70% of the fintech companies operating in the country are concentrated in Mexico City. However, it is expected that the ecosystem will become more diverse due to the pandemic.
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5 min read
This article has been translated from our Spanish edition using AI technologies. Errors can occur due to this process.
The opinions expressed by the entrepreneur's contributors are their own.
- Payments and transfers.
- Business technologies for financial institutions.
- Insurer or Insurtech.
- Digital banking.
In Mexico, the COVID-19 pandemic accelerated the adoption and development of fintech. It was not until the first few months of childbirth that the country exceeded the number of operations in these companies in order to reach the level expected for the next five years, according to legal advice Legal Paradox.
According to Finnovista's Fintech Radar Mexico 2020, Fintech companies in Mexico have grown by an average of 23% per year since 2016, which means that the demand for services of this type of company continues to increase. They are also taking advantage of the current circumstances to become major players in financial services.
70% of the fintech companies operating in the country are concentrated in Mexico City. However, it can be expected that the fintech ecosystem will become more diverse due to the pandemic, and emerging companies will continue to innovate and expand into other cities in the country, which will be vital to its development and persistence.
We are currently seeing the first signs of fintech expansion, particularly in some sectors where the pandemic has allowed the inclusion of new dynamics that have popularized its use. With that in mind, I share five trends that will become apparent during the pandemic:
1. Payments and transfers
These fintech companies have been one of the fastest growing companies in Mexico due to the pandemic and lead the supply of fintech services in the country as a sector where the most companies compete for the market and represent 20% of fintech companies nationally .
The prospects suggest that these businesses are growing steadily as they were essential in the toughest months of detention and will remain so in the "new normal" as they allow payments or transactions via mobile devices or electronic means and maintain the social Distancing measures still in place in the country.
2. Enterprise Technologies for Financial Institutions (ETFI)
This segment also performed remarkably in the first few months of this year 2020 with growth of 39% compared to 2019. This shows that financial institutions in Mexico are demanding more development of technological solutions in order to conduct operations faster, safer and more accessible.
3. Insurer or Insurtech
With 39 startups and 46% year-over-year growth, the Insurtech segment is one of the favorites during the pandemic. For me, the boom in this sector could change the fintech landscape as we know it in Mexico today, as it only accounts for 9% of the market. If this trend continues, that number will undoubtedly change and consolidate in the short term. as one of the most outstanding sectors.
4. Digital banking
This sector has been one of the most sought after sectors due to COVID-19 with a growth of 24% in 2020. Just three years ago, Fintech digital banking services were not even taken into account in Finnovista's Fintech Radar Mexico. Today they have been shown to be critical in reducing the risk of infection. Many banks have implemented improvements in their digital channels, and thanks to Neobanken it is even possible to access 100% digital services.
Funding was central to many companies during the pandemic, which is why it has become necessary to bring companies together in dynamic funding networks.
The way we do business is changing, as is the way funding is raised. Many companies understand this and it is not surprising that fintechs continue to lead the way in this sector. Funding is now more than ever the key to fueling business development and creating jobs. In Mexico, these fintech companies cover 6% of the national market.