Mexico Lays Groundwork to Modernize Fintech Regulation

Mexico City - Mexico is taking steps to modernize its regulatory framework for financial technology companies, known as fintechs. The government aims to boost a rapidly growing sector whose rules have lagged behind.

Background

According to a report by Fintech Mexico, only 46 out of 650 fintechs in Mexico currently operate under the country’s “Fintech Law”, sanctioned in 2018. The National Banking and Securities Commission (CNBV) has authorized 65 fintech companies.

First Fintech Week and Roadmap for Reform

The Finance Secretariat recently organized its first “Fintech Week” to work with industry chambers and companies to outline a roadmap for gradual changes in the country’s regulation. This initiative aims to identify what type of actions or reforms are needed.

Quotes from Deputy Finance Secretary Gabriel Yorio

• “I believe it would be a mistake to continue to pretend as if the sector did not exist.”
• “We need to modernize our regulation. With a sector that is growing fast, we think it has such an opportunity for even more growth that could help boost our financial market by expanding the range of options, products and services to which the population can access.”
• “We are not looking for a regulation for 600 companies, what we do want is to identify or establish a friendly regulatory framework for fintechs to flourish…there will be other companies that may not need regulation but provide financial services and what we need to do is to monitor them to protect users.”

Reform Goals

The public-private partnership aims to:

• Decide on specific reforms to the Fintech Law
• Adjust secondary regulation
• Align local regulation with international best practices

Challenges Ahead

Yorio pointed out that there are fintech institutions that have not been able to find a regulatory category under which they can operate in Mexico and have established themselves as “SOFIPOS,” or payment aggregators, among other categories.

Timeline

The Deputy Secretary stated that it is unlikely for this reform initiative to make imminent progress in Congress due to the electoral climate. However, a roadmap is likely to be feasible this year while the government will seek to implement all changes ahead of the 2024 presidential elections.

Conclusion

“We must integrate the fintech sector into our financial market, regulate it in the best way possible not inhibit innovation and make the most of it…We cannot waste any more time and although we are in the last year of the administration it is worth the effort.”