Credit:Genaro Servin
Interview with: Alejandro Valenzuela, Chairman of the Board of Directors, Banco Azteca
Imagine living in a remote place, so remote that there are no banks or access to financial services. Even though online banking and fintech have significantly reduced these cases, many people still lack access to the internet, particularly in rural areas, and continue to rely largely on local bank branches. Additionally, some may be unfamiliar with digital financial services and therefore be “financially excluded.”
Banco Azteca explains: “According to the 2021 Encuesta Nacional de Inclusión Financiera (ENIF), 32.2% of adults (aged 18 to 70) in Mexico remain financially excluded, meaning they do not have access to to formal financial services such as savings accounts, credit or savings. insurance. This exclusion is particularly prevalent in rural areas and among low-income populations, with a notable gender gap, as men tend to have better access to financial products than women.
Universal access
Financial inclusion ensures that everyone, regardless of location or origin, has access to banking, savings accounts, insurance and payment services. Alejandro Valenzuela, chairman of the board of directors of Banco Azteca, told World Finance that “financial inclusion in Mexico has progressed significantly.”
Citing the World Bank, Valenzuela adds: “As of 2021, 49 percent of the adult population in Mexico holds a formal financial account, leaving approximately 51 percent still excluded, particularly in rural and low-income areas. » Challenges remain in providing affordable, responsible and sustainable financial services. To promote financial inclusion, the bank strives to provide accessible services to underserved populations, particularly low-income households and rural communities.
Challenges remain in providing affordable, responsible and sustainable financial services
“Today, Banco Azteca is the private bank with the largest branch network in Mexico, allowing it to reach people living in remote areas,” says Valenzuela before adding that “Banco Azteca’s extensive presence the bank, combined with digital initiatives, has played a vital role in reducing financial exclusion across the country.
Banco Azteca believes that financial inclusion is vital to Mexico’s economic and social development. Valenzuela explains why: “It allows individuals to actively participate in the economy, reduce poverty and build financial resilience. However, achieving true financial inclusion in a country as diverse as Mexico requires more than just digital solutions: it requires a phygital approach, a concept we embrace.
Banco Azteca’s approach, known as the “phygital banking model,” combines the convenience of digital channels with the accessibility offered by its branch network. In 2023, more than 705 million transactions were carried out through the Banco Azteca application, eliminating geographic and infrastructural barriers. However, many Mexicans still prefer in-person interactions.
“This preference often stems from limited access to the internet, unfamiliarity with digital tools, or a personal choice for face-to-face support,” says Valenzuela. Phygital banking also means maintaining more than 2,000 branches across the country. Physical branches remain a vital part of the product mix because in rural areas, anyone new to banking relies heavily on them for essential financial services.
Fight against financial exclusion
The bank is investing in digital tools to expand access to financial services, taking into account preferences for digital or in-person access and personal circumstances. As a bank and the largest issuer of personal loans in Mexico, it aims to provide accessible credit to promote financial mobility and reduce inequalities.
Improving financial inclusion in Mexico also involves financial education programs. One such initiative is Banco Azteca’s “Aprende y Crece” (Learn and Grow), which has reached more than 1.5 million people in 2023. This program helps individuals learn essential financial skills with confidence, allowing them to use both in-person services at branches, and to use digital banking services. “By combining digital tools, personalized in-branch services and education, we are closing financial gaps and enabling more people to fully participate in the economy,” says Valenzuela.
The Mexican economy is growing modestly. In 2023, it increased by 3.2 percent, according to official INEGI figures. Despite this, the bank says income inequality is a major problem, with low-income rural populations disproportionately affected, limiting access to financial services. The modest GDP growth highlighted the structural challenges facing Mexico and the country’s sensitivity to external factors, such as slowing growth in the United States. Inflation has also had an impact on consumers’ purchasing power.
Money flow from the United States is a major driver of financial inclusion in Mexico. It gives people access to formal financial services. Banco Azteca recognizes the role the U.S. dollar plays in the Mexican economy, particularly through remittances, which reached a record $58 billion in 2023. A strong dollar provides Mexicans with financial stability and opportunity savings and investment.
Banco Azteca plays a crucial role in promoting greater income parity and universal access to financial services, thereby fostering robust economic development. As a major recipient of remittances and a provider of low-barrier-to-entry loans, particularly in low-income sectors, Banco Azteca enables Mexicans to invest in education, housing and businesses. Its phygital model and financial education strategy work hand in hand to drive economic development and financial inclusion, providing a transformative banking experience for all.