TRANSFORMATION: MEXICO Fintech adoption and digital transaction rates in Mexico are soaring. Alejandro Valenzuela, CEO of Banco Azteca, and Francisco Javier García Delgado, of payment solutions provider ACI Worldwide, consider the challenges for acquirer banks “You can’t swim against the tide of innovation,” says Alejandro Valenzuela. And the bank he leads, Banco Azteca, has no intention of doing so. Part of the Mexican financial, telco and retailing behemoth Grupo Salinas, established by the business magnate, investor, and Bitcoin hodler Ricardo Salinas Pliego, it’s been riding the digital swell around banking and payments since 2002. Most recently, it found itself at odds with the central bank over plans to accept cryptocurrency; it’s lost that battle, along with every other local bank (for now). But Grupo Salinas’ Elektra stores – often referred to as the Amazon of Mexico by virtue of their market dominance – has pressed ahead with becoming the first retailer in the country to accept Bitcoin for purchases. They will go through US-based Bitcoin payment service provider BitPay instead.
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Salinas’ personal determination to promote cryptocurrency, which he has referred to as ‘the new gold’, strikes a chord with ordinary people across LatAm. El Salvador, where Banco Azteca also operates, became the first country to adopt Bitcoin as legal tender, alongside the US dollar, in September 2021. People in every walk of life across the region – and notably immigrants who need to transfer cash cross-border – have dramatically increased their holdings as a way of hedging against economic instability, especially after COVID. Many see cryptocurrency potentially levelling the playing field and extending financial inclusion to those who can’t access mainstream financial services – and more than half the Mexican population still can’t. About 42 per cent live in poverty, according to the International Monetary Fund, despite many being in work. Banco Azteca has a long track record in extending financial freedoms to many of those who hitherto had no access to credit, savings and transactions using anything other than cash. Financial inclusion is not just part of the business model – Valenzuela sees it as more of a mission. “We’re developing digital products to give access to banking for around 20 million Mexicans, which will probably be their only option for formal banking,” he says. That includes tackling some big social issues, such as finding ways to help women who are kept out of the financial system by patriarchal communities, and even abuse.
The pandemic has helped hasten the bank’s progress. “According to the Bank of Mexico, in 2019 there were 422 million purchases via digital channels, amounting to a total of 246billion MXN. In the first quarter of 2021 alone, there were 407 million digital transactions, which translates to 232billion MXN. The metrics tell us that we’re going to double the number of transactions conducted in the digital world in just two years. So, this [digital shift] has come to stay,” says Valenzuela.
TRANSFORMING LIVES Even before the life-changing events of 2020, Banco Azteca was profoundly altering ordinary people’s relationship with money, providing micro-financing for businesses, personal loans for those without conventional credit records, and facilitating payroll coupons for food and gasoline (a common way for employers to top up wages in Mexico and for employees to reduce tax). Francisco Javier García Delgado, a customer success manager, responsible for Mexico, Central America and the Caribbean with payments solution provider ACI Worldwide, cites his own experience of the impact it’s had. He had an issue trying to pay a local person to look after his remote cottage in the Mexican countryside. “I couldn’t go every week or fortnight to pay him in cash, so we both set up an account with Banco Azteca – which he could use via a local Elektra store – just so I could transfer money to him and he could take it out.
Issue 23 | TheFintechMagazine
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