Introduction: The Dance Analogy of Financial Inclusion
When it comes to dancing, there’s nothing quite like the rhythmic sway that moves you smoothly from side to side or front to back, and sometimes, by the end of a piece, dancers haven’t moved from their original spot. However, not all movements are equally appreciated in the artistic illusion of continuous motion without progress. In Mexico, according to the recent ENIF 2024 report, only 76.5% of adults have some form of financial product, with savings accounts at 63%, formal credit products at 37.3%, and insurance contracts at a mere 22.9%. This leaves a significant portion of the population lagging behind compared to developed countries, which generally hover around 98% financial product inclusion. The challenge for the government remains.
The Financial Authorities: A Trío of Institutions
Depending on the specific sector, there are other direct competencies. For this article, we’ll focus on the financial authorities’ roles. The SHCP is tasked with planning, coordinating, evaluating, and overseeing the country’s banking system, including development banks and other institutions providing banking and credit services (Article 31 F. VII of the Vigent Constitution). The Banco de México, as per the Constitution Political’s Article 28, is responsible for regulating intermediation and financial services. The Ley del Banco de México provides more details in Articles 3 F.I and 26. Lastly, the CNBV, according to its Ley de la CNBV Article 4, handles tasks such as authorizing new entities, prudential regulation, supervising them, and imposing sanctions or revoking authorizations.
Subsectors Analysis: A Decade of Changes
Using annual reports from the CNBV (excluding the 2024 report, pending publication) as a reference for the sector, we observe that in a 10-year span, the number of entities participating in financial activities has either remained stagnant or slightly decreased, contrasting with the economic and demographic growth during the same period.
- Institutions of Multiple Banking (Banks): 45 in 2014, 44 in 2015, 47 in 2016, 48 in 2017, 50 in 2018-2020, 51 in 2021-2023, and 51 in 2024.
- Credit Unions: 101 in 2014, 98 in 2015, 90 in 2016, 88 in 2017, 83 in 2018, 84 in 2019, 82 in 2020-2022, 76 in 2023, and 68 in 2024.
- General Deposit Warehouses and Exchange Houses: 25 in 2014 (16 and 9), reducing to 22 (15 and 7) by 2024.
- Currency Exchange Centers: 1,566 registered and operating in 2013, now down to 750.
- Sociedades Financieras Populares (SOFIPOs): 49 in 2014, decreasing to 34 by 2024 (45 in 2015, 43 in 2016-2019, 38 in 2020-2023).
Throughout these 10 years, subsectors have experienced new authorizations, registrations, mergers, acquisitions, liquidations, revocations, and, in dire cases, management interventions by the CNBV to protect users’ interests.
Case Study: CAME’s Intervention
On June 13, the CNBV announced a management intervention regarding Consejo de Asistencia al Micro Emprendedor (CAME), a SOFIPO. This entity resulted from the fusion of two operating SOFIPOs, Te Creemos and CAME, in April 2023. However, within two years, CAME’s situation turned sour, reducing the operating SOFIPOs count from 34 at the end of 2024. This new failure in the system implies risks for investors and financial institutions, with almost $2.7 billion in unpaid debts and indirect contagion effects if the affected portfolios aren’t adequately reserved.
Conclusion: Time for a New Tune
With Mexico facing complex international conditions and internal demands, a robust, integrated, and solvent financial system is crucial for implementing strategies like Plan México. The system must grow and contribute to Mexico’s growth with a long-term vision that considers each subsector’s unique characteristics and needs. It’s high time to change the tune and accelerate this financial dance.
