Mexico illustrates global drive toward advancing financial inclusion

21 Aug 2016

Editor’s Note:

On August 4, the Brookings Financial and Digital Inclusion Project (FDIP) team launched the findings of the second annual FDIP report. The report highlights developments within the financial inclusion ecosystems of 26 diverse countries from spring 2015 through spring 2016. In this post, the FDIP team explores a number of advances within the financial inclusion landscape of one of its focus countries, Mexico, since the end of the data collection period for the 2016 FDIP Report.

The global financial inclusion landscape is rapidly evolving, as evidenced by robust progress toward strengthening the digital and financial ecosystems among the 26 geographically, economically, and politically diverse countries featured in the 2016 FDIP Report. Indeed, a number of countries have already implemented new financial inclusion initiatives since the end of the data collection period for the second annual FDIP report in late May 2016.

One of these countries is Mexico, which earned an overall score of 74 percent on the FDIP scorecard. In an effort to illustrate the kinds of financial inclusion developments emerging around the world, the FDIP team situates recent advances in and opportunities for Mexico’s digital and financial ecosystems within the context of the four FDIP scorecard dimensions: country commitment, mobile capacity, regulatory environment, and the adoption of traditional and digital financial services.

For more information on Mexico’s financial inclusion environment, as well as descriptions of the financial inclusion ecosystems of the other FDIP countries, read the detailed summaries featured the 2015 FDIP Report and the 2016 FDIP Report.


Mexico received a country commitment score of 94 percent for the 2016 FDIP scorecard—the second-highest score among the FDIP countries for that dimension. Since the end of the data collection period for the 2016 scorecard, Mexico has already made considerable strides toward amplifying its country commitment to financial inclusion.

For example, in June 2016, the President of Mexico launched the country’s national financial inclusion strategy, fulfilling a recommendation presented in the 2016 FDIP Report. The strategy is built around six pillars, including the advancement of financial education, the use of technology to improve financial inclusion, the development of financial infrastructure in underserved areas, increased access to and usage of formal financial services among marginalized populations, the promotion of financial consumer protection mechanisms, and the generation of data and measurements to evaluate financial inclusion.

The enactment of Mexico’s financial inclusion policy was complemented by another commitment to promoting financial inclusion at the national level: In June 2016, the government of Mexico joined the United Nations-based Better Than Cash Alliance (BTCA). Together, these commitments are expected to promote efforts to accelerate engagement with the formal financial ecosystem among underserved populations. Given that a 2015 survey by the government of Mexico found that only 44 percent of adultsin Mexico over age 18 have a bank account, there is undoubtedly ample opportunity to expand financial inclusion.


Mexico’s recognition of the value in strengthening its digital ecosystem, as reflected in its national financial inclusion strategy and membership in BTCA, has been a visible component of the government’s policy agenda for some time. In 2013, the Mexican government launched its “México Digital” strategy, with the creation of a digital economy as one of the strategy’s key objectives. Mexico’s focus on augmenting its digital landscape has yielded demonstrable benefits: For example, a 2013 report published by the BTCA found that the government saved about USD 1.3 billion a year by digitizing and centralizing wages, pensions, and social transfers.

With respect to mobile capacity in particular, Mexico received a score of 83 percent on the 2016 FDIP scorecard, the third-highest score among the FDIP countries for that dimension. Mexico performed particularly well in terms of the extent of 3G network coverage and the diversity of offerings within its mobile financial services ecosystem. Moving forward, room for growth remains with respect to certain elements of mobile infrastructure and services, particularly regarding unique mobile subscribership and smartphone adoption.


Mexico earned a regulatory environment score of 78 percent, the fifth-highest score among the 2016 FDIP country sample. Among the strengths of Mexico’s regulatory environment is its tiered know-your-customerprocess, which enables individuals that are at the margins of (or outside of) the formal financial system to access secure, affordable deposit accounts by simplifying the documentation requirements for account opening to be proportionate to the perceived level of risk posed by the customer.

Ongoing efforts to advance interoperability across mobile money services (discussed below) should enable Mexico to further strengthen its regulatory environment score in the future, and the development of comprehensive electronic money regulations could bring greater clarity to the digital financial services market and facilitate the entry of a greater number and diversity of financial service providers.


