Reactivating the labor market and reviving the economy will be two of the greatest challenges in Mexico and in all countries around the world if isolation is removed. Given the uncertainty about what will come, there seems to be a sector that is confident that the “new normal” is a great opportunity for the growth of Financial technology company (fintech).
Mexico has already seen a boom in tech finance companies, in part due to potential users and the fintech law that made the country a hub in Latin America. With more than 500 Fintech and around 60,000 jobs created in Mexico according to Fintech radar from FinnovistaThe industry appears to be well positioned to withstand the economic recession that many specialists around the world predict.
“The introduction of new virtual and technological routines has accelerated in many sectors. In the financial world, fintech companies were a good option even before quarantine, as the sector grew in double digits and the mortality rate of these companies was less than 5%. and although it is changing a bit now, in post-quarantine it will be the best option for everything they offer, ”explains Cristian Huertas, Country Manager of Fintech Bnext, which offers various financial services and already has more than 20,000 users in fewer than three has months.
Many micro, small and medium-sized enterprises (MSMEs), which according to IDB Invest create more than 70% of the country’s formal jobs, run the risk of ceasing or cutting back in the months that follow, but fintech companies are startups that will benefit from it. The Bnext country manager shares five reasons for optimism in this sector:
1. Fintech companies are ready for the new normal
While many banks need to speed up internal processes to improve their digital offering, fintech companies were born to solve this problem. “We don’t have to make any changes, we have to improve what we have already done. Banks, on the other hand, may need time to adjust, ”Huertas explains. Technology is the fundamental part of apps like Bnext and other fintech companies, so the new normal for many will simply be the everyday life of this type of startup.
2. They do not depend on user payments
The services of many fintech companies are free, such as Bnext, which does not charge commissions for the account, card and transactions, while adding other financial services and earning from these alliances. Many startups rely on user consumption, while most fintech companies, according to Radar Fintech 60%, received funding last year to have more stable plans during the pandemic.
3. Nobody forgo comfort
Before quarantine after Global Cash Index More than 90% of payments in Mexico were made in cash. That won’t go away, but given the need for digital payments and the inability to go to banks, users realized the benefits of electronic money. “Nobody likes wasting time in banks, standing in line to pay for services, and now they don’t want as much cash because it’s dirty and can contain contaminants,” says the country manager for the Spanish app . Habits change when most people recognize the advantages of the alternative and nobody wants to do without the comfort that Fintech offers.
4. Lower costs and better talent
Many financial institutions are facing a new reality that doesn’t require as many branches as thousands of startups depend on their physical location. Fintech can work in a small space, cheaper and even easily from home. This dynamic work will increase in the following months.
While banks may consider closing offices, fintech companies will continue to grow and hire the best talent no matter where they are. For example, a study by Beauhurst in the UK found that almost 60% of start-up jobs are at risk, while Fintech only reaches 20% if a global economic recession hits. .
5. You will have more support than other sectors
The Fintech law 2018 was a pioneer in Latin America in terms of competitive balance and business opportunities, so support from both the government and major investors around the world will only increase. The Mexican public needs better access to agile financial services, and the government will continue to promote digital collection (CoDi) to help startups like Bnext recover more quickly from a recession. “Fintech companies can radically help the economy recover, and government support will be important so that more players like us who benefit the Mexicans can participate,” concludes Cristian Huertas.
The new normal will bring changes, and many cannot yet be predicted, but just like work and exercise at home, home delivery and healthy distances are part of everyday life, digital transactions and the reduction of consumption at home will also include cash represents some of the new banking and financial alternatives of fintech companies, a sector that has been quarantined to provide the push needed to reach more people.