After authorizations, the consolidation of the fintech sector in Mexico will follow

Once the National Banking and Securities Commission (CNBV) in Mexico published in the Official Gazette of the Federation (DOF) all the authorizations of the fintech companies that will continue with their operations, now in a fully regulated manner, a consolidation of the sector in which there will be mergers and acquisitions cannot be ruled out, said Juan Carlos Flores, co-founder, and director of Doopla.

A few days ago, the official notice was published authorizing this crowdfunding platform, which already has more than $14.95 million (300 million pesos) in loans and more than 750,000 registered users, to continue with its operations.

“I believe that the ecosystem will be consolidated, and in general terms we will strengthen the companies,” Doopla’s co-founder said.

He added: “We also do not rule out, maybe not next year, but by 2023, consolidation processes in terms of mergers or acquisitions. I think we will also be observing this.”

At the end of April, according to information from the CNBV, there were already 11 fully authorized fintech companies, and another 15 on the verge of being published, but with some requirements yet to be met.

In an interview, Juan Carlos Flores highlighted that, with a fully regulated ecosystem, we will also see a greater adoption of this type of platforms by users, and more robust companies on fronts such as fraud prevention, risk management and cybersecurity, to mention just a few. “At the end of the day, the beneficiary is going to be the investor.”

However, he also pointed out that there will be challenges such as scaling and continuing to grow, but now in a regulatory environment; in addition to continuing to battle with the economic crisis derived from the COVID-19 pandemic.

“It is a fact that this year and next year we will continue to deal with the economic crisis; taking care of credit origination; taking care of the management and administration of collections,” he said.

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It implies being in “the big leagues”

For the co-founder and director of Doopla, having the authorization implies being in “the big leagues”, with benefits such as having legal certainty, institutionalizing processes and activities, and the ease of entering into greater corporate alliances.

But also, he says, this increases the possibilities of institutional investors entering Doopla. “Both to fund our day-to-day operations, as well as to fund credit applicants. The fact that there is institutional funding has many implications: imagine that large investment funds can be co-investors of individuals”.

In addition, he pointed out that it increases user confidence. “It is also a message of tranquility and confidence for the thousands of users, because it tells you that, being a regulated financial institution, our operations are supervised, monitored, monitored and audited by the National Banking and Securities Commission”.

It was not a simple process

Juan Carlos Flores recognizes, however, that finally obtaining the authorization was not a simple process, since in Doopla’s case it involved 30 months of work, a significant investment of resources and human capital, and more than 150 documents submitted to the CNBV.

“This authorization was finally formalized, and as of April 30 we are now a crowdfunding institution, a regulated financial technology institution,” he emphasized.

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(Featured image by Chickenonline via Pixabay)

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First published in El ECONOMISTA, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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