Crowdfunding Grows as VC Alternative: The Week in Finance

Crowdfunding has become an increasingly popular funding method for startups in Mexico as venture capital investments decline. Meanwhile, the country experienced a US$4.2 billion capital outflow in July. Banco Afirme has partnered with IBM to enhance digital banking and improve the customer experience.

Read more about this week in finance!

Crowdfunding Gains Popularity for Startup Funding

Crowdfunding is increasingly becoming a crucial funding method for startups, especially in Mexico, where high interest rates and declining venture capital have made traditional funding scarce. The global crowdfunding market is expected to grow at an annual rate of 18.24%, reaching US$55 billion by 2029. Despite its growth, challenges remain in educating the public about crowdfunding, as many potential investors fear losing money and feel inadequately informed.

Mexico Sees US$4.2 Billion Capital Outflow in July

In July, Mexico experienced a significant capital outflow, with foreign investors selling off US$4.2 billion in debt securities, making it an outlier among emerging markets, which otherwise saw rising investments. This marks the sixth consecutive year of capital outflows for Mexico, driven by both domestic and international factors, including geopolitical tensions and potential congressional changes.

Banco Afirme, IBM Team Up to Boost Digital Banking Experience

Banco Afirme has partnered with IBM to enhance its digital banking services by integrating IBM's AI technology, streamlining operations and improving customer experience. This collaboration has enabled rapid account openings and led to over 150,000 app downloads in its first year, showcasing strong user adoption.

How Should Average Mexicans Invest Their Savings?

Fernando Suarez, Senior Portfolio Manager, Fintual writes about how investing in Mexico doesn't have to be complex or costly; instead, focus on three key areas: building an emergency fund, securing retirement savings, and goal-oriented investing. He recommends starting by creating an emergency fund with three to six months of salary in liquid assets like CETES or money market funds, then prioritizing retirement savings through a Personal Pension Plan (PPR) to take advantage of tax benefits and long-term growth. 

Banxico’s Interest Rate Cut Stirs Debate Amid Growing Inflation

Mexico’s Central Bank (Banxico) unexpectedly lowered its key interest rate by 25 basis points to 10.75%, despite rising inflation, which hit 5.57% in July, the highest in 14 months. The rate cut, Banxico's first since March, surprised most analysts who had anticipated a rate reduction later in the year. While some financial experts criticized the decision as premature and risky, others believe the current restrictive monetary policy will eventually help curb inflation.