The sharing economy: Beyond market cultivation to financial inclusion in Mexico
By J. Kevin Fisher & Rossana Huerta Cado
The sharing economy: Lessons for financial inclusion
The seed has been planted in Mexico for more affordable and accessible financial products. Point solutions that address a particular financial need are popping up regularly – in traditional banking channels, through non-traditional channel such as retailers and with the ever growing number of non-traditional financial institutions.
Assuming the regulatory and operational barriers are clear organizations can make significant progress in the market. However, to be effective institutions promoting financial inclusion must embrace a business strategy that connects with consumers. It is about getting personal with the consumer. A mass-market approached based upon the theory “one-size fits all” is dead in today’s hyper-connected, hyper-viral business world. As such, service providers can be made and broken in no time.
Emerging markets such as Mexico are fertile ground for new companies promoting a better way to serve the market. But, Mexico is not one big market. It can best be described as a group of regional markets all sharing some commonalities but strikingly unique in local flavor. So it is time for stakeholders to get hyper-local in their approach to financial inclusion and avoid the temptation to see financial inclusion as the opportunity to deliver first-world products to populations living at the bottom of the economic pyramid.
Background facts about Mexican consumers
- Mexico City is home to approximately 21 million in a country of 123 million people. (Mexican remittances 2014 approx. 17% of the total population)
- The next ten regions in size in Mexico account for over 40% of the population. These regions include: Baja California, Guerrero, Chihuahua, Oaxaca, Chiapas, Michoacán, Nuevo León, Guanajuato, Puebla, Jalisco and Veracruz.
- Formal sector employment accounts for approximately 40% of the Mexican workforce.
- Upwards to 52% of the population lives at or below the poverty level.
- Mexican consumers are increasingly “time-poor” and consider convenience as a key driver of consumption.
- Over a half-million Mexicans from the state of Puebla live in NYC
- Remittances by region tell a different story.
Some general attributes of the Mexican people
It is important to note that Tamaulipas is the only northern border state among the top 10 states receiving remittances. Many factors contribute to these flow levels – the number of migrant workers from that state working in USA, the poverty levels in the state, unemployment rates in the state, whether or not that state has a long history of supplying migrant workers.
- There are over 50 million active Facebook users in Mexico.
- Mexico is the fifth most active country on Twitter with over 13 million active users.
- 66% of all Facebook users in Mexico will visit their account at least once a day. The number of hours spent within social media is estimated to be 3 to 4 four hours a day.
- Hands-down short video has emerged as a preferred medium for Mexican social media users.
- Some general attributes of the Mexican people
- Mexicans put a high value on hierarchy and structure in business and family matters. Especially outside of cities, families are typically large and Mexicans are very conscious of their responsibilities to immediate family members and extended family such as cousins and even close friends.
- Women head-of-households has increased in recent years as have divorce rates.
- Hosting parties at their homes plays a large part of Mexican life and making visitors feel comfortable is a large part of the values and customs of the country.
- Most Mexican families are highly traditional, with the father as the authority figure. While more women are working outside of the home in the past several decades, there are still a large number of women who work exclusively in the home. The country remains a male-centric society, and machismo.
- Mexicans revere people in authority, including clergy and medical professionals. (~90% Catholic)
Connecting with consumers – one region at a time.
Viral marketing has been cited as necessary approach to create awareness and capture users for to expand financial inclusion. In Mexico, a regional focus with affinity programs launched with major influencers should be a critical necessary step in launching new programs. In addition, a bold direct emotional appeal to targeted consumer sectors is critical for viral spread of awareness and acceptance of services. Too often new entrants into the financial inclusion fray focus on products. Products developed from more financial established regions of the world, but this approach can be risky. Products must reflect the local consumer; it is about consumer pain and opportunity.
Addressing the market opportunity.
The strategy behind any program must be backed with a comprehensive roll-out and fulfillment mechanism. This type of program should be highly scalable and leverage the Mexican love affair with social media.
Think Uber – a quintessential disruptor in an old industry. Financial services vendors must want to be a disruptor. To disrupt, a company must move beyond “me too” marketing and set in motion a significant shift in convenience and costs in order to ease a consumer’s pain. There are many notable practices to be learned from UBER’s rapid ascent, ill-will and role as an industry disruptor. It is cutting to heart of an entrenched relationship between the established industry, its regulator and the status-quo.