Mexico has positioned itself as the Latin American capital for financial technology, an industry expert told Spanish news agency Efe.
FinTech Mexico Director Eduardo Guraieb said approximately 200 FinTech companies are operating in the country, which, he added, has its own regulatory laws and in essence represents a huge market. “Mexico is a very big country with an equally big economy, population and in the amount of transactions being carried out within its financial system,” said Guraieb.
However, he noted, the country along with the rest of Latin America faces common challenges such as a lack of financial inclusion. Mexico’s population is 120 million, of which 60% is excluded from the financial system. “This represents a huge opportunity and a market that would be hard to deplete,” he explained.
Guraieb said that the traditional financial system has not reached a large group of the population due to geographic difficulties that will be resolved by providing them with digital banking services.
The millions of Mexican migrants who send remittances back home (in 2017, this totalled USD28.7 billion) could also benefit from financial technology, which is making international money transfers easier.
According to the Mexican National Banking and Stock Commission (CNBV), there are over 2,000 FinTech companies around the globe and about 10% or 238 of them are based in Mexico.
The commission explained that 69% of the firms in Mexico have been operating for under three years, they have serviced 540,000 users, have 400 employees on payroll and assets worth about USD$20 million and have carried out transactions worth over USD$872 million.
Mexico is also a pioneer in FinTech legislation. In March, congress passed a law regulating the technological services provided by banks, as well as how they’re organised, operate and function. Guraieb pointed that “we believe this law to be very good in many ways,” despite the law lacking meticulous regulation of the business model.
He added that in fact the secondary dispositions to the law are currently being drafted and that he believes the details missing today will be in place in the near future.
One of the greater challenges FinTechs currently face in Mexico is the lack of a digital and financial culture among the population. “A person who has very few educational opportunities is too far behind to understand the benefits of the financial technology sector.” Therefore, Mexico has a deficit of specialised employees.
“As a country, what Mexico could and should do is provide better training and technical-level education to form workers for these financial technology companies,” he concluded.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.