With a population of 120 million people, Mexico is the Latin America’s second largest economy (growth of 2.5% in 2015). The country who is “so far from god and so close to the US” according to Porfirio Diaz, knew how take advantage of its strategic position when we are talking about Fintech.
Personally, I thought that being so close to the US could corrupt the startup culture in Mexico opting for the easy path and doing copy/paste of American solutions. I am happily surprised that it is not the case. Mexico has a tradition of innovation and creativity along its history and its entrepreneurs pulled out solutions from its own culture and reality to solve latent problems. So let’s roll out the carpet for Fintech.
In Mexico, 60% of population is unbanked and only 20% have a credit card. Fintech appears as the best solution to finally solve the unbanked issue. In a country where cash is dominant and people prefer to save money under the mattress, banks had real difficulties to get them on board. Fintech companies have great challenges in front of them: educate the unbanked people about financial services and give them confidence using technology.
In order to help them in this mission, several initiatives were created by international programs, accelerators and incubators. For example, Village Capital and Accion Venture Lab partnered with Mastercard Center for inclusive growth, Pomona Impact and United IT Consultants created a program to support entrepreneurs making financial services more affordable and accessible for Mexicans who lack access to traditionalU financial services. This program of three months started in 2015 and recruited 12 ventures. At the end of the program, two peer-selected enterprises received USD 50.000 in investment each. The winners last year were:
- BillPocket: a payment facilitator for more than 5.500 Mexican merchants using their mobile points of sale.
- Credilikeme: an online lending platform that uses facebook to reach, analyze and engage borrowers.
The inscriptions for this year were already closed and we are waiting to know the selected startups.
Accion Venture Lab is an investment initiative that provides seed capital and support to innovative financial inclusion start-ups improving financial access for people living in poverty worldwide. In his current portfolio, there are 4 Mexican startups:
- Clip combines a card reader plug-in for smartphones with innovative back-end risk management platform to enable nearly any merchant in Mexico to accept credit cards.
- Konfio is an online lending platform that uses innovative credit algorithms an alternative data analysis to help microbusinesses in Mexico who do not have access to credit obtain affordable working capital loans.
- Salud Facil offers low income customers access to affordable credit to cover their healthcare and medical costs in Mexico.
- Quippi aims to replace high priced traditional remittances to families in Mexico with PIN-based gift cards redeemable at local retailers (grocers, clothing stores, convenience stores…).
Fintechs also saw opportunities in the recurrent problems that Mexicans living in the US face sending remittances to the country. These solutions demand work and involvement in both countries. This is a door opened for Americans to be involved in the solutions, as partners or investors for example.
BBVA, the bank that “embraces the disruptive power of Fintech” is present in Mexico and through its BBVA Innovation Center, or #Piso33, it organizes events to boost innovation and technology in the Mexican Community. BBVA Bancomer has disrupted the financial services market in the country with the launching of several digital products first (digital wallet or hiring car insurance through an app).
On September 2015, the Finnosummit took place in Mexico for the second year. 350 participants of the Fintech community attended to explore with the 25 international speakers the future of the Fintech industry. The final of the BBVA Open Talent in Latin America occurred during this event with 12 finalists, among them there were some Mexican ones:
- Openpay has an API that allows companies to accept and end payment to clients and vendors through internet and mobile phones.
- ZaveApp helps you to reach your goals saving money without thinking about. You save without fees, easy, quick and fun.
On 20/09/2016, we will have the third edition of the Finnosummit at Mexico City. For more information, you can click here.
This year, Innotribe announced its first partnership with SWIFT’s Latam Regional Conference (LARC) to harness innovation happening in the region. The event will be organized in Mexico City from 28-29th june 2016. Innotribe will select 12 startups to enter the startup challenge, showcase their products at the event and receive expert coaching and mentoring. The three finalists will attend the SWIFT’s annual global financial services conference, held in Geneva where they will share the stage with Fintech experts and representatives from leading financial institutions worldwide. For more information please click here.
If we talk about Fintech, we cannot ignore bitcoin and blockchain, the technology that is disrupting banks. In December 2015, the laBITconf took place in Mexico DF, gathering more than 300 attendants and 40 international speakers as Andreas Antonoupoulos and José Rodríguez, from Bitso, bitcoin pioneer in the country. Bitso is a Mexican bitcoin exchange that has recently acquired Unisend Mexico in an attempt to become the leading bitcoin exchange in the country. The conference shows the involvement of Mexico in the international ecosystem of digital currencies. Bitcoin seems very promising as a solution for the Mexico’s remittance market and cross border payments.
To consolidate all the initiatives and activities happening in the country, in October 2015 the Mexican association of Fintech, “FINTECH México”, was created. This association intends to create a collaborative environment boosting innovation and also union in front of important actors of the ecosystem as regulators and big companies. With a focus on 5 key areas (education, technology, research, regulation and networking), they plan to make the Mexican Fintech community stronger locally and internationally. This week, the association was awarded as one top brand influencer at the Innovate Finance Global Summit 2016.
At the Venture Capital conference of the Alianza del Pacifico in March 2016, Mexico congratulated and encouraged for more work of the four countries (Chile, Colombia, Mexico and Peru) to attract more investments in the region. After all, the four countries together have a bigger market than Brazil.
Today, there should be more than 100 Fintech companies in the country but this number should grow quickly (in 2020, 63% of mobiles in the country will be smartphones). Mexico brings an ocean of opportunities for digitalization and innovation in financial services that we expect to really change the financial landscape of the country.
Mexico is “so close to the US” (easy access to US knowledge of Fintechs, international American speakers/influencers go easily to its territory, interest of American investors…) but above all is a Latino American country so he can play a leading role in the spanish speaking community.
We expect to hear more about Fintech Mexico activities and successful histories, especially related to financial inclusion. Because as Cristine Lagarde, IMF secretary, said once “Mexico can become the inspiration for the rest of the world to “dare to dream.””