Banco-Azteca-CEO-Alejandro Valenzuela
Banco Azteca chief executive Alejandro Valenzuela: “There is a revolution coming in financial transactions.” (Image courtesy of Banco Azteca)

“Financial inclusion is at the centre of the mission and business model of Banco Azteca,” explains CEO Alejandro Valenzuela. “We tend to go wherever there is a need for financial services. Most of our clients have acquired access to formal banking services for the first time because of our services in several countries in Central America.”

Since it first opened its doors in Mexico in 2002, Banco Azteca has specialised in helping low-income customers get access to formal banking, which all too frequently means overcoming several barriers. Banco Azteca has 1,880 branches at home, and also has operations in Guatemala, Honduras, Panama and Peru.

The bank, which has $10bn in assets and is part of Grupo Salinas, provides many services to its clients including personal and consumer loans. Additionally, Banco Azteca offers payroll services and is an agent of the government’s agricultural financing programme, Procampo.

However, managing operations across several countries has been complicated by the Covid-19 outbreak, with each country imposing different restrictions and measures to battle the pandemic, meaning that multinational companies such as Banco Azteca have had to adjust accordingly and differentiate their strategies in each location.

Banco Azteca navigates uncharted waters

“The reactions of governments to Covid-19 in developing countries, where resources are scarce and stimulus packages are limited, have heavily influenced the capacity of businesses to keep operating, or to stop existing over time,” says Valenzuela. He explains that in Mexico the bank continued its operations by taking the required Covid-19 measures, but it was not able to do this in Panama, Peru and Honduras where a harder lockdown meant companies had to shut down.

However, although the pandemic has caused many disruptions to operations in all countries, it has also accelerated the digital transformation at Banco Azteca. Valenzuela explains that within the space of a few weeks, the bank managed to adjust to the new normal and make rapid progress in regards to its digitalisation procedures. A major obstacle has been that the client base of Banco Azteca, in line with the banking culture throughout Mexico, still prefers to visit branches, but throughout 2020 there has been a rising number of customers using online and mobile banking.

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However, this shift has brought with it higher risks with regards to cybersecurity. “There is a revolution coming in financial transactions, but for this to happen the key is cybersecurity,” says Valenzuela.

He adds that apart from the digital transformation, other trends to watch within the banking sector include big data, artificial intelligence, blockchain and cryptocurrencies. On top of that, he mentions fintech as a game changer for the industry.

“Banks are getting a lot of pressure from fintechs, who have been able to specialise in parts of the financial world and provide much better solutions than a general bank does,” says Valenzuela. “It is like the difference between a generalist and a specialist.”

Sustainable investment makes impact in Mexico

Another trend to watch is sustainable investment, according to Valenzuela, who adds that there is a lot of progress in terms of sustainable and environmentally friendly projects in Mexico.

Indeed, it become the first country to launch a Sustainable Development Goals (SDGs) bond earlier in 2020. According to the UN Development Programme, the “SDG sovereign bond framework contributes to Mexico’s commitment to achieving the SDGs in three specific ways: it strengthens budget transparency; it increases earmarked spending for sustainable development programmes; and it contributes to the development of the local and international capital markets aimed at development finance”.

Valenzuela highlights the importance of sustainable and environmentally friendly projects for Mexico as well as the wider world, not only because they generate good financial returns, but because they are also meaningful to society and people’s well-being. He adds that among the areas that provide good opportunities for sustainable FDI in Mexico are solar panels, and refuse collection and processing.

With the Covid-19 outbreak seeing a number of Western companies rethinking their supply chains in Asia and considering reshoring or nearshoring, Mexico looks well placed to take advantage. Indeed, a recent survey by the Site Selectors Guild predicts an uptick in onshoring to the US, Canada and Mexico, particularly in the pharma and life sciences industries, as a result of the Covid-19 pandemic’s impact on global supply chains.

Such investment could make Mexico’s path out of the Covid-19 crisis easier, given that the levels of investment such nearshoring would bring would mean more jobs for the local population, and Banco Azteca will be well-positioned to cater to the financial needs of these workers.