Diconsa Case Study
Diconsa Case Study
Diconsa Case Study
Client goal
The Gates Foundation is a private foundation with vast ambitions; one of its goals is to
reduce extreme poverty worldwide. In this case study, the foundation has asked McKinsey
to design a basic financial-services offering for inhabitants of remote communities in
Mexico.
Description of situation
The majority of Mexicos rural inhabitants are relatively poor, relying in part on
government benefits for their livelihood. As these people tend not to have bank accounts,
they usually collect governmental benefits in cash from a limited number of state bank
branches. These branches are often a long way away from where the benefit recipient
lives and therefore it can take a lot of time and effort for the recipient to collect their
benefits. In addition, traveling to the branches can sometimes expose the benefit recipient
to crime along the way.
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 the
rural population. These stores are supplied via 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 basic set of financial services, supplementing the limited number of
state bank branches. At first, the offer would start with the dispensing of governmentbenefit payments, and move progressively to include savings accounts, bill payment,
insurance, credit, and other financial products.
Helpful hints
Write down important information.
Feel free to ask interviewer for explanation of any point that is not clear to you.
QUESTION 1
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.
A good answer might include the following:
What are the benefits that might come from providing financial services via the Diconsa
network?
For the Mexican rural population
1 How much time, effort, and expense would the benefit recipient save through
the Diconsa network (for example, through shorter travel time)?
2 Beyond what was stated in the summary, what would be the benefits to the
Your interviewer can provide you with the following information if requested:
You can assume that Mexico has a population of 100 million.
You can also assume that families in Mexico have four members on average, and that this
does not differ by region.
Helpful hints
Don't feel rushed into performing calculations. Take your time.
Talk your interviewer through your steps so that you can demonstrate an organized
approach.
A good answer to this question would involve the following steps:
There are 5 million families in rural Mexico (20% x 100m 4 per family).
There are 2.5 million families receiving benefits (50% x 5 million families).
Each family currently spends 600 pesos per year to receive their benefits (50 pesos per
month x 12 months).
In total 1.5 billion pesos per year is spent by families in receiving their benefits (600 pesos
x 2.5 million families).
450 million pesos could be saved (30% x 1.5 billion pesos).
A very good response might note that these potential savings could be redirected to
enhance the benefit system further, and that there may be other costs that could be
saved also, such as the cost of lost working time in making the journey to collect benefits
(that is, opportunity costs).
QUESTION 3
The team conducted a survey on a sample of the rural population in three different regions
of Mexico. The populations were given a number of statements regarding the concept of
collecting their benefits at their nearest Diconsa store, and were asked how much they
agreed with each statement. The average response to some of the questions by region is
shown below:
What are your observations from 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 within the data.
Helpful hint
Consider the issues raised in the question, and group your thoughts around these issues.
This will ensure that you are giving the most relevant answers to the question being
asked.
A good answer to this question might include:
If available, examples of how basic financial services have been successfully introduced
into other poor populations, and how that learning could be leveraged in this case.
Suggestions for how to overcome the lack of education and familiarity with banking
products, for example:
1 Pilot some products in certain regions where the population might be more
receptive, so that less receptive people can see that they are already being
used by others in similar situations.
2 Arrange in-store talks and demonstrations, focusing on educating people on
what the products are and how they can be used, and dispelling common
causes of distrust.
Partner with brands or organizations that are already well known and trusted
by the rural poor.
4 Advertise using individuals who have benefited from similar products, for
example, people who have made successful insurance claims, or who
managed to save money for a specific need.
5 Motivate Diconsa employees to encourage take-up of the products.
6 Offer promotions to encourage initial take-up, for example, pay 50 pesos
when the first savings deposit is made
Suggestions to overcome crime and fraud could include the following:
1 Increase security in Diconsa stores.
2 Impose daily or weekly limits on transactions.
3 Introduce technology such as chip cards to reduce fraudulent activity and to
discourage crime through less use of cash.
A very good answer may involve suggestions that can address all of the concerns together
such as the following:
Introduce compulsory secure chip cards for all benefit recipients to verify their identity
when collecting benefits can help reduce fraud.
These chip cards can be designed to handle financial-services transactions such as savings
accounts or bill payment, and the fact that the population is already familiar with the
technology can make them more open to the new services.