Correspondent Banking in Mexico’s Rural Areas: Lessons from a G2P Payment Digitization and Financial Inclusion Project
This paper studies the effect of payment digitization on the government-to-person (G2P) payment platform in Mexico. The main objective of the Mexican government’s Oportunidades program (Mexico’s largest conditional cash transfer program) was to provide access to financial services to the program’s recipients and others in their communities. By this, it intends to pave the way for their inclusion into the formal financial system and also to strengthen the program’s overall development. The study draws from various project-related documents and interviews with over 20 key actors in the months of July and August 2013. It covers the following in detail:
- Objectives of the G2P program and the need for digitization;
- Outcomes of the digitization initiative and its effect on financial inclusion in Mexico;
- Priorities of three key players: Oportunidades, DICONSA, and BANSEFI with a focus on their mandate, project objectives, project alignment, and sources of friction;
- Advantages of using bio-metrically enabled smart cards in Mexico;
- Insights and recommendations classified into three themes: establishing partnerships and positioning the project, building and managing the agent network, and growing the business by serving the clients.
The paper finds that while payment digitization was successfully accomplished for more than 6.5 million Oportunidades’ recipients, the financial inclusion initiative did not yield the expected outcomes.
