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banco de bienestar

‘Bank of the Poor’ will have largest network of branches in the country

As private sector banks focus on digital access, government to build 2,700 branches of it own bank

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).

While still ambitious, the plan to build 2,700 new Banco del Bienestar branches to supplement the existing 538 ones (formerly branches of the federal savings bank Bansefi) is well short of a figure of 13,000 floated by the president in December.

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.

Construction of 2,700 new banks would bring the total number of Banco del Bienestar branches to 3,238, a figure equivalent to almost 28% of the 11,687 private bank branches in the country. The well-being bank would have far more branches than the largest of the 51 private banks that operate in Mexico.

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.

Data from the National Banking and Securities Commission shows that the number of bank branches in Mexico has grown by just 3% since 2010.

The president of the Mexican Banking Association (ABM) has said on numerous occasions that increasing the number of bank branches is not the solution to incorporating more Mexicans in the formal banking system because of the massive investment it entails.

Luis Niño de Rivera said that ABM member banks have focused instead on strengthening their digital capacity, pointing out that they collectively invest about 70 billion pesos (US $3.7 billion) a year in technological innovation. All banks in Mexico are now offering their customers the option to pay for goods and services using the CoDi (Digital Charge) app developed by the central bank.

Milenio also noted that the president’s strategy to bring financial services to people in isolated, rural areas is not consistent with that implemented by governments in other countries such as Russia, China and Honduras.

More people in those countries are entering the formal banking system thanks to greater availability of digital payment systems including one accessible by mobile telephone, as well as the ease with which an account can be opened without having to go into a bricks and mortar branch.

Source: Milenio (sp) 

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