December 2, 2016

How a Retail Chain Became Mexico’s No. 1 Bank Account Supplier

Written by Gabriela Zapata AlvarezMartha Casanova

This post originally appeared on CGAP.

Growth in savings accounts for the unbanked and underbanked has mainly happened in one of two ways. Those who see value in an account open one for themselves, or those who need others to have an account open one for them (as in the case of payroll or government-to-person, or G2P, transfers).

In Mexico, where just over 40% of people (33.6 million) sport a bank account of any kind, low-income customers have historically not had bank accounts or have used them narrowly, with many tossing the accounts when their purpose was served. From the 2015 National Financial Inclusion Survey, we know that:

  • 63% of the 33.6 million Mexicans with bank accounts have a payroll account, while 40% have a savings account.
  • Many of these savings accounts are in the hands of low-income clients and recipients of G2P social transfers (more than 15 million), whose main use of the account is a weekly, biweekly, or bimonthly visit to the ATM (or branch, to the displeasure of banks) to cash out in full.
  • Of those without accounts, 11 million once had one (rendering them “debanked”), and 31.6 million have never had one.
  • Half of the “debanked” population explains that their payroll account became unnecessary when they stopped working, while others reported not having had any use for it or having had a bad experience with it (10% in each case).

Rebanking the debanked and banking the unbanked, plus improving the value proposition for the already-banked to keep them in the system, requires combining clients’ need for a specific product with product relevance and accessibility. In the limited universe of account offerings, a new entrant seems to be doing just that. Its name is Saldazo, and it is making swift inroads.

Saldazo is a co-branded, simplified account with low know-your-customer (KYC) requirements and no minimum balance (albeit capped). It is issued by Banamex — one of Mexico’s largest banks — through a VISA card, and is sold and activated for less than US $2, in less than 5 minutes, at any of the more than 14,000 outlets belonging to Mexico’s largest corner store retail chain, OXXO. It works like a card-based digital wallet (but it is a bank-issued account) with optional access to Banamex’s Transfer mobile service, a mobile payment platform that enables mobile payments, transfers, balance inquiry, withdrawals, and airtime purchases without a card.

Read the full report here>>