Since 2016, when Finnovista conducted its first surveys of the Mexican ecosystem (which was then the largest fintech market in Latin America), fintech has made little progress in formalizing Mexico’s sizable unbanked population. The most recent National Survey of Financial Inclusion conducted by Mexico’s National Institute of Statistics and Geography finds that as of May 2022, only 49.1% of adults ages 18-70 had a bank account. While this is 3.4 million more than in 2018, it represents growth of only 2%.

Five years after Mexico’s famed fintech law took effect, the sector has failed to meet Finnovista’s prediction that it would “broaden the frontiers of the financial market through the financial inclusion of segments of the unbanked and underbanked population.” While many neobanks, credit providers, and payment providers have gained important traction in Mexico, none have managed to bring millions into the formal banking sector as anticipated.

In fact, if the World Bank’s 2021 Global Findex had included Mexico, Mexico would likely have had the largest unbanked population in the region, surpassing Brazil by over 15 million people.

The unseized opportunity is hard to overstate. Not only would greater financial inclusion in Mexico support the economic development of the country by encouraging savings and investment, expanding access to credit and increasing tax collection; it could also prove to be highly lucrative for those who crack the code and gain scale. Moreover, despite Mexico’s 42.6 million unbanked population, e-commerce in Mexico has nearly tripled since 2018, growing 23% y-o-y in 2021, pointing to a strong growth trend that could be leveraged to encourage greater adoption of formal financial tools.

Challenges slowing financial adoption in Mexico

Several factors have contributed to Mexico’s seeming inability to bank the unbanked. In addition to limited incentives for formalization, the majority of the unbanked simply don’t see the need for a bank account which has made customer acquisition hard and expensive for both fintechs and traditional banks.