Mexico

Financial services in rural areas (PATMIR III)

Project description

At the end of 2011, Sparkassenstiftung won an international tender for a three-year project to improve the access to financial services in poor rural regions of Mexico. The project is financed by the World Bank and steered by the Mexican development bank BANSEFI within the scope of the PATMIR programme. This new project is a prolongation of PATMIR II, a project that was successfully executed by Sparkassenstiftung between 2008 and 2011.

In Mexico’s rural areas, only few people have access to financial services. In contrast to the cities, there are often no financial institutions on hand at all. Mexico’s cooperative-based savings banks (cajas solidarias) offer a possible way around this problem. They have a social mandate and regard rural areas as an attractive market prospect. However, these savings banks are often very small and reluctant to take on the costs and risks involved in expansion.

The PATMIR project was constructed for this scenario and is thus designed to help Mexican savings banks expand their branch-office network in rural areas. The project reimburses a large share of the costs incurred through network expansion and it supports savings banks expansion efforts by deploying external advisors, i.e. from Sparkassenstiftung. To qualify for project funding, the savings banks involved first have to work together with advisors from Sparkassenstiftung to draw up a blueprint for expansion. This blueprint must cover the implementation of new, market-oriented products, appropriate marketing strategies and measures for raising efficiency, including financial literacy measures. Support is only given to new branch offices in localities having fewer than 15,000 inhabitants and these places must be in regions that have below-average income levels.

Sparkassenstiftung has selected and motivated more than 50 savings banks throughout Mexico to take part in the project. During the three-year project term 155,000 new customers are to be recruited, who will actively use savings bank products for a period of at least six months. Within the scope of PATMIR II, Sparkassenstiftung has already succeeded in attracting more than 144,000 new customers, in particular women and indigenous people, and thus contributed to financial inclusion in Mexico’s rural areas.

Services provided

• Development of customized optimisation plans in cooperation with the different Mexican savings banks
• Execution of market surveys
• Marketing of rural microfinance services
• Consultancies to strengthen the savings banks through regular monitoring of financial indicators
• Product development
• Training and education of savings banks’ staff
• Utilisation of network systems and synergy effects to reduce costs of small-scale business operations
• Financial literacy measures to educate target groups (in particular women and indigenous population)
• Development of expansion strategies and consolidation of distribution channels
• Quality management during expansion process
• Coverage of savings banks’ expansion costs