Innovation has changed many industries in recent years twenty years; especially in the financial services industry. Traditional banks were able to maintain their dominant position mainly because of the high level of regulation that constitutes a barrier to market entry. However, technology has changed everything and banks are witnessing the emergence of new technologically advanced competitors that threaten their dominance.
What may be surprising to traditional banks is that many new financial competitors innovate and develop in emerging countries where the potential for bank services to grow is enormous. In Asia, Africa and Latin America 60% the population still has no bank account, but they have their own mobile technologies. Of the new entities, the most specialized are technology-based financial companies, collectively called FinTechs. In this article, we will look at FinTech companies and how Mexico deals with them.
FinTech business model
FinTech acts as an intermediary for remittances, loans, crowdfunding, purchases and sale of financial securities, and provides financial advisory services. It does. three key features.
- Focus on one product or service and does it well. Without the general costs of traditional FinTech banks, it can focus on users by offering its services cheaper, more efficient and more cost-effective than traditional banks. An example is TransferWise, an application that allows international money transfers.
- He has a clear focus on the client. Without the burdensome older systems faced by traditional banks, FinTech can focus on solving the problems of its customers. For example, Fintonic allows users to manage their bank accounts and savings effectively.
- All FinTechs use modern technology that gives them a competitive advantage. Kabbage, an American lender for small businesses, can collect large amounts of data using artificial intelligence, and grant loans in just ten Just a minute.
These features enable FinTechs to deliver their products more efficiently and at lower costs than traditional banks.
FinTech Regulations in Mexico
According to the US Treasury Department report in years 2010–2017 formed above three one thousand new FinTech companies, generating investments exceeding 22,000,000,000 USD. This rapid increase has made regulation urgent, especially since traditional banks have been strictly regulated for decades.
The Mexican National Banking and Securities Commission (CNBV) regulates FinTechy in accordance with the new Financial Technology Institutions Act. This law allows FinTechs to operate using one of two business models.
- Electronic payment institutions may issue and manage cash balances electronically, perform operations in national currency and act as money transferors.
- Crowdfunding institutions may conduct financing operations involving debt, equity or profit-sharing.
FinTechs must meet the following strict licensing requirements:
- • Minimum share capital of 700,000 UDI, which corresponds to approximately 217,000 USD
- • at least two shareholders, Mexican or foreign, natural persons or other entities,
- • a management body consisting of one manager or one management body,
- • the supervisory authority that supervises the management body,
- • sufficient representatives to enable the company to achieve its corporate objective.
The Future of FinTech
Until now FinTechy has focused on payments, automation and large databases. However, In 2020 There will be a change of focus because the market is trying to control the full range of FinTech services through regulation, and what usually follows regulation is the influx of new entrants into the mass market. This will happen quickly, especially in areas where the use of traditional banking services is less common. This is likely to be the beginning of a new era of financial services.
About the author
José Antonio Gutiérrez, partner Russell Bedford Mexico. He is responsible for the financial sector and against money laundering (AML). He won over 20-year experience in international consulting in international advisory companies, supporting entities in the banking and non-bank financial sector. Manage e-views and due diligence analyses for banks, private sector companies and government programs. It is certified by the Mexican authorities as a compliance officer and external auditor for AML.
Source: www.russellbedford.com/Late/insight/the-rise-of-fintech-in-banking ♪ Oh, oh, oh, oh ♪