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    FEMSA UBD   MXP320321310

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.

(FEMSA UBD)
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End-of-day quote Mexican Stock Exchange  -  2022-08-11
130.93 MXN   +2.47%
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Fintechs fail to make a dent in Mexico as cash remains king

05/26/2022 | 04:16pm EDT
FILE PHOTO: Mexican peso banknotes are pictured at a currency exchange shop in Ciudad Juarez

MEXICO CITY (Reuters) - Financial inclusion levels in Mexico have worsened since 2018, official statistics show, despite a burst of financial startups hoping to 'bank the unbanked'.

Mexicans with at least one financial product last year fell 0.5% to 67.8% compared with 2018, the National Inclusion Report (ENIF) concluded this month. Meanwhile, cash still drives 90% of transactions under 500 Mexican pesos ($25), as well as 78.7% of payments or bills over 500 pesos.

That puts Latin America's second most populous country far behind similar economies like India, Kenya and Brazil in terms of inclusion and its reliance on cash.

This comes despite hundreds of 'pro-inclusion' fintechs arriving in Mexico since 2016, offering easier ways to sign up or no-fee banking, including Klar, Kueski Pay, Stori, and Albo.

While attracting millions of users, these startups are struggling to move the needle around Mexico's informal economy, says Maelis Carraro, managing director at consulting firm BFA Global.

"Fintech innovators have not yet delivered on their potential to build solutions that are centered on underserved communities," she told Reuters, adding that fintechs mostly target Latin America's metropolitan elite, rather than poorer, rural communities where banking infrastructure is most needed.

For their part, fintechs say they need more regulatory support to have impact.

"Until more digital players become [licensed as] banks, inclusion will continue to hit a ceiling," said Juan Guerra, Revolut's Mexico chief executive.

Fintech users still need to link their digital accounts to licensed banks, requiring a visit to traditional brick-and-mortar branches, he said.

Since the government introduced its 'fintech law' in 2018, 58 companies have been approved or provisionally approved for payment licenses, according to the Mexican Fintech Association, yet no new retail banking licenses have been issued.

At the same time, the proportion of Mexican adults with bank accounts edged up two percentage points between 2018 and 2021 to 49.1%, while card usage for larger transactions increased to a modest 12.3%.

Mexico, meanwhile, continues to attract international startups like Nubank, Uala and Revolut, with ambitious full-scale banking plans.

Convenience-store Oxxo also launched a banking app last November, and says it already boasts 1.6 million users. Customers can sign up directly in Oxxo stores, which are far more populous nationwide than bank branches.

The Mexican government has separately undertaken a pilot project to get women banked, after the gender gap for financial inclusion doubled to 12% in 2021.

Officials are also beginning to dispense welfare benefits via digital wallets or bank deposits, rather than cash, as well encouraging adoption of government mobile payments system CoDi, launched in 2019.

(Corrects name of fintech in paragraph 4 to Kueski Pay instead of Keusiki Pay)

(Reporting by Isabel Woodford; editing by Richard Pullin)

By Isabel Woodford


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V. 2.47% 130.93 End-of-day quote.-17.82%
MEXICO IPC 0.82% 48840.1 Real-time Quote.-9.07%
US DOLLAR / BRAZILIAN REAL (USD/BRL) -0.01% 5.0713 Delayed Quote.-7.53%
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Sales 2022 645 B 32 444 M 32 444 M
Net income 2022 25 851 M 1 300 M 1 300 M
Net Debt 2022 102 B 5 129 M 5 129 M
P/E ratio 2022 18,1x
Yield 2022 2,41%
Capitalization 436 B 21 921 M 21 921 M
EV / Sales 2022 0,83x
EV / Sales 2023 0,77x
Nbr of Employees 330 394
Free-Float 99,0%
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Daniel Alberto Rodríguez Cofré Chief Executive Officer
Eugenio Garza Y. Garza Finance Director, CFO & Corporate Development
José Antonio Fernández Carbajal Chairman & Chief Executive Officer
Gerardo Estrada Attolini Vice President-Administration & Corporate Control
Robert Edwin Denham Independent Director
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