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The relatively small caja based in Pamplona in the Navarra region of northern Spain provides a great example of how Spain’s cajas have pioneered innovative strategies to win market share against the commercial banks in an ultra-competitive banking market. Caja Navarra’s strategy, which it calls civic banking, draws on what it sees as the cajas’ unique strength: their close connection with the communities and organizations to which they were founded to be benefactors.
“Social considerations should make people more keen to choose cajas as their banks, but that often doesn’t happen because people don’t feel involved in the cajas’ social works,” says Iñaki Iraizoz, head of strategy at Caja Navarra. “We believe that if we can give people the chance to get involved then we can make them feel closer not only to their bank but also their community.”
In 2004, Caja Navarra’s general assembly unanimously agreed to let the bank give its customers the choice over how the bank’s contribution to charity should be distributed. The experiment began modestly by giving customers the chance to decide how the bank should divide its donations between categories of causes such as the environment and the arts. In 2007, however, the bank decided to take the unorthodox decision of writing to all its clients to tell them how much went to charitable causes and to allow them to choose three specific projects out of a list of more than 2,500.
The bank also redesigned its branches to function as spaces open to the community. Not only can anybody walk in and surf the net for free, but community groups needing a space for a meeting can come in and kick branch managers out their offices to use the space. One day every week, each branch hosts a public event such as a concert, a theatre production, or a children’s book reading.
The success of the strategy so far has catapulted Caja Navarra in five years from the 20th caja in terms of profits to the 12th. It has also made the management confident of reaching its ambitious goal of doubling deposits to €19.5 billion by 2010 and more than doubling its loan book. The bank is also confident that it can open 100 new branches in that time, taking the total to 450 nationwide, and increasing the number of people choosing their charities from 500,000 to 700,000 and improve its efficiency ratio from 50% to 45%.
