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The horizon of Fintech in Mexico
A study conducted by Santander Mexico, the Embassy of the United Kingdom in Mexico, Finnovista and Google, explains the situation of financial technology companies and the challenges they face with regulations in Mexico and abroad.
This first-ever study of this magnitude on the Fintech ecosystem in Mexico has concluded that the sector is in a clear stage of growth, with opportunities but also major challenges ahead, especially in regulatory matters. Its main findings are:
- Mexico’s Fintech ecosystem, consisting of more than 515 active companies, is the most dynamic in Latin America and clearly growing. Since 2015, more than 266 new companies have been created and upwards of 270 startups have received 629 million dollars in equity and financing. Last year alone, more than 300 million dollars were mobilised.
- This ecosystem directly accounts for 3,600 jobs, and benefits more than 4.5 million service users. Most companies (56%) have between 1 and 10 employees, while 22% have between 11 and 25.
- Fintech generates 68.409 billion pesos in annual revenues, according to a sample of 148 firms.
- Mexico’s Fintech Ecosystem Maturation Index (INFIN) stands at 48%; the sector is still in the early stages of development. This assessment of the sector considered such variables as sales, jobs, investment, revenues, active users, market and technology.
- The average Fintech has been active for three years, with 105,000 dollars in annual income, 9 employees and 230,000 dollars in equity. This shows that the Fintech sector in Mexico is made up mostly of entrepreneurs in an early stage of growth.
- It is estimated that around 200 of the 515 Mexican Fintechs mapped out by the National Banking and Securities Commission (CNBV) are categorised as electronic payment funds (wallets), virtual assets (cryptocurrencies) and collective financing (crowdfunding) and, thus, are subject to the new ‘Fintech Law’.
- 57% of surveyed Fintechs stated they are subject to new provisions and expect to incur costs of 35,000 dollars per year (including fees for legal and consulting services for mandatory regulations).
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According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.
According to @iee_org, Spain has one of the most demanding tax environments for businesses within the European and international context, which may have significant implications for competitiveness, foreign investment attraction, and business expansion.
According to Christine Lagarde for the euro to gain in status, Europe must take decisive steps by completing the single market, reducing regulatory burdens and building a robust capital markets union.
According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.
McKinsey notes that European private capital is half the size of the U.S. and must play a key role in boosting competitiveness, by driving innovation, scaling firms, and mobilizing the investment needed to close the gap with other regions.
IMF states that global financial stability risks have grown significantly, driven by tighter financial conditions and heightened trade and geopolitical uncertainty.