Mexico was considered to be one of the leading countries in Latin America for fintech innovation, regulation, and international investment. Since 2016, Mexico’s fintech startup scene has seen an annual growth of 23 percent, with 60 percent of new startups receiving funding. With the unprecedented impact of COVID-19, Mexico is now finding ways to harness the new conditions and reach its full fintech potential. Unlike other Latin American nations, Mexico has established a clear pathway for fintech development and is poised to facilitate the likely move to digital banking in the wake of the virus. The fallout from the pandemic could actually accelerate Mexico’s journey towards being the fintech hub of Latin America, because of the following dynamics.
Benefits of the ongoing currency exchange also apply to other assets that have maintained or risen in value during the crisis. Gold, for instance, has slowly climbed up in price, peaking at $1,769 per ounce in the second week of April – the highest point in almost seven years. There is scope for well-positioned fintech companies to develop platforms where assets beyond fiat currencies can be sent as remittances. Such startups could also redefine the use of remittances as long-term investments. Currently, roughly 60 percent of remittances are spent on food, clothing, and debt payments, rather than savings and improved financial security.
Mexico’s framework for fintechs is all the more valuable as COVID-19 spurs concerns about the future of the Mexican economy, which will encourage people to turn to fintech for sustainable solutions. The fact that in 2019 Mexico was the country with the highest growth in electronic payments in retail stores shows that citizens are quick to embrace technology that can make payment processes faster and more secure.