Diconsa

Client goal

The Bill & Melinda Gates Foundation is a private organization with vast ambitions; one of its goals is to reduce extreme poverty worldwide. The foundation has asked McKinsey to design a basic financial-services offering for residents in remote communities in Mexico.

Situation description

The majority of Mexico’s rural population is relatively poor, relying in part on government benefits for their livelihood. Since they tend not to have bank accounts, they usually collect those benefits in cash from a limited number of state-owned bank branches. These branches are often a long way from where the recipients live, so it can take a lot of time and effort to collect benefits. In addition, while traveling to the branches, people can be at risk of falling victim to crime.

The Mexican government also owns and operates a chain of 22,000 stores throughout Mexico, called Diconsa, which provide basic food, clothes, and other essential goods to rural populations. These stores are supplied through a network of central and regional warehouses and several thousand delivery trucks.

McKinsey study

McKinsey has been asked to investigate and assess the possibility of using the Diconsa network to provide a set of basic financial services to supplement the limited number of state-owned bank branches. This would start with dispensing benefit payments and would gradually grow to include savings accounts, bill payments, insurance, loans, and other financial products.

Helpful hints

• Write down important information.
• Feel free to ask the interviewer to explain anything that is not clear to you.

What should the team investigate to determine whether the Diconsa network could and should be leveraged to provide a range of basic financial services to Mexico’s rural population?

Helpful hints

• Take time to organize your thoughts before answering. This will help show your interviewer that you have a logical approach and can think in an organized way, regardless of the accuracy of the outcome.
• Develop an overall approach before diving into details.

The team has estimated that it currently costs a family 50 pesos per month in transportation and food to make the journey to collect benefit payments. The team also estimates that if benefits were available for collection at local Diconsa stores, the cost would be reduced by 30 percent.

Twenty percent of Mexico’s population is rural, and of that number, half currently receive state benefits.

You can assume that Mexico has a population of 100 million.

You can also assume that families in Mexico have an average four members, and that this does not vary by region.

If every family could collect state benefits at their local Diconsa stores, how much in total per year would be saved across all Mexican rural families receiving state benefits?

Helpful hints

• Don’t feel rushed into performing calculations. Take your time.
• Remember that calculators are not allowed—you may want to write out your calculations on paper during the interview.
• Talk your interviewer through your steps so that you can demonstrate an organized approach; the more you talk the easier it will be for your interviewer to help you.

The team conducted a survey on a sample of the rural population in three different regions of Mexico. Participants were shown several statements about the concept of collecting benefits at their nearest Diconsa store and asked how much they agreed with each statement. The average response to some of the questions in each region is shown below:

What are your observations regarding this information, and how would you explain these trends?

Helpful hints

• Take some time to look at the information and note down any observations you have.
• Challenge yourself to identify trends that are not immediately obvious from the data.

In a subsequent meeting, representatives from the state-owned bank express concern about how challenging it will be to offer basic financial products to the rural population.

One of the representatives mentions that these are regions where people have minimal education and are unfamiliar with banking products. There is also significant crime and fraud. He asks for the team’s thoughts about how the bank could sell these services effectively to the population given these challenges.

Helpful hint

Consider the issues raised in the question and group your thoughts around them. This will ensure that you are giving the most relevant answers.