As discussed in my last blog post about Brazil, Latin America has long been seen as a market ripe for the development of mobile money. While I urged Brazillian banks to go mobile, Mexico arguably poses a larger opportunity as it is in the midst of an mbanking revolution.
Mexico has a population of 123.7 million according to the latest figures from the World Bank, of which roughly 60% is under 25 and part of Generation mBanking – the future of finance.
Overall appetite for mobile services is high. 97% of adults have mobile access and figures from Pay Vision show the nation spent about $97.75mn using mobile devices last year. But just 56% use financial products. Although our research showed that 73% of young adult use their smartphone or tablet for banking.
At the end of 2010, the Comision Nacional Bancaria y de Valores estimated that just 14% of Mexican banks offered mobile banking services. While a handful of organizations, such as telco company Telcel and Banco Azteca have launched mobile services since then, there is still room for more competition in the market.
Those who are considering doing so, or want to hone their existing mBanking offering, need to consider what’s holding Mexican banks from making the most of this market.
Security, or perceived lack thereof, seems to be the main barrier. According to the Mexican Internet Association (AMIPCI), 47% of those who not use online banking abstain because they do not believe it is sufficiently secure. This may be a particularly strong concern among underbanked customers who may not have experience with secure traditional financial services.
Our own Generation mBanking report revealed that 46% of young adults said they would switch bank if they felt their provider wasn’t secure or if a mobile app was hard to use. Interestingly 22% of Mexican respondents also said they trusted their mobile provider more than their bank, more than in any other surveyed country. Clearly addressing security is critical to the growth of mobile banking in the country.
Conveniently for those considering a mobile move to Mexico, the government is making life much easier with a strong financial and banking reform agenda. Under the current President, Enrique Peña Nieto, the Mexican constitution has been amended to facilitate financial growth in the region and encourage foreign investment. In August 2011 a new framework to specifically allow for four different types of mobile-based accounts was also launched. The most basic requiring neither identification nor a visit to a branch to open, though this is limited only to small depositors.
In summary the opportunity for mBanking in Mexico looks very bright indeed!