Find out the opportunities available for foreign tech companies in fintech in Mexico. Financial technology or ‘fintech’ is becoming more popular as technology is continues to transform traditional sectors. Fintech innovates elements of the financial services industry to make transactions more efficient, digital, and accessible to its customers.
Consequently, new fintech options are becoming popular amongst consumers, companies and business owners to guide their financial operations. The use of smartphones, computers, laptops further stimulates this growth, and to keep up with the changing nature of the financial sector, banks are partnering with these fintech companies.
The fintech scene is growing rapidly in Latin America, and countries such as Mexico are showing great potential.
Opportunities for fintech in Mexico
Mexico is one of the best international destinations in Latin America to expand a foreign fintech startup. These startups appear to be coming mostly from Europe and the United States.
In recent years, Mexico’s fintech industry grew at a rate of 50-60% and consequently attracted many new players. Mexico has put itself on the map to stimulate the fintech innovation ecosystem.
Currently, Mexico has a population of approximately 128.5 million people, they are actually the second biggest country in Latin America in terms of population. According to the World Bank report, in Mexico, 63% of this population relies on cash instead of using a bank account. Next to this, the increasing growth of mobile devices and usage in combination with digital banking could create many opportunities for Fintech companies.
The Fintech Law of 2018
In 2018, Mexico became one of the first countries in Latin America to pass a law regulating the services provided by financial institutions through technological means.
The law contemplates the regulation of electronic payments, collective financing, administration of virtual assets and offer of financial advice through digital channels. Additionally, it includes a chapter on sanctions and crimes such as impersonation, which are considered offenses at the federal level. The Fintech Law puts Mexico at the forefront of financial innovation.
Mexico a regional leader for fintech
Finnovista, a platform analyzing access to digital finance, and the Inter-American Development Bank (Banco Interamericano de Desarrollo – BID) both provide annual reports of the growth of Fintech companies in Latin America.
Finnovista reports that Mexico’s tech scene supported “18% net growth and a hundred new Fintech startups” in 2018. This increase accounted for a 52% growth of the industry, currently valued at US$151 million. Mexico is regularly competing with Brazil as the regional leader in fintech in terms of startup numbers. In May 2019, Mexico housed 394 fintech startups.
What Fintech companies are operating in Mexico?
Among the hundreds of fintech startups in Mexico, some innovative companies operating in the industry’s different branches include:
RappiPay operates in the payments and remittances branch of Mexican fintech. This branch supports and innovates options to make money transfers between individuals. An example of this is an individual working in the United States sending money over to a family member in Mexico. But this could also include payments such as invoices or other obligations. Payments and remittances are currently the most active areas of fintech in Mexico.
Fintech also offers crypto transactions. One company active in the cryptocurrency scene in Mexico is called Bitso. Bitso is a platform to buy, sell and use cryptocurrencies, based in Mexico City. Bitso is made up of two main products: its mobile App, developed to buy, sell and exchange cryptocurrencies, and Bitso Alpha, an advanced cryptocurrency trading platform that has technical analysis tools and different types of purchase and sale orders. However, this is a quite new industry and the cryptocurrencies are fluctuating in the currency rates which makes it harder to utilize. Market observers expect this area to grow at a slower rate than others, but with a great deal of international potential as cryptocurrencies become more widely used in Mexico.
Digital banking involves all activities, programs, and functions of a bank on your smartphone, computer, or other devices. In Mexico and in Latin America in general, digital banking is quite uncommon.
What are the branches of Fintech?
Financial technology consists of many branches on the fintech radar but we will be discussing the branches that are the most important in the Fintech industry.
- Consumer lending, these are the finance category that focuses on individual and household consumers.
- Crowd Funding, this is Capital raising through the collective effort of clients, family, friends and individual investors such as the company Kickstarter. In the Fintech radar this is quite important on the radar in Mexico.
- The Financial Management of enterprises, implies arranging, sorting out, coordinating and controlling the money related exercises, for example, acquisition and use of assets of the undertaking. It implies applying general administration standards to the financial assets resources of the company.
- Personal Financial Management, this refers to software that assists clients with dealing with their money. Personal Financial Management frequently lets clients categorize transactions and include accounts from different institutions into a single view.
Start your operations in fintech in Mexico today
There are many opportunities right now in the upcoming Fintech industry in Latin-America. To gain more knowledge about Fintech in Mexico, get in touch with Biz Latin Hub.
Our Mexican team offer in-depth advice and guidance on local compliance and formation processes for new businesses. Our variability of market entry and back-office services is completely customizable to your business’s desires.
Learn more about doing business in Latin American countries and check out our other articles about Fintech.
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