70% of the fintech companies operating in the country are concentrated in Mexico City. However, it is expected that the ecosystem will become more diverse due to the pandemic.
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- Payments and transfers.
- Business technologies for financial institutions.
- Insurer or Insurtech.
- Digital banking.
In Mexico, the COVID-19 pandemic accelerated the adoption and development of fintech. It was not until the first few months of childbirth that the country exceeded the number of operations in these companies in order to reach the level expected for the next five years, according to legal advice Legal Paradox.
According to Finnovista’s Fintech Radar Mexico 2020, Fintech companies in Mexico have grown by an average of 23% per year since 2016, which means that the demand for services of this type of company continues to increase. They are also taking advantage of the current circumstances to become major players in financial services.
70% of the fintech companies operating in the country are concentrated in Mexico City. However, due to the pandemic, the fintech ecosystem can be expected to become more diverse and emerging companies to innovate and expand to other cities in the country, which will be vital to its development and persistence.
We are currently seeing the first signs of fintech expansion, particularly in some sectors where the pandemic has allowed the incorporation of new dynamics that have popularized their use. With that in mind, I share five trends that will become apparent during the pandemic:
1. Payments and transfers
These fintech companies have been one of the fastest growing companies in Mexico due to the pandemic and lead the supply of fintech services in the country as a sector where the most companies compete for the market and represent 20% of fintech companies nationally .
The prospects suggest that these businesses will continue to grow steadily as they were essential during the toughest months of detention and will continue to exist during the “new normal” as they allow payments or transactions via mobile devices or electronic means and maintain the social Distancing measures still in effect in the country.
2. Business technologies for financial institutions (ETFI)
This segment also performed remarkably in the first few months of this year 2020 with growth of 39% compared to 2019. This shows that financial institutions in Mexico are demanding more development of technological solutions to conduct operations with greater speed, security, and accessibility.
3. Insurer or Insurtech
With 39 startups and 46% year-over-year growth, the Insurtech segment is one of the favorites during the pandemic. For me, the boom in this sector could change the fintech landscape as we know it in Mexico today, as it only accounts for 9% of the market. If this trend continues, this number will undoubtedly change in the short term and consolidate it. as one of the most outstanding sectors.
4. Digital banking
This sector was one of the most demanded sectors due to COVID-19 with a growth of 24% in 2020. Just three years ago, Fintech digital banking services were not even taken into account in Finnovista’s Fintech Radar Mexico.Instead, they have now proven to be decisive in reducing the risk of contagion. Many banks have implemented improvements in their digital channels, and thanks to Neobanken it is even possible to access 100% digital services.
Funding was central to many companies during the pandemic, which is why it has become necessary to bring companies together in networks of dynamic funding.
The way we do business is changing, as is the way funding is raised. Many companies understand this and it is not surprising that fintechs continue to lead the way in this sector. Funding is now more than ever the key to stimulating business development and job creation. In Mexico, these fintech companies cover 6% of the national market.