The Alliance recently welcomed Lidh, our first FinTech member and the first digital bank in Mexico that focuses on meeting women’s financial needs. In this interview, CEO and co-founder Tonatiuh Salinas spoke with the Financial Alliance for Women about why he started the company and where he sees the future of financial services for women in Mexico going.
Financial Alliance for Women: According to Findex, only 37 percent of Mexican adults have access to a financial account. Why do you think that is that the case, and why don’t more financial institutions in Mexico see the unbanked as an opportunity?
Tonatiuh Salinas: Our financial environment is such that you can make great financial returns without much effort – without innovating and without including the excluded. Many financial services providers focus on the middle class, but they offer similar products and don’t solve for their clients’ specific needs. The middle class remains under-banked, and the base of the pyramid remains unbanked. We see a significant opportunity for FinTechs to serve these markets.
Alliance: The gap is more persistent for women: Findex shows an 8 percentage point gap in financial access between men and women. What are the main barriers women face in Mexico?
TS: The main barrier we see is a lack of motivation. The banking industry has created general products for the general population, which do not take women’s decision-making role into account. So women are not motivated to engage with the sector. We see a great opportunity to offer products that provide solutions to women’s lifecycle needs, and through our communications to engage and inform women and encourage them to participate in the financial system.
Alliance: Beyond access, what other financial gaps do women face in Mexico? Which segments do you see facing the greatest barriers?
TS: The biggest challenge really is in retirement planning. Culturally, we typically don’t prepare for it, and women generally tend to rely on their spouses in retirement. Twenty to 25 years ago, most middle-class women did not engage in paid work, and while currently many more are, they are still not preparing for retirement, and they do not understand the benefits of planning and investing.
Alliance: Only 4 percent of women are currently using mobile money accounts in Mexico, according to Findex. Why are these levels so low? Can mobile/digital banking play a bigger role in getting more Mexican women banked?
TS: Most people think that if they move to mobile bank accounts they will have to pay more taxes. In an economy that is 60 percent informal, this is a real barrier; the motivation to use them is not there. To solve this, a big effort is needed on the policy front. There is a new law that seeks to incentivize transition to the formal economy and to mobile money, with the Mexican government offering benefits such as health care and lower tax fees for new businesses.
Second is the issue of trust. Historically, Mexicans want to feel the money in their pockets. However, as economic models based on trust are coming to the fore – such as the shared economy – this attitude is changing. For example, we recently worked with a client company whose owner was in an older age demographic and did not really understand the mobile solutions we are offering. Her daughter, who is 40 years old, immediately understood. But we don’t see any other way: in 50 years, 90 percent of all money in Mexico will move digitally.
Alliance: Why did you decide to start Lidh? What was the business rationale?
TS: Five years ago, we did some research and found that women are eager to have products designed for them. As part of Nacional Financiera’s work to support women entrepreneurs, which I led, we lent almost US$1 billion to the financial industry. Through this program, we found women pay on time, and their default rates are 45 percent lower. So we came up with a FinTech that is woman oriented, with the right products and communications strategy. Lidh means to connect – our purpose is to connect women with the financial sector so they can gain power over their money, their independence, and their security.
Alliance: Can you tell us about the financial and non-financial solutions you plan to offer? How will women be able to access them?
TS: We’re first offering a bank account that can be easily opened via the app or online, as well as loans, electronic transfers and a payment card. Through this account, you have access to deposit and withdrawals on a daily basis and can also easily invest your money in Cetes, Mexican treasury bonds – with two clicks you can invest, and with two clicks you can dis-invest. In regards to credit, we will provide personal and business credit, and it is also a big challenge to educate women about these two different types of credit. We plan to offer credit for small women business owners that is easily accessible and can be approved and processes in 24 hours.
In regards to non-financial services, we are first offering an education platform. Before providing someone with a credit card, the customer has to go through a short training and answer some questions. If answered correctly, they get access to the card. Second, we want to change the way women manage their money. At the moment, women cash out their wages immediately. Through our communications and engagement, we want to ensure stickiness, savings and investments.
Alliance: As a start up in the FinTech space, how are you making sure your company embodies the diversity you are looking to promote externally? How do you manage diversity and inclusion within your organization?
TS: The first question we always get is why does a FinTech focusing on women have a male CEO? I am the only male founder in our company; the rest of my team is female. We have a great team with a hugely diverse experience base. What is really key is having female investors invest in Lidh. We have diversity in the DNA because of our founders, and then of course the internal diversity and inclusion focus.
Alliance: Where do you see Lidh in 5 years?
TS: We want to be the most innovative financial company in Mexico. I see Lidh as a financial group, made up of different companies – talking at first to women and then to different segments, like the working class. Then we will probably focus on the LGBT community and continue to find segments that need our specific support.
Alliance: Why did you decide to join the Financial Alliance for Women?
TS: We joined because we want to learn! For us it’s a 24/7 school of good practices and opportunities.