Following in the tradition of the new health insurance policy Instituto de Salud para el Bienestar (INSABI), Mexican President López Obrador has decided to expand upon his socialist vision for Mexico to create the “Bank of the Poor”.
Mexico is opening its own bank. Called Banco del Bienestar (Bank of Wellbeing) will have the most network branches of any bank in the entire country—at least as far as AMLO’s vision is concerned.
The state-owned Banco del Bienestar (Bank of Well-Being) will have the largest network of branches in the country if President López Obrador’s ambitious construction plans come to fruition.
The construction of 2,700 branches of the so-called “bank of the poor” has been approved, the president said at his regular news conference on Monday.
Half the branches will be built this year and the other 1,350 will follow in 2021, López Obrador said, explaining that military engineers will build the new banks for a total cost of 10 billion pesos (US $528.7 million).
The Federal Savings Bank (BANSEFI) branches will be converted to Banco del Bienestar branches, which will add an extra 538 branches to the total.
This construction will mean that these 3,238 Banco del Bienestar locations will equal 28% of the 11,687 locations in Mexico. It will by far outnumber the locations of any other bank in Mexico—outnumbering Banco Azteca and BBVA which have about 1850 locations each.
The branches will provide banking services to recipients of financial support from the government including the elderly, disabled people, scholarship holders and Mexicans employed by the state-run tree-planting program Sembrando Vida (Sowing Life) and the “Youth Building the Future” apprenticeship scheme, López Obrador said.
Construction will be prioritized in the nation’s “most isolated, most marginalized communities” where the “poorest people of Mexico” live, he added.
Most banks are focusing on improving online banking—specifically their website interface and mobile app efficiency—which is in the opposite direction that Banco del Bienestar is going. In fact, in the last decade, bank branches in Mexico have only increased by 3%.
Mexican Banking Association members invest roughly $70B MXN (about $3.7B USD) in increasing technological innovation in hopes of strengthening their digital capacity. For example, the Mexican Central Bank developed the new CoDi digital charge system of payment through smartphones.
The President of the Mexican Banking Association (ABM) has publically denounced the plan to build more branches. According to him, the massive investment it takes to construct these branches outweighs the amount of Mexicans that will be incorporated into the formal banking system.
Other nations such as China, Russia, and Honduras (that face the same challenges in the development of rural and underdeveloped areas) have also rejected the notion of creating thousands of bank branches in the middle of nowhere to satisfy the people.
Instead, these nations are also focusing on digital payment solutions as opposed to brick and mortar branches. However, AMLO is banking that building these brick and mortar branches will also improve the local economy by offering jobs to these rural areas where they can deposit their funds.
According to a report by the newspaper Milenio, Banco Azteca currently has the highest number of branches with 1,860, followed by BBVA México with 1,850; Citibanamex with 1,465; Santander with 1,227; BanCoppel with 1,168; Banorte with 1,165; Scotiabank with 553; and HSBC with 362.
López Obrador’s plan to build so many new branches goes against the trend seen in the last 10 years, Milenio said, noting that commercial banks have placed greater emphasis on providing services to their customers through their websites and mobile apps.
Source: milenio, el financiero, el economista
The Mazatlan Post