On December 4th, the National Banking and Securities Commission announced “CNBV » published a notice on the licensing and licensing process of the fintech sector in Mexico, which some experts believe could lead to a bad fight for local entrepreneurs.
Titled under a comprehensive analysis of the sector “Fintech as a Service: The Chronicle of an Announced Death”, Carlos Valderrama Narváez and Diego Montes Serralde from Legal Paradox highlighted the implications this new regulator ruling could have on the innovators using the FaaS “Fintech-as-a-Service” as a bridge to enter the local market without being approved by the CNBV.
“It seems that the above is a death sentence for the FaaS model,” said Carlos David Valderrama Narváéz and Diego Montes Serralde of the fintech consultancy Legal Paradox in the analysis.
The official document states very clearly that third parties using fintech platforms or “API” application programming interfaces to independently provide financial services are unable to operate in the Mexican market.
The authors urge entrepreneurs to seek legal advice immediately, noticing this “We will see the beginning of the investigation processes in the relevant areas of financial supervision that will get these entrepreneurs and their business models into trouble.”
For analysts, the strategy is “accelerated “ For launching many FaaS service provider platforms, it is a “A strategy that is now threatening the freedom of even these great innovators.”
Valderrama and Serralde’s position is shared with other lawyers specializing in the matter. As the local media pointed out by Juan Luis Hernández, partner of the Novus Concilium de Guadalajara law firm, the CNBV outlines its position very well and is to some extentappropriate ‘.
“It tells us that it doesn’t matter that you take a trademark. I authorize your company and you are the only authorized person who can provide these services,” added the legal specialist.
A flourishing service
Using the FaaS model in local financial markets is a relatively new solution that allows financial firms to streamline their processes from start to finish by integrating licenses or APIs to other actors into their systems.
The flow accelerated over the last year thanks to the increasing need for digital financial solutions that made it possible to support technological demand in both traditional banking and startups and multiple platforms in Mexico whose only business model is to deploy their infrastructure under the concept by FaaS.
The new regulations, however, could jeopardize this niche market in the fintech sector, a fact cataloged by experts at Legal Paradox as a “death sentence for the FaaS model”.
“The real problem does not lie with the previous actors, but with the entrepreneurs who, given the complexity of the fintech process, have opted for the ‘fast’ route and are using the regulatory infrastructure of a third party in the approval process to survive. they added.
“These entrepreneurs are the ones who risk everything, including freedom, since they can be argued to be committing a financial crime.”
In Mexico, the comprehensive legal framework for the fintech sector was adopted in March 2018, which has since become one of the benchmarks in the region.