Mexico Adds Unicorn, Could Slow Down in 3Q22

This week, fintech Stori became Mexico’s newest unicorn after receiving an investment that increased its valuation to more than US$1 billion.

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Stori Becomes Mexico’s Ninth Unicorn

Fintech company Stori received a US$150 million investment, reaching a valuation of over US$1 billion. The company’s main objective is to use its most recent investment as a stepping stone to grow its customer base. Stori is already working on democratizing access to credit cards for 80 million underserved Mexicans.

BBVA Research Shows Discouraging Expectations

Despite the recent surge in demand in 1H22, BBVA Research expects a slowdown in Mexico’s growth. The bank’s analysts also dropped Mexico’s growth prediction for 2023 from 2.1 percent to 1.6 percent.

The Importance of Industrial Parks

Mexico has benefitted from the relocation of companies caused by the tensions between the US and China, supply chain problems caused by COVID-19, the conflict between Russia and Ukraine and new USMCA rules.

“Mexico continues to be an attractive player for private capital investment by foreign companies looking to move their manufacturing to the Americas and become suppliers to large US companies. In this context, industrial parks have a very important role to play in attracting foreign investment as they meet the high demand for space by companies that are coming to the country,” explained Liliana Reyes, CEO, Mexican Association of Private Capital (AMEXCAP).

Galileo, Mastercard Push for Financial Inclusion

Tory Jackson, Director of Business Development and Strategy Latin America, Galileo Financial Technologies, LLC explains that developing payments is the core vision of Mastercard and Galileo’s alliance.

“While cash is still king in Latin America, there is little doubt that digital payments are rapidly taking hold as the digital payment ecosystem matures and grows. It’s estimated that at least 50 million people in Latin America made digital payments for the first time in 2020. The trend continues in 2021, according to the most recent New Payments Index 2022, which shows that 86 percent of consumers in the region used at least one new form of payment last year,” said Jackson.

Frauds Diminish Revenues

 Latin America is the region with the largest number of fraud and chargebacks, said Mauricio Madrigal, CEO, Retrypay. Madrigal argues that reducing payment rejection is the primary solution for companies seeking to increase their revenue, as several complexities surge for the dissemination of cards.

Uncertainty Affects Investment in Mexico

Daniel Becker, President, Association of Banks of Mexico (ABM), explained that major investments are prepared to enter Mexico but several barriers stand in their way. Meanwhile, companies from Mexico and the US asked Mexican President Andrés Manuel López Obrador to speedily address matters pertaining to the energy reform to foment investment in the country.  

Digital Transformation Unified Commerce

Financial technology platform Adyen shared the “Retail in Mexico and the world” study arguing that the digital transformation is essential in unifying commerce. Companies in 2022 should be optimistic, said Erick MacKinney, Country Manager, Adyen México.

Alternative Data Sources Surge for Lenders

Open finance solutions continuously aim to help lenders address a variety of complications, such as Mexico’s low financing. “Access to credit continues to be one of the main challenges in Mexico when it comes to substantive and real financial inclusion. According to data provided by the CNBV last year, Mexicans continue to resort to informal instruments to acquire financing, all because the requirements are lower and there is greater flexibility with the granting of credit, compared to banks or government-regulated lenders,” said Pablo Viguera, Co-CEO and Co-Founder, Belvo.

Mexico: Leader in FTA’s

The World Trade Organization ranked Mexico as the seventh country with the most Free Trade Agreements (FTA) in the world. Claus von Wobeser, President, International Chamber of Commerce, added that several companies are interested in investing in the country.