The financial technology industry, also known as Fintech, has enjoyedin Mexico in recent months, to the point that its growth is 26% in 2022. This is one of the largest year-on-year increases that the sector has registered in recent years, as it doubled the growth achieved between 2020 and 2021.
As part of that expansion, 184 companies were established in the Mexican fintech ecosystem last year alone, according to a report presented by Finnovista, an innovation and startup building company.
Of those firms, those offering lending, payments and remittance services continue to be the most important segments of that sector, as they make up 60% of the total industry.
Regarding remittances, the use of cryptocurrencies has become an alternative that Mexicans see with a better eye. According to the blockchain analysis and security firm, Chainalysis, sending remittances to Mexico with bitcoin (BTC) grew 400% in one year, a fact reported by CriptoNoticias.
This is due to the fact that in Mexico there is a high percentage of families, of socioeconomically low class, who are constantly receiving remittances from their relatives abroad.
One of the cryptocurrency-related companies featured in the Finnovista report is the Mexican bitcoin and cryptocurrency exchange Bitso. The company has stood out for offering remittance services through digital assets such as stablecoins.
Additionally, the report highlights that smart contracts and blockchains have increased their use by 5% and 9%, respectively, within Fintechs in Mexico.
Between industry challenges and the criticism of regulations
In the study, Finnovista also mentions the challenges that Fintechs must face in 2023. The main one is to scale operations and internationalize, followed by access to financing and launching a product or service.
Finally, those consulted mentioned cybersecurity and getting and implementing adequate infrastructure. “Mexico continues to be a growing ecosystem with a strong appetite for capital,” the study states.
Regulations are also a stumbling block for alternative financial institutions, such as bitcoin and cryptocurrencies. For Eloísa Cadenas, a consultant specializing in the development of products with cryptoassets and blockchain, the legislation is not adjusted to the current situation, it has fallen short and a reform involving bitcoin is necessary.
Vanessa Solis Caballero, an accountant and bitcoin enthusiast, said that Mexican regulators fear that a regulatory framework favorable to bitcoin could threaten or harm the country’s financial system in some way or another.