With its craggy buttes and cactus-spiked hills, the Sierra
Mixteca is a frontier of Mexican banking. Ramón
Gómez and Oscar Xicotencatl, executives at HSBC Mexico,
have driven here from their offices in the city of Puebla,
several hours north, to spread the gospel of savings accounts,
debit cards, personal loans and mortgages to farmers and
villagers who have always dealt in cash and avoided banks.
"It's a big potential market for us," says Xicotencatl,
assistant director for HSBC in four central Mexican states.
"But it's also a real challenge," adds Gómez, who is the
bank's director for the same region.
The potential and the challenge are in full view in this
southern corner of the state of Puebla. Traditionally one of
Mexico's poorest regions, the Sierra Mixteca is being
transformed by millions of dollars in remittances sent home by
young locals who have moved to New York, mostly as illegal
migrants. In small towns like Tulcingo del Valle and Piaxtla,
fast-food pizzerias and cybercafés crammed with computer
stations have replaced pulquerías, those old-time
saloons with swinging doors. Instead of ancient adobe hovels,
new brick-and-concrete houses are everywhere, with satellite
dishes sprouting from their roofs.
But despite swelling purchasing power, local people see no
advantage in using financial products such as credit and debit
cards or loans. Their homes sit on communally owned property --
part of the ejido farmlands created by agrarian reform after
the Mexican Revolution of 1910'21, which makes it legally
and financially difficult for HSBC Mexico, a subsidiary of HSBC
Holdings, to issue mortgages. According to the bank, more than
70 percent of all commercial transactions in Mexico are in cash
-- compared with about 30 percent in the U.S. But in the Sierra
Mixteca, more than 90 percent of all transactions are in
"I've never even seen a check around here," says Arturo
Robles, a rancher on a visit to the weekly Piaxtla livestock
fair to buy a stud bull. For payment, he uses a thick roll of
pesos -- amassed from the monthly remittances wired by his son,
a restaurant worker in Manhattan.
Remittances from the estimated 9 million Mexicans living in
the U.S. reached $20 billion in 2005, according to Banco de
México, the nation's central bank. That's too much money
for HSBC and other global banking giants to ignore. Of the
total, about $2 billion was carried as cash to Mexico by
returning migrants. The remaining $18 billion was sent
electronically. But in most cases, the only fees the banks
collected came from their role as clearing agents for money
transfer operators, such as Western Union, MoneyGram and DolEx.
"Banks partner with us because we have many more outlets than
they do" near Mexican immigrant communities, says Cynthia
López, Mexico Citybased assistant director of
international business for DolEx. "Also, they still haven't
learned how to reach out to Mexican customers in the U.S." That
hasn't kept banks like HSBC from wooing those customers with
other financial services. "We are trying to add value to those
tremendous remittance flows, both for the beneficiaries and for
ourselves," says Juan Lavalle, Mexico Citybased director
of remittances and international products at HSBC Mexico.