Banco del Bienestar – Mexico Is Opening a New Mexican Bank

Banco del Bienestar – Mexico Is Opening a New Mexican Bank

 

Mexico Is Opening a New Mexican Bank – Introduction: 

 

Following in the tradition of the new health insurance policy Instituto de Salud para el Bienestar (INSABI), Mexican President López Obrador has decided to expand upon his socialist vision for Mexico to create the “Bank of the Poor”.

That’s right! Mexico is opening its own bank. Called Banco del Bienestar (Bank of Wellbeing) will have the most network branches of any bank in the entire country—at least as far as AMLO’s vision is concerned.

 

On Monday, January 6th, 2020, the construction of 2,700 branches of the new Banco del Bienestar was approved—half of which will be built this year. The rest will finish completion in 2021. These banks will be built for $10B MXN (roughly $530M USD). 

 

In addition, former Federal Savings Bank (BANSEFI) branches will be converted to Banco del Bienestar branches, which will add an extra 538 branches to the total. 

 

This construction will mean that these 3,238 Banco del Bienestar locations will equal 28% of the 11,687 locations in Mexico. It will by far outnumber the locations of any other bank in Mexico—outnumbering Banco Azteca and BBVA which have about 1850 locations each.

 

Mexico Is Opening a New Mexican Bank – AMLO’s Vision: 

 

AMLO’s original vision was to build 13,000 branches, though proved to be unrealistic. Construction of these banks will be built in impoverished, marginalized, and rural communities first. 

 

Those who are getting government financial support will benefit the most from Banco del Bienestar. This includes disabled individuals, the elderly, students with scholarships, and Mexicans who do government-funded charity work.

 

However, AMLO’s plan to build so many Banco del Bienestar branches has come under criticism. This runs contrary to the current trends in the banking industry. 

 

Most banks are focusing on improving online banking—specifically their website interface and mobile app efficiency—which is in the opposite direction that Banco del Bienestar is going. In fact, in the last decade, bank branches in Mexico have only increased by 3%.

 

Mexican Banking Association members invest roughly $70B MXN (about $3.7B USD) in increasing technological innovation in hopes of strengthening their digital capacity. For example, the Mexican Central Bank developed the new CoDi digital charge system of payment through smartphones.

 

The President of the Mexican Banking Association (ABM) has publically denounced the plan to build more branches. According to him, the massive investment it takes to construct these branches outweighs the amount of Mexicans that will be incorporated into the formal banking system. 

 

Other nations such as China, Russia, and Honduras (that face the same challenges in development of rural and underdeveloped areas) have also rejected the notion of creating thousands of bank branches in the middle of nowhere to satisfy the people.

 

Instead, these nations are also focusing on digital payment solutions as opposed to brick and mortar branches. However, AMLO is banking that building these brick and mortar branches will also improve the local economy by offering jobs to these rural areas where they can deposit their funds.

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Comments (12)

  • John A Chambers

    Mexican banks are already required to offer no-cost accounts to everyone. Many employers REQUIRE that paychecks be made directly to the bank. On Friday evenings, the ATMs have very long lines of people getting their pay.

    Nonetheless, my experience is that when given a choice, those with relatively low wages would prefer cash. In small towns without bank branches, I suspect most of the locals don’t miss them; they’ve always used cash and I believe many or most prefer to continue to do so.

    There is a sizable party of the population that still doesn’t trust banks. I’ll be curious to see if the new plan changes that.

    Reply
    • Raf Bracho

      Interesting thoughts, John. I’ve never heard that. Thanks for contributing! We hope this message finds you well.

      Reply
    • Richard Grabman

      With entitlement benefits now going directly to beneficiaries, most of whom live in underserviced areas, they will be able to have their benefits thru direct deposit, and receive ATM cards.. and use an ATM in communities where they haven’t existed before. In other words, this is a way of getting the poor into the banking system, the bells and whistles of smartphone banking coming later. They also will be a source for low or no interest small loans.

      Reply
      • Raf Bracho

        Exactly Richard. You got the point of it. 🙂 I am glad that you enjoyed my article. Thanks for commenting!

        We hope this message finds you well.

        Reply
      • Enrique juan huerta

        The reason to bring them into the banking system is two fold. it introduces banking where it hasn´t existed before…that´s a lot of mexico…. and introduces more people to the government as potential tax payers. Money in the bank is easier traced than it is at moment, in the employees hands. Mexico is moving like the rest of the world and wants “all” its people to pay their share of the tax. This is exactly the way other countries introduced modern banking and reliable tax provision many years ago…and with exactly the same excuse of how it benefits the people. There is a reason why people don´t like to bank their money in mexico…first is identification of income and second is that the banks cost. No matter what anyone tells you…its costs you to have the banks look after your money. There is no such thing as a no cost bank in mexico. Unless your counting that they don´t ask you to pay for the opening fee…but they do demand a minimum in your account. 🙁

        Reply
  • Rob Bertram

    I have lived and worked in México for 26 years. Banks in México charge ridículous comissions for picking up cash, on creditcards, morgages and personal loans (38 – 40%). Their service is bad, and no one trusts them. They are definitely not interested in serving the poor. So poor people can’t get loans. There are all kinds of shady businesses providing these services.

    Reply
    • Raf Bracho

      I have heard this as well Rob. This bank seems to be different. We’ll see if that’s true once it is implemented.

      Thanks for commenting!

      Reply
  • Mari Sheppard

    For those of us who receive our money through banks in the USA ATMs can be challenging. They charge a service fee and now a fee to convert dollars into pesos. Most refuse checks written from USA banks. Opening a peso account is easy. Getting money into that account is hard. I tried to have money wires and found USA banks either refused or wanted to send money to a dollar account. I tried to open a dollar account at Scotia Bank. They wanted 1,000 USD in cash to open a dollar account. don’t have that, thus no dollar account. They refused a check drawn from USD. Banking in Mexico is difficult for those of us who do not have an income in Mexico.

    Reply
  • Toya

    This is not only for the poor people is similar to social Security benefits in USA. The new government give to all the people 68 years or older, disabled students $2550 pesos every two months. Plus health insurance in a great government Hospitals. When it President Lopez Obrador start this benefits almost 20 Year ago, was for people 60 years and mas. Remember never ever before in Mexico County any government give any money to nobody. Except if you working for the government or an industry with benefits you can get retirement. So what the last Governments do we our (Impuestos) taxes???. Mexico is Rich and beautiful and mas su Gente, Nuestra Gente except for some bad people the only said bad things about Nuestro Mexico Lindo y Querido! Saludos

    Reply
  • Albert

    No, do not trust that bank. The Mexican president is not a trustworthy person.

    Reply

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