Why Don’t Low-Income Mexicans Use Formal Savings Products?

In contrast to many jurisdictions where CGAP works, Mexico has a highly urbanized population of well over 70%, enabling its population to have relatively easier physical access to banks and other financial service providers.  Yet, current estimates indicate that between 50-65% of the population are unbanked and a large proportion of them are de-banked” – meaning that they once had access to a formal financial service but then decided to stop using it.

1. Poorer Mexicans do not save just for the sake of saving. People save for tangible things, not for having general funds for “possible” use in the future or long-term security.  They intuitively categorize money for specific projects, daily expenses and emergencies and use a variety of analog methods to keep track of it and/or ‘distance’ themselves from it.  These go from literally keeping money under the mattress, to storing it in drawers, jars, boxes, envelopes, jacket pockets, giving it to other people to look after or purchasing goods to later sell or use.  We learned that organization, separation and categorization help them create mental and emotional structures around money and prioritize its use.


2. Poorer Mexicans seem to think they’ve never saved before.  When questioned, this market segment tends to answer that they have never “saved” when in fact the above suggests they do.  The reason is that savings was perceived as something that is done when you have an income in excess of your needs, which is something the interviewees expressed they never, or hardly ever, had. Savings is seen as something beyond their reach, unattainable and practically impossible to do.  However, they did, in their own words, “put money away,” “store it,” “keep it,” “set it aside,” “put it to work” (in Spanish: sacarlo, juntarlo, guardarlo, apartarlo, ponerlo a trabajar) but they didn’t “save it” (ahorrarlo).   Hence, we learned that offering a savings account as a gateway to formal financial services would require using very different language than Mexican banks had traditionally used in order to attract people to a savings product they otherwise would consider not relevant to them.

• Design products that directly cater to the categorization within people’s real lives.   While this might seem intuitive and obvious, we see much too often that financial providers across the board offer a very standard set of products (e.g. typical savings account, credit, insurance).  However, providers striving to serve low income markets may reap financial sustainability if they offer products that mimic and improve on the categorization and prioritization that people already do in their everyday lives.  This would ensure that the products offered are intuitive, relevant and add value to potential clients of this market segment and that their transition to using formal services is natural and painless.


• Speak people speak, not bank speak.  This refers to the many ways in which financial service providers convey information and communicate with their clients regarding, for example, disclosure and product information, fees, specific product offerings.  The more familiar the terms used, the easier they will be understood and the more transparent the provider will come across.  People naturally mistrust what they don’t understand and they will not be attracted to things they don’t think they need,  such as being charged commissions for an intangible service (e.g. account handling fees).  We found that fees and other charges evoked negative emotions in people, but they reacted positively to them when it was clear that they were receiving a tangible benefit in return and that they had a choice in the matter.  Hence, fees and other surcharges should be framed and marketed in a language and manner that allows customers to clearly identify tangible gains and tradeoffs.