Mexico Country-Level Savings Assessment

This report, by CGAP, examines the client-demand for small-balance deposit services in Mexico and the ability of the financial system to satisfy this demand at three levels: financial institutions (micro), supporting infrastructure (meso), and policy (macro). The report finds that:

• Only 6% of the rural and 15% - 25% of the urban population have access to accounts in financial institutions;
• Savings in banks account for just 9.7% of the gross domestic product;
• There is:
  • Strong latent demand for small deposit services,
  • Need for a more inclusive financial system,
  • Lack of strategic interest in savings mobilization;
• Lack of financial literacy and lack of confidence in the financial sector stop low-income people from saving in formal financial institutions.

The report lists the constraints at various levels:

• At the micro-level:
  • Lack of physical proximity, inappropriate, high-cost products, ineffective marketing and product delivery.
• At the meso-level:
  • Lack of competitive second-tier services for the popular finance sector,
  • Distortion of the market by heavy government influence.
• At the macro-level:
  • Fragmented public policy,
  • Poorly executed subsidy programs.

The report recommends the following strategies to improve small-deposit mobilization in Mexico:

• Improve financial literacy of the consumers;
• Build institutional and human capacity among financial institutions;
• Enhance innovation in product design, marketing and service delivery;
• Support viable financial infrastructure services for the popular finance sector;
• Press for policy coherence at the political level.