGEN INTERMEDIACION AGREGADO 177.588
177 588 145 528
145.528 32.061
32 061 22,03
22 03
MARGEN BASICO 203.111 171.315 31.796 18,56
Gastos de explotacion 108.372 91.134 17.238 18,91
MARGEN EXPLOTACION RECURRENTE 94.739 80.181 14.558 18,16
Resultado operaciones financieras -5.025 2.601 -7.626 -293,17
MARGEN EXPLOTACION 89.714 82.782 6.932 8,37
Dotación y provisiones 29.313 24.176 5.136 21,25
Operaciones y extraordinarios 44.878 39.993 4.885 12,21
RESULTADO ANTES IMPUESTOS 105.280 98.599 6.680 6,78
Impuesto sobre beneficios y otros 4.942 8.561 -3.620 -42,28
RESULTADO DESPUES IMPUESTOS 100.338 90.038 10.300 11,44


Pioneers in Civic Banking

If you are interested on developing a similar strategy, contact :
pablo.armendariz@cajanavarra.es
Tel: +34948208505


% increase in
% increase in
customers
customers
through Civic
B ki
Banking
15,2%
8,7%
7,4%
7 4% 41% Navarra

Outside of
59% Navarra

2006 2007



B. Financial proselytism
>> The Pride is extended to the customer ‘In Can more
than just banking happens >> “Bring your money to CAN,
that way you can finance what you want most” >> 15% of
new clients come to CAN for Civic Banking

C. Value of the brand
>> 2006: Best European initiative of CSR, award sponsored
p , p
by the EU >> + 7,4% increase in clients in 2006
>>2007: Best CSR initiative in Spain, recognition promoted
by Forética >> 100 best companies in Spain to work for,
y p p
Merco, “Top para trabajar” (CRF) >> Financial entity with
the best reputation (Merco Marca) >> Empresa y Sociedad
Prize 2008 >>100 Companies with the best reputation Merco
Empresas 2008 >>Marca Esade Prize >>Best Spanish Annual
i h l
Report of Sustainability , …



A. Applied Social Innovation
> 2007: 530.362 clients decided among
7 g
2.707 projects > in 2010, 700.000 clients deciding and
4.000 projects in the community

Projects
j

Clients

www.can.es


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