Mexico Is Paving the Way For The Future of Fintech

Mexico Is Paving the Way For The Future of Fintech

December 8, 2023 Off By Glespynorson

When you think about the cities, nations, or regions that are at the center of fintech, which places spring to mind? You may think of international banking hubs like London and New York, and certainly those cities have been epicenters of the finance industry. It may surprise you to learn that Mexico is also near the top of the list. In fact, over the past couple of years, Mexico has become a magnet for fintech investment, and an incubator of innovation. It’s no exaggeration to say that the future of this industry runs straight through the nation of Mexico.

Fintech In Mexico: What Do The Stats Say?

To get a sense of just how fruitful the fintech industry has been in Mexico, consider a few quick stats according to Via Work:

  • The fintech industry currently accounts for more than 20 percent of all venture funding in Mexico.
  • Fintech investment in Mexico has surpassed $600 million, distributed between over 200 startups.
  • More than 500 fintech companies base their operations in Mexico, a number that’s growing all the time.

Clearly, fintech companies see opportunity in Mexico. The question is why.

The Opportunity in Mexico

To get a sense of why so many fintech investors have taken to Mexico, consider another startling statistic: In 2021, only about 45 percent of the Mexican population had an active banking relationship. By contrast, 88 percent of Brazilians are banked, 82 percent of Chinese, and 60 percent of Argentines.

Yet at the same time, more than 80 million Mexicans have smartphones and access the Internet regularly, while over 9 million qualify as digital natives. (In terms of the percentage of the population that’s digital natives, Mexico ranks sixth in the world). And things like electronic bill payment and online money transfer have accelerated substantially since the pandemic.

All of this points to a ripe opportunity to reach the population of Mexico with online banking opportunities… and fintech companies have taken notice.

Fintech and Mexican Law

It’s also important to denote the importance of the regulatory environment in Mexico. Fintech investment is always correlated with compliance, and Mexico has laws in place that are generally favorable to fintech innovation.

In fact, back in 2018, Mexico became one of the first countries on earth to pass regulation pertaining to fintech. Specifically, a law called “Ley Fintech Mexico” authorizes a handful of entities— the Secretaría de Hacienda y Crédito Público (SHCP), along with the Mexican Banking and Securities Commission (CNBV) and the Central Bank—to establish “sandboxes” for fintech products, and also to set parameters on collective financing. Basically, the law exists to keep both users and investors in a financially healthy position.

The upside of this regulation is that Mexico’s population has a high level of trust in fintech innovation, as they know that there are appropriate legislative guardrails in place. The downside is that companies do have a few additional regulatory hoops to jump through, which can sometimes slow progress or create inefficiency.

Navigating Mexico’s Fintech Environment

Fortunately, there are plenty of resources available to help fintech companies navigate the compliance environment in Mexico. Working with a team that specializes in financial regulatory compliance services can provide the edge your company needs for innovation in:

  • Mobile banking
  • Digital lending
  • Digital credit
  • Wealth management
  • Insurtech
  • Crowdfunding
  • Neobanking

… and the list goes on and on.

As you prepare to expand your fintech operation into Mexico, make sure you’re getting sound advice and competent financial regulatory compliance services. Contact Antonio Grimaldo Monroy, Aldo Heladio Verver y Vargas Duarte & Álvaro Israel Pérez Vega VCGA Consultores (VECEGEA S.C.) to learn more about achieving fintech success in Mexico.