The fintech industry It has shown constant growth since 2019, despite the closure of different startups, the ecosystem remains ahead. According to the data presented by MasterCard and Finnovista, Mexico has 650 financial technology companies138 more firms than those registered in the previous survey and a compound annual growth of 18 percent.
However, data from Finnovista Fintech Radar Mexico 2023indicate that segments such as insurtech and those related to open finance (open finance) did not have the expected performance, since a greater number of these companies was forecast, in part the lack of regulation is pointed out as one of the main obstacles .
“There is no regulation, there is insecurity, because entrepreneurs do not know that they are going to fall, that discourages all the actors in the ecosystem, that uncertainty is also transmitted to the investor, which is the most important thing, since the investor capital is the blood that runs through the veins of startups”, commented Fermín Bueno, founding partner of Finnovista.
In addition, the information presented shows that the regulated universe is significantly smaller compared to the Fintech ecosystem, since only 10% of Fintech companies are operating with a Fintech license in the country, both as a Collective Funding Institution and as a Funding Institution. Electronic Payment Funds.
In perspective, 12% seek authorization in terms of the Law to Regulate Financial Technology Institutions (Fintech Law), while 34% operate under another figure, 14% are seeking a license not related to the Fintech Law and 30% operate under a third-party license.
open finance waiting
On the other hand, despite the high expectations that were held in terms of the open finance and insutech segments, these were the ones that reported the lowest growth since the first registered 10 new ventures and the second only three, in addition to the collective funding of the Two new firms were registered.
Despite the fact that the financial technology sector demonstrates growth and resilience in the face of the macroeconomic scenario, Fermín Bueno indicated that the lack of regulation in technologies such as open finance is limiting the growth of the ecosystem
“In the insutech sector, we don’t really know what this (growth) is due to, on the one hand there is no regulation, on the other hand, insurers are not very active in the ecosystem, perhaps it represents an opportunity for others. Lastly, there is also open finance, which is experiencing significant growth, although it is still a small segment, but there are great expectations developmental.
The Inter-institutional Committee, made up of the Ministry of Finance and Public Credit, Banco de México (Banxico) and the National Banking and Securities Commission, left pending the rules for the operation of open finance, since there are no subsequent indications since the publication of the circular 2/2020 of Banxicowhere the first provisions referring to article 76 of the Fintech Law for the integration of Application Programming Interfaces (APIs) were issued,
In this context, Mauricio Schwartzmann, general director of MasterCard México, said that the remaining regulations on open finance and open banking are expected to be released in 2023.
“2023 will be the year where we are going to see the regulation moving, there is a lot of activity in the ecosystem, so there is a lot of expectation. Normally open banking and open financing there are two fronts, one is the data part, the other is the payment part. The regulators will provide the certainty that is needed for this segment of the industry to develop a lot”, commented Schwartzmann.
Little Investment does not discourage Fintech
Although information cited by the radar indicates that 2022 was a year with essentially lower investment volumes in terms of venture capital, the Fintech respondents are optimistic about the results expected in 2023. The study indicated that, during the In the first half of 2022, it was diversification, since a greater number of negotiations and a lower investment amount were recorded, compared to the same period of 2021.
“The reason for this greater diversification is the sharp drop in late-stage investments and the significant increase in seed and early-stage investments,” says the radar.
Despite the context, the entrepreneurs indicated that their expectation of closing sales for 2023 is higher than that of 2021. According to what was presented, their expectations are mainly based on the generation of alliances and strategic collaborations with other companies in the ecosystem, followed by innovation in their sales strategies and portfolio improvement.
