Mexican Traditional Finance Models Turn towards FintechBy Sofía Hanna | Thu, 06/10/2021 - 16:14
Remittances showed their fastest growth rate since 2003, growing 39.1 percent year-on-year in April 2021, explained Banco de México’s (Banxico). Meanwhile, MBN’s startup contributors explained the effect the rapidly coming waves of crowdfunding and digital payment methods will have on Mexican consumers.
Interested in more? Here are the week’s major headlines in Finance!
- Internet banking and direct transfers have become the preferred payment method for 68 percent of Mexicans during the pandemic, wrote Anabel Pérez, Co-Founder and CEO of Novopayment and an MBN Startup Contributor. These trends reveal that Mexico, historically cash-reliant, is transitioning into the world of digital-first financial services and experiences, addressing an increasing demand in the market. To keep up, incumbent banks must partner with challengers to provide a robust breadth of innovative services that enrich the digital economy for all. Fintech companies’ have an essential role in this subject because as more consumers adopt digital financial services, expectations climb for innovative digital financial services. However, many banks and incumbents use proprietary legacy systems at their core, which are unable to support the digital-first strategies and products that challengers can. Read the full story here!
- Banco de México’s (Banxico) latest report explains that remittances increased by 39.1 percent year-on-year in April 2021, their fastest growth rate for any month since 2003. This accelerated growth was influenced mainly by the larger number of transactions from the US. This move pushed remittances to record levels. Banxico reported that in April 2021, Mexico received a capital inflow of US$4.05 billion from remittances. Remittances could continue to increase, add Banorte’s analysts, thanks to the progress in vaccination campaigns in the US, promoted by US President Joe Biden. Moreover, his administration’s continuous push for immigration reform could chart a path for thousands of migrants to be able to achieve legal status north of the border.
- Efforts to optimize the supply chain should go beyond its recovery, explained Jorge de Lara, Vice President and General Manager for GCS American Express Mexico and Latin America and an MBN Expert Contributor. For many SMEs, tapping into the logistics capability of third parties was the only viable option when faced with constricted manufacturing partners and limited points of sale. Leaving distribution to dedicated vendors can enable businesses to achieve leaner operations and focus on indispensable activities, increasing nimbleness and resilience, he adds. As the pandemic is increasingly under control, many companies may welcome the ablility to reactivate paused activities. “But it’s crucial not to become obsessed with bringing back older processes if they no longer respond to current times,” writes de Lara.
- What is Crowdfunding? Peer-to-peer and crowdfunding are increasingly popular, even though few people understand them fully. Instead of having saving money under the mattress or sitting in a bank account, crowdfunding platforms can connect savers with people or companies that help it grow, explains Fernando Padilla, CEO of Pretmex. He further adds that companies should not go digital because the world is doing so or because Facebook exists, but should prioritize the consumers and their habits when going digital. The digital revolution coming to all sectors of the economy, finance is no exception.