Economic crisis in Mexico closes 867 bank branches, reduces credit card use

Mexican banks feeling the impact of the economic crisis created by the COVID-19 pandemic have closed 867 branches in the first quarter of 2021.

According to Mexico News Daily, the 50 banks operating in Mexico have closed 6% of the points of contact available to customers, and now offer a combined total of 11,912 locations, down from 12,779 in the first quarter of 2020. This situation has increased the risk of financial exclusion with some communities left without a brick-and-mortar branch. Still, this risk could be overcome by the increase in digital banking and an aversion to cash payments, both of which are also side effects of the pandemic.

Digital financial tools have profited from the change in consumer habits. Their heightened strength was best reflected in the increase in smartphone transactions during the first three months of 2021, which totalled over 52 million, an increase of 26.5% on 2020.

Furthermore, the banks saw the dissolution of more than one million credit card contracts, according to the National Banking and Securities Commission (CNBV). BBVA México, Banorte, Citibanamex, Santander, HSBC, Scotiabank and Inbursa hold 70% of all credit cards contracts and they ended the first quarter with a total of 27.7 million, down from 28.72 in the same period in 2020.

The trend away from credit cards is due to a consumer preference for making payments with disposable income and for saving more of what they earn, according to the Association of Mexican Banks (ABM).