Diconsa
Practice Case

Diconsa

Client goal

The Gates Foundation is a private organization with vast ambitions; one of its goals is to reduce extreme poverty worldwide. In this case study, the foundation asked McKinsey to design a basic financial-services offering for inhabitants of remote communities in Mexico.

Description of situation

The majority of Mexico’s rural inhabitants are relatively poor, relying in part on government benefits for their livelihood. As they tend not to have bank accounts, they usually collect government benefits in cash from a limited number of state-bank branches. These branches are often a long way from where the recipients live, so it can take a lot of time and effort for them to collect their benefits. In addition, traveling to the branches can sometimes expose benefit recipients 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 to supplement the limited number of state-bank branches. The offer would start with dispensing government-benefit 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 the interviewer for an explanation of any point that is not clear to you.

Practice Case Questions

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.

Question 2:

The team has estimated that it currently costs a family 50 pesos per month in transportation and food to make the journey to collect their 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 this number half currently receive state benefits.

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

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.

Question 3:

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



Diconsa exhibit

What are your observations about 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 in the data.

Question 4:

In a meeting with representatives of the state bank, they 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 are poorly educated and unfamiliar with banking products, and where there is a high degree of crime and fraud. He asks for the team’s thoughts about how the bank could sell these services effectively to this population given the 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.