Wednesday, June 19, 2024

Economic crisis has closed 867 bank branches, reduced credit card use

Banks feeling the impact of the economic crisis created by the Covid-19 pandemic closed 867 branches in the first quarter of the year and saw the dissolution of more than one million credit card contracts, according to the National Banking and Securities Commission (CNBV).

That has increased the risk of financial exclusion with some communities left without a brick and mortar branch, checking the stated aim of financial institutions to reach all municipalities in the country by 2024.

However, the risk of financial exclusion has been offset by the increase in digital banking and an aversion to cash payments, both of which are also side effects of the pandemic.

The 50 banks operating in Mexico have closed 6% of the points of contact available to customers, and now offer a combined total of 11,912 locations, down from 12,779 in the first quarter of 2020.

Meanwhile, credit card use is down: seven banks — BBVA México, Banorte, Citibanamex, Santander, HSBC, Scotiabank and Inbursa — hold 70% of all credit cards contracts and they ended the first quarter with a total of 27.7 million, down from 28.72 in the same period last year.

The trend away from credit cards is due to a consumer preference for making payments with disposable income and for saving more of what they earn, according to the Association of Mexican Banks (ABM).

Cash payments are another casualty of the pandemic. ATM withdrawals fell by more than two million in the first quarter, while card payments at point of sale terminals increased by more than seven million.

Digital financial tools have profited from the change in consumer habits. Their heightened strength was best reflected in the increase in cell phone transactions during the first three months of the year, which totaled over 52 million, an increase of 26.5% on 2020.

Source: Milenio (sp)

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