In one of the most daring developments in Latin American banking, stores such as Mexico City-listed supermarket chain Soriana are announcing plans to target Mexicans who have traditionally been neglected by mainstream banks. Retailers ranging from electronic stores to wholesalers will open banking services in their shops this year, offering car financing, small loans, insurance and eventually mortgages.
For Wal-Mart, which has named its bank Adelante, "get ahead" in Spanish, banking could add 20% to its annual earnings in Mexico by its fifth year of operation, according to Merrill Lynch. Many analysts expect the venture to be a success because of the sheer number of Wal-Mart stores across Mexico, some 900 at the last official count, and because "a large part of our clients do not have access to banking services," says Wal-Mart de Mexico’s president, Eduardo Solorzano.
The low-income niche has been so successful for retailer Elektra, which pioneered the business in 2002 with its Banco Azteca, that the company plans to open banking operations for the poor in six new Latin American countries this year, including Argentina and Brazil. The business-model is labour-intensive, with Azteca sending agents to prospective borrowers’ homes to judge creditworthiness and paying them visits if they miss payments but it appears to be working.