Fintech’s Presence Growing Stronger

The restrictions on movement that COVID-19 has caused could be the opportunity fintech and digital banking needed to really get going in Mexico. The pandemic’s impact has driven income for households lower, while Afore accounts have risen as those who can prepare for the future save a bit more for their retirement.

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Two Thirds of Mexican Households Suffer Financially from COVID-19

A study carried out by Research Institute for Development With Equity found that 65 percent of Mexican households saw a drop in income from April to May. Some 47 percent of households did not generate the MX$5,000 (US$220.9) per month minimum considered necessary by the government. Many millions of individuals and businesses have applied to banks to defer credit and loan payments, but the study underlines the financial precarity that a large chunk of the Mexican population lives in.

Digital Banks on the Up Despite COVID-19

The advantages of digital banking over traditional brick-and-mortar bank branches have been made evident during the crisis, as social distancing orders and genuine risk have kept people at home. The rise in popularity of digital banking is an opportunity for fintech and neo banks and even the Facebook-owned messenger app, WhatsApp, has become involved in online payment services in Brazil. With financial inclusion a main aim for the Mexican government, digital banking might be a solid option.

Mexican Competitiveness Declines

The publication of the 2020 Kearney Foreign Direct Investment Confidence Index and the World Competitivity Classification 2020 table has highlighted Mexico’s falling economic competitiveness at a global scale. According to the reports, the government’s three main projects will have high cost but low economic impact and changes to the “rules of the game” under the administration have fostered a less-than-friendly business environment.

Mexicans Increase Afore Savings During COVID-19

Afore retirement funds reached their highest value in May, MX$102.49 billion (some US$4.49 billion), in the midst of the COVID-19 pandemic. There could be many reasons, but according to economist Raymundo Tenorio, one of the drivers behind this increase is layoffs. According to Tenorio, people are choosing to put part of their severance packets into their pension funds, while holding on to some for daily expenses.