As part of a series on branchless banking around the world, a post was recently published on the CGAP Technology Blog, a website operated by US-based think tank CGAP (Consultative Group to Assist the Poor), covering regulatory developments in the Mexican microfinance sector. The Mexican government has passed regulations permitting the use of non-bank correspondents (or banking agents), facilitating penetration by financial institutions and promoting cooperation between commercial banks and retailers in cultivating new customers, new methods of delivery and reducing the costs of financial services.
The authors warn that although cost reduction is beneficial to existing customers, 35 percent of the economically active population are still unable to utilize formal financial systems. While they applaud the work of large banks like Compartamos and Banco Azteca, the authors express the need for innovation from competing sources that directly target excluded, low-income populations. Financial service providers can partner with retailers like Telecom, the state-owned telecommunications network, to launch credit and savings services using existing infrastructure.
Many banks remain cautious about new opportunities, as credit portfolios remain volatile and the new regulation is untested. But as commercial banks, microfinance institutions and retail chains begin to evaluate the possibilities, the authors are hopeful that “innovative and promising approaches [will] begin emerging soon” .
By Rohan Trivedi, Research Associate
About CGAP (Consultative Group to Assist the Poor):
Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to facilitating the provision of financial access to poor people worldwide. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.
Sources and Additional Resources:
 CGAP Technology Blog: “Mexico: Promising moves towards new banking models” by Xavier Faz and Paul Breloff, April 27, 2011, http://technology.cgap.org/2011/04/27/mexico-promising-moves-towards-new-banking-models/
CGAP Summary Note: “Technology Program – Country Note: Mexico”, http://www.cgap.org/gm/document-1.9.50836/CGAP_Technology_Program_Country_Note_Mexico_Public.pdf
MicroCapital.org story, May 3, 2011: “MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Technology Blog Reviews Lessons Learned from Branchless Banking in Brazil”, http://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-technology-blog-reviews-lessons-learned-from-branchless-banking-in-brazil/
MicroCapital.org story, March 1, 2011: “MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Launches Online Branchless Banking Database”, http://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-launches-online-branchless-banking-database/
MicroCapital Universe Profile: CGAP (Consultative Group to Assist the Poor), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29
Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/