Felipe García, general director of Santander México: “The country became incredibly attractive due to a geopolitical issue”

Felipe García Ascencio (Mexico City, 1971), general director of the Santander bank in Mexico, arrives at the 87th edition of the Banking Convention with achievements under his belt. In February, the bank reported an increase in its net profit for 2023 of almost 10% compared to the previous year. And, in the last quarter of last year, despite the fact that the economy showed a slowdown, Santander's profit was 7% higher than the same quarter of 2022. That the market is a priority for the Spanish bank is not new and García receives EL PAÍS in his office days after the president of the financial group Ana Botín visited Mexico.

“There is a very great commitment to North America and Mexico in particular,” says García Ascencio, and the expectation is that its new digital arm, Openbank, will attract clients that traditional banking has not been able to attract. This is a time of transformation in the financial sector, with fintechs becoming increasingly popular and new players seeking a banking license. Many of these companies will be present at the banking event to be held on April 18 and 19 in Acapulco. “We are prepared for the competition,” says García Ascencio, “but it is important that the rules are even.”

Ask.

How are investors assimilating the electoral process in Mexico? Are they waiting to see who wins before investing?

Answer.

The interest we see from investors, both national and foreign, is that, regardless of who wins, Mexico has become an incredibly attractive country due to a geopolitical issue. Changes in geopolitics have made the United States want to have the provision of goods and services much closer to home. With the amount of liquidity that there is in the world economy, through the injection of liquidity that was introduced to get out of the pandemic, many of those resources are reaching Mexico. Furthermore, compared to other emerging markets, we look very good in our debt to Gross Domestic Product (GDP) ratio, even against developed countries. We have free trade agreements with more countries than practically any other economy, monetary policy has been very prudent and fiscal policy, until this year, too. Those are the variables that foreign investors primarily see, so in that light, we look incredibly good.

Q.

Speaking of fiscal policy, how has this year's expansionary policy impacted banks? And do they expect the spending reduction proposed for next year to mitigate the risks?

A.

First, speaking of monetary policy, it is something atypical that interest rates have risen almost triple from 4% to 11.25%. Now they have dropped again to 11%, but I have never experienced in my professional career that rates almost tripled in Mexico and we did not enter an economic crisis. The reality is that the economy has remained quite strong. For the last 24 months we have been monitoring credit card variables and others to see where the economy is beginning to deteriorate, but we see that due to this geopolitical and nearshoring phenomenon

,

employment has increased and we are very close to full employment. Salaries have risen, the wage bill is 13% up. Yes, it has been felt a little and we have seen it in the money in circulation. Clearly in this first half of the year, with this fiscal stimulus we see a little more activity. I believe that in the future, fiscal prudence, which is what has allowed us to be attractive to this type of investors, is something that must be taken up again.

Q.

Do you think that things have happened under this federal Administration that have challenged the way we see Mexico? The strength of the exchange rate and the slight impact that the increase in the minimum wage has had on inflation, for example.

A.

Yes and this is not necessarily because of something that has happened in the country. External factors have played a very important role. That strong injection of liquidity due to the pandemic, that shortage of goods and services that existed worldwide that caused inflation to go up. The measures that have been taken to try to get out of the economic crisis, especially in developed countries. All of this has meant that many of the correlations that we normally had for economic and financial variables are no longer the same. I would hope that in the following years we return to a normality like the one we had previously in which, if rates rise, the economy slows down and if rates fall it accelerates.

Q.

You recently announced the entry of Openbank, your fully digital banking, to Mexico. What is the expectation?

A.

Openbank already operates in Spain, Portugal, Germany and the Netherlands and we have just announced that we are entering the US and Mexico in the second half of the year. It is a 100% digital platform that the Santander Group has that we have not taken to high-growth countries with a young population and a relatively low level of penetration. These are the conditions under which fintechs perform particularly well. We think that in Mexico and the United States it should work very well. What we are looking for is for the customer experience to be as good as what the four Openbank banks that we have in Europe have demonstrated, which is significantly superior to that of traditional commercial banks. If we manage to have a much better customer experience in Mexico than what banks have, we think that new generations and people who are comfortable with having everything 100% digital will begin to adopt this type of platforms. It's a big bet. If we can demonstrate a high level of customer satisfaction, it could reach other countries.

Q.

Fintechs are promoted as the solution to low financial inclusion, however, illegal applications that scam users have emerged from their offer. Does Santander hope to increase banking coverage in Mexico with Openbank?

R.

​I agree with you, it is very important that this growth is orderly and something that we promote a lot as a union is that the rules of the game are even. The same type of regulation that they ask of us, should be asked of

fintechs

. And you can't give everyone a credit card if they don't have the ability to pay it. You have to do it in a very responsible way or you have to be ready to lose a lot of money. You have to know which products are appropriate for each different segment of the population, ensuring that the rate is affordable. The idea with this is to bring a new, fresh, young offer that helps, as you say, new players to enter the financial system, but to do it in a very prudent way so that people really only take the credit that can really serve .

Q.

This is a time when

fintechs

or neobanks are looking for a banking license. How do you define this transformation?

A.

My first reflection is that it is very positive, because all these improvements in the quality of customer service, in banking more people and so on, help the country. Mexico is a country with complicated terrain, so there are parts of the country where it is difficult to set up a branch. If you can bank all the people with smart phone devices, you can reach many more parts of the country and the cost of serving a customer is infinitely cheaper. To the extent that people feel comfortable with these investments in digital media, we can lower the cost of serving clients and with that we can charge them fewer fees or we can remunerate them more on their deposits. So, all this competition that is being generated, I think is something very positive for consumers. A second reflection is that, if there is a non-banking entity that is collecting deposits, it has to be subject to the same rules as the banks. If there is someone who wants to lend, they must have the same rules as those who lend and the same if they start to enter insurance, investments. We just have to make sure that we are all playing by the same rules. Grupo Santander is in 26 different countries, we have long been accustomed to competing with all types of players and we are prepared for the competition. But it is important that the rules are even.

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