Earlier this month, Citibanamex — Mexico’s second-largest bank — announced that it is building new APIs to allow fintech companies real-time access to information like its services and ATM locations. The move comes as Mexico’s fintech ecosystem flourishes so fiercely that traditional banks have to embrace them or risk lagging behind.
Mexico has been — and still is — leading the fintech charge in Latin America. The country was the first in the region to implement a law specific to the sector, and Mexican fintechs account for nearly 20% of total venture investment in the industry throughout Latin America. Not to mention, the Mexican population harbors both the talent and demand for fintech services. Mexico repeatedly tops most innovative fintech hub lists, and neobank and digital wallet transactions are consistently increasing — during COVID lockdowns they rose by an estimated 80%.
Considering that nearly 40 million people in Mexico (almost a third of the population) are unbanked, fintech has been a necessary vehicle for fresh routes for credit, insurance and remittances. And because many Mexicans have little trust in banks, the transparency of fintech options has played a big part in people adopting the new technology.
There are no signs that fintech in Mexico is slowing down. More than a year into the global remote revolution, now is a good time to reflect on the country’s fintech journey, the local players that are having the biggest impact and what lies ahead for the industry.
Mexico has long nurtured its fintech ecosystem
Mexico’s fintech success is no coincidence – it’s due to a combination of factors that have made the country a fertile space to create and grow fintech solutions. This natural evolution has enabled people to gradually become familiar with fintech as a safe and streamlined solution.
For one, smartphone usage and internet penetration have both significantly improved in Mexico over recent years, shaping a tech savvy population that has become accustomed to managing money through devices. Paired with people’s aversion to traditional banks, this tech literacy makes fintech an attractive alternative.
The country’s fintech law (Ley Fintech) came into effect in 2018 and set the parameters for crowdfunding, cryptocurrencies, and APIs, alongside detailing regulatory sandboxes for fintech products. The law has done wonders to promote a healthy fintech sphere where users are protected and investors are more active thanks to the safety net of regulatory framework. Currently, 52 fintechs have been authorized to operate under the law, while 38 more are pending approval. The law is expected to be developed further this year.