Mexico regains its leadership in Latin America in the Fintech sector with 394 startups, according to the latest report by Fintech Radar Mexico. With this number, the country exceeds Brazil, which has 380 startups, according to the Fintech report in Latin America 2018: growth and consolidation presented in November by the Inter-American Development Bank and Finnovista.
In 2018, the enactment of the Fintech Law in March and the publication of secondary laws in September created uncertainty in the sector. Despite this situation, the number of fintech in the country increased by 18% since July 2018, when Finnovista made the last measurement. Since then, 98 new startups were created, while the mortality rate was 11.3%. Finnovista surveyed a third of the startups that exist in Mexico for the Fintech Radar report.
Fintech Radar Mexico 2019
Of the companies that make up the sector, the sub-strata of Loans, and Payments and Remittances continue to be the most popular in Mexico and, as a whole, make up more than 40% of the country’s fintechs. Most fintech branches in Mexico grew, except for Crowdfunding and Patrimonial Management, which fell -3 and -20% respectively. Digital banks had the highest growth (200%), an indicator of the acceptance of startups such as Albo or Hey.
The fintech sector is made up of young companies. 70% of the fintechs were founded in the last five years. More than half of the startups are in Mexico City: Monterrey and Guadalajara are the other two cities with most companies. Only one in five Mexican startups operate outside of Mexico, with Latin America being their preferred destination, followed by the United States.
Banking in Mexico is on the rise, and financial products still have plenty of space to expand. The banking population grew by 37% in the last six years and now 68% of the population has some financial product. 38% of Fintechs seek to increase financial inclusion.
The Fintech law in Mexico gives greater legal certainty to the sector. However, 53% of the surveyed companies consider that it will be a barrier to the incorporation of new players, while 46% think the costs to comply with the law will cause inefficiencies.
In addition to the proliferation of new competitors, Mexico is one of the most attractive markets for companies in the region that are becoming internationalized in countries such as Chile. The country has also seen the entry of startups in the region such as Nubank. Foreign competitors only concern 5% of Mexican startups.