Mexico: An Opportunity for Financial Inclusion
IMF News, May 28, 2019
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Bibliographic details
- Published: May 28, 2019
Introduction and context
- Speaker: IMF Managing Director Christine Lagarde; delivered in Mexico City on May 28, 2019.
- Purpose: Assess progress in financial inclusion since 2014, highlight remaining challenges, and outline steps to expand access to financial services across Mexico.
- Framing: Financial inclusion presented as a tool to reduce poverty and isolation—citing Octavio Paz (“La soledad es la realidad mas profunda de la condición humana”) and Frida Kahlo (“Al final del día podemos aguantar mucho más de lo que pensamos que podemos”).
The role of financial inclusion
- Key arguments:
- Financial inclusion supports inclusive growth, which can reinforce stronger and more durable economic growth.
- Access to financial services affects poverty reduction, entrepreneurship, homeownership, savings, and borrowing.
- Women are disproportionately unbanked globally and in Mexico; empowering women financially increases labor force participation.
- Expanding inclusion requires both government policy (supportive regulation, competition, independent supervision) and private-sector innovation (banks, mobile banking, fintech).
- Caution: financial deepening must be balanced with safeguards for financial stability and consumer protection; moving too fast risks instability (lesson from the 1990s and the Global Financial Crisis).
- Complementary reforms (e.g., extending internet coverage) enhance financial inclusion and reduce regional disparities.
- Numeric context preserved from speech:
- Of the 1.7 billion people around the world who are unbanked, nearly one billion are women.
Advances in inclusion (findings)
- Progress highlighted:
- National Strategy for Financial Inclusion launched three years prior to the speech.
- Nearly half of all Mexican adults now have bank accounts, compared with only 36 percent in 2011.
- Government social programs opened accounts for some four million people to receive social or cash transfers; 80 percent of those accounts belong to women.
- Banking agent network expanded nationwide; those served in the countryside more than doubled in six years to eight million adults.
- Use of mobile banking services has increased significantly since 2012, though overall take-up remains limited.
- Microfinance expansion has benefited many small entrepreneurs, especially women: in the microfinance network Pro-Desarrollo, women now represent 95 percent of group-credit customers and half of individual borrowers.
- Other factual points:
- Mexico has more than 300 startups offering services such as payments and remittances, microfinance and crowdfunding, and credits to pay for health services.
- The fintech law approved the year before the speech provides a comprehensive framework for innovation while protecting financial stability.
- The Bali Fintech Agenda was developed by the IMF and World Bank and is endorsed by our 189 member-countries.
Gaps and remaining challenges (key statistics)
- Comparative and domestic shortfalls:
- Mexico had a little over 1,000 bank accounts per 1,000 adults last year; the average across emerging market economies is nearly 1,500 accounts.
- Citizens in three-quarters of Mexico’s municipalities do not have even one access point for financial services within a two-kilometer walk.
- 95 percent of daily purchases under 500 pesos are made with cash.
- Only a small proportion of the population is currently taking advantage of mobile banking services, despite significant increases since 2012.
Policy recommendations and suggested initiatives (way forward)
- Supportive regulatory and institutional measures:
- Continue to strengthen a supportive regulatory environment that fosters competition and growth, and maintain strong, independent supervisory institutions.
- Balance financial deepening with safeguards for financial stability and consumer protection.
- Promote competition in the banking sector and streamline bankruptcy procedures to boost incentives for banks to extend credit.
- Technology and market-development measures:
- Expand internet and mobile network coverage to bring financial services to remote areas and reduce regional disparities.
- Pilot and scale electronic payment platforms (example cited: pilot programs to test-run the CoDi digital platform to enable real-time electronic payments via mobile phones).
- Use fintech to deliver transparent, low-cost remittance and payment solutions to improve rapid payment processing for remittances.
- Allow pension funds greater flexibility with investments to channel savings to more productive uses and expand participation in the financial system.
- Institutional support:
- Leverage IMF technical expertise on the regulatory aspects of fintech to support innovation while protecting financial stability.
- Continue coordination among government, financial institutions, and fintech startups to expand access to services (payments, remittances, microfinance, crowdfunding, credit).
Conclusion
- Outlook and call to action:
- Acknowledgement of progress but emphasis that “this is not the moment to pause.” Greater inclusion is essential to raise growth and reduce poverty and inequality.
- Optimism expressed about the government’s commitment—President López Obrador’s focus on lifting growth, reducing inequality, and encouraging wider use of mobile banking.
- The IMF stands ready to work with Mexico to continue advancing financial inclusion and to support initiatives that break the “solitude of poverty.”
IMF Managing Director Christine Lagarde, “Mexico: An Opportunity for Financial Inclusion,” Mexico City, May 28, 2019.