Fintech companies are seeing a huge boom in the country with the advancement and improvement of innovation. Fintech or Financial Technology are the companies that, with the help of innovation and technology, compete with other traditional financial methods for providing financial services. Currently, Mexico is seeing a huge boom in the fintech companies operating in the region. Currently, across the globe, there are more than 26,000 fintech startups and 40% of these start-ups are housed in the USA. Going by the stats, Mexico houses more than 440 such fintech companies and in the coming years, the number of fintech companies will see a further increase in the country.
The Potential Of FinTech Startups In Mexico
Mexico has a huge potential for housing fintech startups because the bank account penetration is still low in the country and the internet user penetration is high in it. This means that there is a huge opportunity for fintech start-ups in Mexico. Each year, the number of fintech companies is increasing in Mexico. It is also forecasted that by 2023, 97,000 Mexicans will be availing of the services of the fintech companies in the country. It is expected that the users of the fintech companies will hugely benefit from its services, especially when it comes to digital payments.
Another reason why Mexico has a huge potential for housing fintech startups is that one-third of the population is unbanked and this often gives birth to a situation where people invest in lotteries like Lottery Sambad and Kerala State Lottery. In such a scenario, these startups are working magic to provide the Mexicans with insurance, credit, and remittances. Also, the adoption of fintech companies in the country can be owed to the increased smartphone usage in the country along with an improved penetration of the internet. With an improvement in these two categories, the Mexican population has become tech-savvy and this has made them comfortable with the services provided by fintech companies.
Key Figures Of FinTech Startups In Mexico
Currently, there are more than 10,755 fintech companies in the Americas. The largest segment of fintech belongs to the payments and remittances segment. However, digital banking is the segment that is experiencing the highest growth rate in Mexico. The fintech adoption rate in Mexico is 72%. Mexico is the largest fintech driver in Latin America. In fact, it was the first country to implement a fintech law that was specific to this segment. Out of the total investments that the Mexican start-ups pick, 20% of the investment is picked by the start-ups belonging to the fintech segment alone. The growth of the fintech startups in Mexico is such that Mexico has repeatedly topped the list of the most innovative fintech hubs.
The digital wallet transactions and net banking in the country are constantly increasing in the country and it experienced the highest growth during the Covid lockdown where the growth was as high as 80%. The volume and value of digital transactions especially made through mobile phones have experienced growth.
The financial technology ventures of Mexico are backed by government support and perhaps, this is the reason why fintech companies are seeing such huge growth in the country. Also, during the Covid-19 pandemic, the number of fintech companies increased by more than 14%. Keeping the growth of the fintech company in mind, the Government of Mexico also published laws related to fintech back in March 2019.
Currently, more than three-fourths of the population of Mexico owns a smartphone, and those with smartphones rely on their device for conducting financial transactions. This fact creates plenty of opportunities for fintech companies to improve and create new ways of making digital payments.
In addition to that, open banking also has an opportunity to grow in the Mexican market. The different sectors of fintech that can grow further are payments and remittances, business and consumer lending, enterprise financial management, personal financial management, insurance, crowdfunding, and digital banking. The low credit penetration can be filled by the emerging fintech startups and in addition to that, these start-ups can also support financial inclusion for growing the financial sector in the country. Currently, the prospects are high for fintech companies and the same is visible through the growth of start-ups dealing in this sector.