Banks to the Rescue of the Mexican Fintech Sector
Many fintech companies, although many of them have been close to banks, not from the direct financing side, have now gradually approached traditional institutions not only in search of alliance opportunities, sharing technologies and experiences, but also to see credit options at a lower rate than those they have today. The fintech sector will attend the Banking Convention in Merida for the first time.
Beyond the transformation that “traditional” banking is undergoing in Mexico, which as mentioned has turned to seek new banking licenses to have fully digital banks, or have designed independent brands, all have agreed that the fintech sector will change after the rise in interest rates.
According to Mexico’s main banking executives, we must not lose sight of the fact that the fintech sector flourished when money had a cost of zero, that is, when interest rates were not even thought to be at their current levels. At the moment, with interest rates on the rise, many of these fintech companies are seeing a direct effect on their planning, and with the bankruptcy of one of the main banks that served the segment in the United States, the outlook may change even more, they anticipate.
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The banking and the fintech sector
So much so that many fintech companies, although many of them have been close to banks, not from the direct financing side, have now gradually approached traditional institutions not only in search of alliance opportunities, sharing technologies and experiences, but also to see credit options at a lower rate than those they have today. That yes, the arrival of fintech companies is considered to have helped many banks to apply the Japanese scheme of observing and improving; that is why we have seen the initiatives that I mentioned on the part of the banks to now seek to become technological financial intermediaries, which seek to incorporate these experiences since they recognize that today the world is totally disruptive.
And it is absolutely true that as the outgoing president of the Association of Banks of Mexico (ABM) Daniel Becker rightly says, the first thing that the fintech sector did is that it forced them to get their act together and generate a different user experience and that is what they are all working on, because they have realized that fintech companies-even if they want to-, will not replace banking, and the proof is that several have migrated to “traditional” regulated figures since the fintech law has been “too little” for everything they do and want to do.
Fintech companies at the Banking Convention held in Merida
The Banking Convention to be held in Merida will have an interesting mix of topics between what is happening with the fintech sector and the closing of Silicon Valley Bank (SVB), which as we know is one of the 20 largest banks in the world and has generated red numbers for the entire financial industry and increased the fear of a contagion, which everyone hopes to overcome as soon as they have a solid financial system. Perhaps it is precisely the startups and the technological world that will suffer the most from the loss of confidence, but it is still too early to anticipate what the future holds.
On the other side of the coin, several fintech companies will be attending the convention for the first time, mainly to strengthen the relationship with banks, and former First Lady, former Secretary of State, and presidential candidate Hillary Rodham Clinton will be the keynote speaker at the convention, who stepped in after the last-minute cancellation of former Vice President Al Gore. For now, the coin is in the air.
(Featured image by israeljam22 via Pixabay)
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First published in EL FINANCIERO, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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