Strengthening Mexico’s Fintech for Further OpportunitiesBy Sofía Hanna | Mon, 06/20/2022 - 10:11
Q: How has the sector changed since the Fintech Law was approved in 2018?
A: The Fintech Law was a watershed in the region, making Mexico a pioneer in this type of regulation and an attractive destination for those interested in the industry. Recent regulations aim to help the sector continue to diversify safely, without being restrictive. These processes contribute to Mexico’s financial inclusion.
Since then, there have been no substantial changes in the laws but we must work hand in hand with the authorities to advance further regulatory changes. The challenge is regulating while simultaneously encouraging these projects; it is a balance between mitigating risk and not barring innovation.
We always seek to capitalize on the expertise and information of entrepreneurs and regulatory groups to better operate in this sector.
Q: How has the association promoted the creation of fintech companies while simultaneously promoting regulations?
A: Fintech Mexico brings together and gives a voice to companies in the fintech sector, both those that are regulated and those that are not. One of our main objectives is to connect the authorities and the sector to promote the regulatory changes necessary to make it more modern, robust and equal. By bringing our members together, we have a much better understanding of what is necessary for the industry to advance.
Our objective is to develop a financial system that benefits Mexicans. Better services must be provided regardless of the sector, which can be achieved by promoting the creation of more fintech companies.
Q: How has the acceleration of digital financial markets impacted the country?
A: It has had a large impact. The pandemic accelerated the penetration of digital technologies, mainly electronic commerce and payments. The confinement forced the sector to advance in a year which would have taken five or 10 years in other circumstances. This acceleration also prompted consumers to adopt digital media, digital payments and e-commerce. The common denominator has undoubtedly been digitalization.
The pandemic accelerated and solidified this digital transformation, which facilitated legal certainty for entrepreneurs, fintech and investors investing in Mexico. In 2021, we mapped over 500 active fintech, which represents 16 percent growth compared to 2020 and 100 percent growth compared to 2017.
The goal is for Mexico to continue to be an attractive investment destination. To continue positioning the country, it is necessary to keep working hand in hand with the authorities to promote regulatory changes that preserve legal certainty and support the implementation of open banking and fintech as a service. Authorities must be as clear as possible.
Q: How many fintech are expected to be approved in 2022 and what areas do they operate in?
A: We expect 2022 to be the year the ecosystem consolidates. We expect the authorization of processes requested since September 2019, which we are confident will be authorized this year. To date, only 24 institutions are authorized and an additional 34 have conditional authorizations. There are also a further 18 authorizations pending.
Q: What investment opportunities do you foresee for fintech in Mexico and Latin America?
A: Mexico is attractive in terms of investment and that will continue to be the case. In 2021, Mexico was the second-leading country in Latin America for investment after Brazil. An opportunity that will continue to be exploited is the view that fintech can fill the gaps in traditional banking. The British and US embassies have been interested in understanding fintech in Mexico. We held a roundtable discussion about open banking issues with representatives from different parts of the sector.
Fintech Mexico is an ally of the authorities and the benchmark for discussions in the sector. We are a proactive actor that seeks regulatory improvement to promote financial inclusion, innovation and competition.