The World Bank defines financial inclusion as “individuals and businesses having access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – delivered in a responsible and sustainable way.”
Having ready access to personal banking and business-related financial services is taken for granted in many parts of the world, but in rural areas and throughout Latin America, limited access to banking solutions remains a fundamental barrier to personal freedom and financial security, and it limits the ability to save money safely outside the home, send payments, receive deposits, and take steps out of poverty toward financial independence.
Financial inclusion is a long-standing social issue in Mexico, where less than half of the population has a bank account, and roughly seven million people – about 6% of the country’s population – live more than four miles from the nearest bank or ATM, according to the Comisión Nacional Bancaria y de Valores (CNBV).
Across Latin America, machismo still exists. Machismo is the idea that women are second-class citizens. It perpetuates traditional gender norms in which men are expected to work outside, and women stay home, raising the children while managing the household.
At its worst, machismo costs women their lives, a situation that has only worsened during the pandemic: femicides in Mexico have increased by 7.7% in 2020 and will likely continue to rise as COVID-19 forces more women to stay home with their abusers. At best, this prevailing mindset limits how women behave and think, and often prevents them from having access to their own money, never mind trying to start a business.
Mexican women who are bold enough to launch a business face sexism and must fight to be taken seriously. They are further challenged by limited access to key resources (financial or otherwise) and the need to balance household and childcare responsibilities while running a business. This gender gap leads to even bigger economic disparities between men and women and perpetuates the cycle.
Fundamentally shifting this dynamic by helping women to join the workforce and to become business owners represents a significant economic opportunity for Mexico. Increasing women’s labor force participation would raise Mexico’s GDP by 70% ($800 billion), per McKinsey & Company. Yet, fewer than 25 percent of business owners in the country are female, and in Latin America, only 4.2% of CEO positions are held by women. COVID-19 has only worsened the economic situation, as many women have lost jobs outside the home due to the pandemic.
Making it easier for anybody to open a bank account, whether you’re a man or a woman, is a vital necessity to increase financial inclusion throughout Latin America. Making business banking more fast and easy will put entrepreneurship within reach of people with big ideas who might otherwise give up on their dreams.
Women like Gabriela Contreras, the daughter of a family of bakers who saw firsthand how hard it was to run that kind of business, decided to take a stable job working at Sam’s Club instead.
At the age of 48, inspired by her son, Gabriela decided to finish her high-school degree and learn coding online with the goal of launching her own development studio within the next year; all while juggling young children at home and another online sales business on the side.
How does a busy woman raising kids and holding down three jobs find the time and energy to open a bank account, learn to code, and become financially literate enough to manage her own business and personal finances? With grit and determination, to be sure. If neobanks can remove one more roadblock for entrepreneurs so that they can focus on what they love and not spend so much time at the bank, we see that as a huge success.
More important, by supporting gender equality and independence through financial literacy and inclusion, women will be empowered to make, keep, and manage their money so that they’re free to make their own decisions and choices for themselves without so much personal risk.
At the same time, we’re better positioning women to follow their entrepreneurial dreams and become a driving force in Mexico’s economy in terms of job creation and GDP growth in the months ahead as we eventually emerge from the pandemic’s impact.