Wallets, Integrated Finance to Boost Fintech Sector in 2023

As mobile device adoption continues to grow in Mexico, digital wallets and integrated financial services will continue to boost the fintech sector in the country during 2023.

The fintech sector in Mexico has grown significantly over the past few years. Although investment in technology decreased in 4Q22, the adoption of digital financial services is expected to increase in 2023 with the growing popularity of transactions through mobile devices.

According to Statista, 78% of Mexicans (84.4 million people) use a smartphone and the figure is expected to surpass 95 million people by 2025. Considering the adoption of technology in the country, digital financial solutions such as wallets and contactless payments will continue to grow in Mexico.

"Mexico has had an accelerated growth in banking and diversification of means of payment in the last five years. More and more Mexicans are willing to trust the information of their cards, in mobile applications and on third-party platforms, in order to access more easily and immediately to make payments electronically,” says Rodrigo Kuri, COO and Co-founder, Pacto.

The growth forecasts of the fintech sector are mainly driven by a growing trend of using less cash and making greater use of digital payment solutions. By the end of 2024, the use of cash will decrease by 38% in Mexico, according to The Latam Tech Report 2022, the most recent study by Latitud. Payments through wallets or virtual portfolios were the digital financial service that grew the most in Latin America in 2021, with a 19.8% increase year over year, followed by debit card payments (16.3% growth) and bank transfers (9.5%), according to the report.

According to PwC, the number of fintechs in Mexico grew by 16% in 2021 to 512 startups. In 2019, the country had 394 fintechs and by 2020, the number had risen to 441. In Brazil, the number of fintechs increased from 474 to 1,174 between 2015 and 2021, representing the largest market in Latin America in this segment.

Mexico’s accelerated digitization results in the democratization of financial services, says Kuri: “There will be more financial inclusion, more people with access to electronic means of payment and, with it, the underlying businesses that may arise.”

In 2023, B2B fintechs will see the most growth, specially paytech and integrated financial services, which facilitate service payments, loans, credits and other software tools outside the traditional banking sector, according to Pacto. SMEs and underserved sectors that are looking for alternatives to traditional financial institutions will continue to play an increasingly important role in the growth of fintech in Mexico, the company says.