New Panorama for Fintechs in Mexico

A recent MBN article by Héctor Cárdenas, CEO and Founder of Conekta and MBN Expert Contributor, addresses Mexico’s next fintech wave. Cárdenas mentions how Mexico has attempted multiple times to fix issues related to financial inclusion, which is still lacking against other countries in the region.

 “Traditional banking services are necessary for the overall financial system to function correctly but the population has yet to adopt these services. Meanwhile, we have a population that is highly connected to the internet (over 71 percent of the population has access to it) and that has shown high adoption rates for other digital tools.” This means Mexico is already well into a process of digitalization.

 Interested in more? Here are the week’s major headlines in Finance!

• The pandemic has dealt a hit to Mexican airlines’ stocks. After Canada and the US implemented new sanitary restrictions and even canceled flights to Mexico, several companies like Aeroméxico and Volaris took a heavy blow. This is not the only financial difficulty these companies have. Mexican airlines are MX$732 million (US$36.2 million) in debt due to overdue rights of airspace use payments. However, some companies have found an opportunity to grow. Viva Aerobus has expanded its business during the pandemic more than ever before.

•  In a recent US Department of Commerce release, it was announced that China met 63 percent of its commercial commitments with the US for Phase One of the merchandise trade agreement with the US for 2020. Now, “there could be a change of strategy, which would impact the current trade dynamic with Mexico,” said Gustavo Flores-Macías, Professor at the University of Cornell, to BBC News.

• Carlos Slim recently stated that there is a lack of private investment in infrastructure, which prevents Mexico’s development. During a meeting Slim had with Argentinean President Alberto Fernández, he also mentioned the importance of promoting private investment. This can lead to more jobs that often expand to different sectors, including construction and housing. Slim also expressed his disappointment toward business people that opposed the minimum wage increase of 2021, which was set at 15 percent, according to President López Obrador.

• Mexico’s Tax Administration Service (SAT) reported that last year, tax revenue as a percentage of the GDP reached its highest point in the previous ten years, exceeding 14 percent. Gabriel Yorio, Deputy Minister of Finance and Public Credit (SHCP), called this a “notable feat, as it stands out from other periods of crisis such as 1995, when despite the increase in the value-added tax, tax income decreased by 2 percent.”