Mexico Country-Level Savings Assessment

Read the results of CGAP's first country-level test diagnostic of small-balance
savings mobilization.

In this Section: Terms of Reference (draft) Savings Assessments Benin Bosnia Mexico Philippines Uganda

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• Mexico Assessment Follow-Up
  (Dándole seguimiento a la Evaluación del Ahorro en México)
  
  

Executive Summary

This report summarizes the results of the first test of the country savings assessment toolkit under development as part of CGAP’s savings initiative. The purpose of the toolkit is to help government agencies, donors, and others to identify the opportunities and constraints of increasing poor people’s access to high-quality deposit services in various countries. The methodology examines client demand for small-balance deposit services, and the ability of the financial system to satisfy this demand at three levels: financial institutions (micro), supporting infrastructure (meso), and policy (macro). It concludes with suggestions for possible strategies to improve the quality and quantity of deposit services available to poor and low-income households.

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The financial system in Mexico is surprisingly shallow. Savings held in banks account for just 9.7 percent of the gross domestic product. Between 15 and 25 percent of the urban population, and as low as 6 percent of the rural population, has access to accounts in financial institutions. The assessment identified strong latent demand for small deposit services in Mexico, and a high level of consensus about the need for a more inclusive financial system. It also encountered a general lack of strategic interest in savings mobilization and obstacles at all levels that inhibit formal financial sector institutions from meeting the strong demand.

Mexicans of all socioeconomic levels save, although many use informal instruments due to the lack of accessible formal financial savings products on the market. Recent innovations demonstrate that when offered an appropriate formal deposit service, poor clients respond on a large scale. However, low-income customers lack confidence in the financial sector and the lack of financial literacy thwart savings in formal financial institutions.

At the micro-level, despite a range of products and financial service providers, there are major constraints to small-deposit mobilization: no physical proximity; inappropriate, high-cost products, and ineffective marketing and product delivery. On the meso-level, the lack of competitive second-tier services for the popular finance sector and distortion of the market by heavy government intervention hamper the provision of savings services to low-income clients. The future role of BANSEFI (Banco del Ahorro Nacional y Servicios Financieros) in delivering financial infrastructure services is of particular concern for the popular finance sector. On the macro-level, fragmented public policy has inhibited the government’s ability to create an enabling environment for small-deposit mobilization. Positive strides in public policy have largely been overshadowed by the array of often poorly executed subsidy programs.

Eight strategies to improve small deposit mobilization in Mexico emerged from the assessment and warrant further research and reflection:

1. Bring reliable information to the table by generating and disseminating accurate and up-to-date data access to financial services to promote a dialogue based on facts rather than politics.

    

2. Shore up existing consumer education efforts to improve financial literacy and enable poor people to understand the benefits of formal financial products and find out about the options available to them.

    

3. Build institutional and human capacity among different types of financial institutions so they can operate in challenging environments.

    

4. Enhance innovation in product design, marketing, and service delivery so that institutions can break out of their traditional supply-led models and decrease the costs of reaching marginalized areas.

    

5. Support viable financial infrastructure services for the popular finance sector, such as access to the payments system, either through BANSEFI or other (private sector) second-tier institutions.

    

6. Encourage consolidation of the popular finance sector at both the micro- and meso-levels to gain greater efficiencies of scale and scope.

    

7. Explore innovative incentives for encouraging formal financial institutions to expand branch and point-of-sale penetration in rural and low-income communities.

    

8. Take advantage of the political juncture to press for policy coherence by starting now to debate public policy related to financial inclusion as the campaigns are gaining steam with the goal of clearly defining the appropriate roles and comparative advantages of government and private actors.