With respect to the adoption of traditional and digital financial services, Mexico received a score of 58 percent—the sixth-highest score for that dimension among the 26 FDIP countries. While Mexico possesses fairly robust mobile infrastructure and a variety of mobile money offerings, Mexico’s mobile money account-related indicators each received a score of “1,” the lowest score possible under the FDIP scoring system.

However, while there is considerable room for growth in mobile money takeup in Mexico relative to some other countries in the FDIP sample, it is noteworthy that Mexico’s percentage of mobile money account ownership among adults age 15 and older as of 2014 was double the average for the Latin America & Caribbean region and nearly five times as high as the average for upper middle income countries.

We anticipate that with increasing smartphone penetration, Mexico’smovement toward mobile money account-to-account interoperability, and ongoing policy and regulatory efforts to promote formal financial services, adoption of financial accounts in Mexico will continue to increase among underserved populations.

Interactive SMS Drives Digital Savings and Borrowing in Tanzania

By Rafe Mazer
21 Aug 2016

For anyone who has ever stood in front of a classroom after delivering a lesson, the question “what did they learn, and what difference will it make?” has surely come to mind.

In many cases, this is a black box, including when it comes to traditional financial education, where in-person trainings are often delinked from the desired actions consumers will take – they may learn about interest rates now, but won’t need to borrow for a few months, or even years. This may be why recent analysis (see, for example, Fernandes [2014]) has questioned the behavioral change that traditional financial education programs can have.

But what if you could deliver the learning content at the moment in time it is most needed, and directly monitor not only how the content was accessed but its subsequent impact on actual financial behavior?

This was the premise behind an interactive SMS project for users of M-Pawa, Vodacom and Commercial Bank of Africa’s fully digital mobile money savings and credit product. The platform was run by Arifu, a personalized learning tool that provides customized learning content based on consumers’ preferences and responses. The project targeted farmers in rural Tanzania, as part of the Connected Farmers Alliance, who were receiving in-person trainings.

Using the farmers’ own feedback from initial user testing, CGAP, Arifu, TechnoServe, Vodacom and the Busara Centre for Behavioral Research developed a series of interactive SMS scripts that let farmers guide their own learning on their phones, and to do so when they wanted and on the content they wanted.

For example, those more interested in loans could learn how to check their loan limit or how to use a cost calculator tool; while those interested in savings could read a story of a farmer like them who saved on M-Pawa for their business or set their own personal savings goal.

The team also tested a range of different types of behavioral messages to drive uptake of the SMS content and different learning approaches – narrative, facts, introducing the Arifu name in the SMS as a personal learning guide to increase personalization of the experience – to see which messages worked best.

Overall, the results for the six-month pilot were striking. A total of 33,782 invitations was sent to farmers. The 2,862 farmers who accessed the Arifu learning platform saved at rates more than five times those of farmers who did not access the learning platform.

Graph showing savings for M-PAWA customers in Tanzania

Similarly, farmers who accessed the Arifu learning content – regardless of the specific delivery method – took out larger loan amounts and repaid at higher rates than those who did not access the learning content.

Graph showing loan repayment statistics based on education received

On average, the more screens a farmer viewed, the more financial activity they had on M-Pawa. Even more interesting still, the treatment that introduced Arifu as their learning guide from the beginning had the highest impact on financial behavior – as shown in the graph on loan amounts. This shows how personification can help amplify digital learning. During pilot testing of SMS content with farmers, several farmers inquired about Arifu, asking questions such as “Arifu nii nani?” (Who is Arifu?) and frequently assuming it was another person communicating with them.

Besides the evidence this research provides on the power of timely, user-guided digital learning content, the research also highlights two key principles for consumer protection and responsible delivery of digital finance.

First, the use of well-built, interactive content about product features – including costs – helped increase use of the product and positive financial outcomes. While we have noted in the past how many digital lenders offer poor or insufficient disclosure of terms, these findings show how robust disclosure can be a good thing for providers as well as consumers (something also documented in CGAP’s digital credit experiment with Jumo in Kenya.)

Second, the interaction between the savings and borrowing aspects of M-Pawa in this experiment show how important it is to offer not only credit, but a place to store value. By driving up savings on M-Pawa, farmers were able to more accurately share their cash flow, and receive larger, more accurate loan amounts, leading to larger amounts borrowed and higher repayment rates for those who accessed the Arifu learning content.

We hope these results demonstrate the utility of enhanced consumer engagement, and that we see more approaches like this by digital financial service providers in the future, leading to increased consumer understanding, product use and benefit for consumer and provider alike.