Banking penetration in Mexico has comparatively lower percentile when compared to other Latin American countries. According to World Bank’s 2011 Financial Inclusion Survey on banking systems across the world, Mexico had only 27.4% of its population with a financial account. Moreover, 55% municipalities in Mexico have only a single access point to a banking institution.
With the above statistics and lower perceptions of traditional banking, major financial players in Mexico are targeting digital to enhance their customer base as well as customer engagement. Although, digital banking is very much a part of the financial system these days it is not as versatile in Mexico as the rest of the Latin American countries. According to data, Mexico has over 50 million internet users and over 100 million mobile phone users but only 11.5 million of the internet users have a bank account. BBVA when looking to expand their digital offerings conducted a study on the Mexican online banking ecosystem and found that only 16% of the total banking transactions is conducted online.
The promise of more people embracing digital and mobile banking owing to the vast number of internet and mobile users is enormous. Online banking can help Mexican banks overcome the issues of customer engagement, limited banking touchpoints and enhance customer base with versatile, easy and secure banking offerings.
Although digital banking is a relatively new venture for Mexican banks, they already face numerous challenges and heavy financial loses. As of April 2018, Mexican financial systems have lost over 300 million pesos due to various forms of cyber-attacks. The high prevalence of these cybercrimes has greatly reduced the trust of customers on the Mexican online banking system. Some the challenges leading to the massive cybersecurity breaches include:
- Lack of proper and stringent security measures toward cyber security
- Inconsistent statements and reporting abnormalities
- Lack of enhanced technological hardware and software infrastructures leading to the use of malicious codes along with other tools to carry out cyber-thefts including compromising ATMs to extract money
- Lack of stringent banking regulations and compliance measures
- Shortage of cyber security professionals who are trained to handle such breaches and also failure to retain such talents
- Lack of upgraded technology knowledge like Blockchain for secure and safe financial transactions
- Lack of cyber security awareness, which is the reason about 14% of Mexican CEOs believe that cyberattacks are inevitable
Areas of Improvement
To overcome the challenges of online banking, both the banks and the government need to take immediate and strong actions to mitigate the effects of cybercrimes and make banking a lucrative business. Some of the steps that can be implemented to build customer loyalty and enhance customers trust in the digital banking scenario include:
- Provide highly specific training to professionals in curbing cyber breaches to detect threats through pattern recognition and intelligence creation
- Include technological advanced hardware and software to enhance cyber security, continuously review technological infrastructures, take proactive measures like vulnerability assessments and in-depth penetration tests
- Increase cyber security awareness among employees and the organization at large
- Bring about stringent measures and regulations to enhance security
- Regulate the operational aspects across process, personnel and technology
- Create incident response team to handle critical situations while handling financial information
- Build operational resilience to address capacity of critical processes and services
Overcoming the challenges in the Mexican online banking space will greatly help financial institutions to enhance their customer support and engagement. Increasing cyber security and regulating the digital aspect of banking can augment customer trust and stringent rules and better management can eventually improve customer loyalty.