Competition 4.0: How Technology is Revolutionizing the Economy

The Mexican economy is undergoing a transformation driven by technology, particularly the fintech sector. This disruption has highlighted regulatory gaps and structural inequalities that require urgent attention. Competition is the key driver of innovation that leads to the improvement of services, propelling economic growth in Mexico, says Andrea Marván, President, COFECE.

In 2016, Mexico had about 100 fintech startups; by 2023, this number had grown to over 650, positioning the country as one of the three largest fintech ecosystems in Latin America, according to Marván. This rapid growth has been fueled by increasing demand for accessible and flexible financial products. "Where there is competition, there is incentive to innovate — not only to generate economic rivalry, but to transform people’s lives through accessible and personalized financial services," says Marván.

The regulatory framework that has supported the ecosystem has played a crucial role in the sector’s growth, providing legal certainty for innovative players, explains Marván. Fintech firms have disrupted a sector long dominated by traditional banks. Their rapid expansion has enabled small businesses to access credit and individuals to open accounts and make digital payments using smartphones — without the need for in-person procedures. "Over 50% of Mexicans do not have a bank account, but they do have a smartphone," says Marván.

However, regulation has not kept pace with innovation, explains Marván. While the Fintech Law lowered entry barriers for new players, further reforms are needed to create a flexible legal framework that does not stifle sector dynamism with bureaucratic processes, she adds. To address this problem, COFECE has issued multiple recommendations, particularly regarding the conduct of dominant banks, to level the playing field and encourage competition.

A key area is data access. Open finance initiatives rely on making consumer data portable and securely sharable across platforms. Marván points out that financial data, once overlooked, now holds significant economic value. "Forty years ago, data had no value. Today, data is the new oil," she adds. Allowing users to transfer services — such as pre-authorized payments — when switching banks could enhance competition and improve customer experience.

However, the market is far from uniform. Investment is concentrated in certain urban regions, and a persistent digital divide means many people still rely on cash or store money at home. About 90% of all transactions in Mexico are still made in cash, explains Marván.

The rise of AI introduces further complexity. AI can improve credit scoring and financial product personalization, but it also presents risks. Algorithms may lead to market distortions or anticompetitive behavior if left unchecked. Marván explains that companies remain accountable for their algorithms, and regulatory agencies must work together to ensure responsible innovation. "If an algorithm fails, the company is still responsible," she adds.

Public policy must now facilitate innovation without imposing disproportionate restrictions. Strengthening competition, decentralizing ecosystems, and fostering collaboration with the private sector are essential to ensure that technology becomes a true economic and social driver. According to Marván, competition should not be viewed as a threat, but as a foundation for developing talent, promoting disruption, and delivering inclusive economic growth in the digital age, "Competition is not a rival, it is an ally. It helps develop talent," says Marván.