Lauren Reese is an Associate Microfinance Analyst with the Technology Program. Lauren coordinates the program’s application process and is the team lead on financial education for technology channels. Before joining CGAP, Reese worked in microenterprise development at CHF, a development consultancy, and at TPC, a microfinance institution in Cambodia. Reese holds a Master’s degree in International Development and Economics from Johns Hopkins University, SAIS.
Dia de los bancos: Mexican in-store banks reaching out to new clients
The many in-store Mexican banks have only begun to scratch the surface of the unfulfilled demand for financial services among low-income Mexicans. Or so hope Banamex, Soriana, and Wal-Mart Mexico, the latest entrants into the consumer credit bonanza in Mexico. The success of Banco Azteca, Coppel and other retailers who opened financial services outlets in their branches has attracted a wave of new competitors.
Banamex and Soriana recently launched a partnership making Banamex services available in all 240 Soriana stores, which see an average of 25 million customers per month. “Mi Ahorro Banamex” offers two products: a prepaid MasterCard card, redeemable at all Soriana and affiliated stores, and a savings card. They plan to introduce additional products, such as remittances and savings, in the future.
Wal-Mart’s approach is slightly different. Instead of partnering with a bank, they’ve decided to do it themselves. Banco Wal-Mart de Mexico Adelante is set to begin operations before the end of the year. Wal-Mart is certainly known for its low-cost, high volume business model, but will this carry over into their banking services? With 964 stores covering nearly every region of Mexico, the potential impact on the estimated 80% of unbanked Mexicans is huge.
Without getting into the debate on whether or not consumer credit is better, worse, or in fact the same as what microfinance institutions are offering, the impact of these new entrants will certainly be felt by both the consumer outlets as well as the microfinance institutions. And perhaps that’s not a bad thing, especially if it finally brings about price competition in this notoriously expensive market.
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The cellular divide?
Rumors are flying about the much anticipated “gPhone” by Google, especially in light of the recent release of Apple’s iPhone. Will the gPhone replicate the glitz and glamour of the iPhone or focus on function over form? Bets seem to be on the latter, predicting that Google will opt for a low-cost, mass market approach which is likely to generate greater advertising income, the bread and butter of their business.
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…and four points from Brazil
In her opening remarks, Elizabeth Littlefield used the example of Brazil to illustrate two points. Since the government began allowing use of banking agents to deliver financial services several years ago, 98% of the municipalities now have easy access to financial services. That number is enviable by all standards. At the same time, one network manager experienced an 85% turnover in agents during the first few years.
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Is SMS advertising the new telemarketer?
As part of its recent entrance into the US mobile payments space, Citibank recently began advertising via SMS. When USA Today readers receive stock quotes on their mobile phone, they now find an accompanying advertisement asking if they’d like to check their Citibank account balance or even find the nearest ATM. Uptake of these offers is around 15 to 20 percent, several times higher than traditional advertising.
SMS advertising is a frequent topic of discussion around CGAP. As many mobile banking services in developing countries have had difficulty maintaining adequate volumes of usage, we often wonder if users would respond to SMS messages reminding them of this service and encouraging use of e-money. What if we could use SMS to provide financial management tips? Could we use SMS to encourage clients to save a small amount after each transaction? The potential of SMS advertising is indeed exciting, but in thinking of how I would respond to a pesky advertisement on my own phone, I feel less confident. Is SMS advertising the new telemarketer?
Exploring and testing innovative ideas is the cornerstone of CGAP’s Technology Program and SMS advertising is likely to play a role in at least one of our projects. Perhaps users will find the service more helpful than annoying and the skeptic in me will be proven wrong…?
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Expanding Banking Services in Rural Mexico
Despite economic gains in recent years, Mexico’s financial services industry has yet to reach all potential customers. In cities, as little as 15 percent of the population have access to financial accounts. In rural areas, the percentage plummets to six percent. These figures are partially due to limited supply of services, especially in rural areas, as well as demand-side constraints such as low levels of education, and negative perceptions of banking in general. Read the rest of this page »
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