The dark panorama that is foreseen in the following months in different sectors of the economy does not make the Fintech ecosystem tremble; on the contrary, the scenario is favorable due to signs that it had during 2020.
Participants of the fintech ecosystem agreed that although the coronavirus pandemic has hit different branches of the economy, digital financial services came out well and they assured that, although 2021 will bring challenges such as regulation, there will be a period of dynamism and an expansion of services from the platforms that have been consolidated in the Mexican market.
“Confinement orders, mobility restrictions, and fear of contagion have really accelerated consumer adoption of these digital financial services, and a large part of fintech solutions revolve around digital technologies,” explained Andrés Fontao, co-founder of the Finnovista accelerator, in an interview.
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In the last part of 2020, there were signs that made the ecosystem take off before 2021.
Two platforms already consolidated in the market, Bitso and Albo, made important announcements regarding the rise of venture capital
In the case of Bitso, the virtual asset exchange platform, announced a capital raising of $62 million in an investment round led by Kaszek Ventures and QED Investors, which will be used for its expansion in Latin America.
For its part, Albo, the platform that operates a debit product through its application and a physical card, announced the closing of a Series B investment round for $45 million, led by funds such as Valar Ventures, Mountain Nazca and Greyhound Capital, which will serve to expand its client base, currently of 500,000 users, as well as introduce new products such as credit.
“Investors are seeing a market eager for these fintech needs, there are many examples of how society in Mexico is looking for alternatives to traditional banking (…) to Albo, investors see it as a platform that is dominating, with so much strength in the market, that they want to bet on the winning horse and are confident that we will build the biggest bank that Mexico has ever seen,” said Angel Sahagun Arcila, founder of Albo.
Fintech Konfío, which focuses on providing credit to small and medium-sized companies, announced the acquisition of Mexican software company Gestionix to improve its operations.
“These three transactions are signs that the fintech theme is here to stay. Before, they were small bets, small investments to test, to validate the business models of the startups, to see how serious the regulator was, if the consumer was going to adopt the fintech solutions. But only with those three transactions I think that the market’s signal is that the fintech ecosystem is here and it is going to detonate in a good way,” Fontao explained.
Although in 2020 it was expected that the regulatory issue would be more advanced with respect to authorizations, there are 80 files waiting to be resolved in order to know if they should be authorized under the Fintech Act, this is not an obstacle that will make the ecosystem nervous, since the challenges will focus on how to raise more capital, especially from Mexican funds, according to Andres Fontao.
“2021 will be a new era, we will move from the fintech 1.0 ecosystem to fintech 2.0, of exponential adoption by the consumer, significant and relevant investment by the venture capitalist,” said the Finnovista representative.
In March 2018, the Law to Regulate Financial Technology Institutions was enacted, which seeks to regulate the operation of two types of platforms such as Electronic Payment Funds or Collective Financing institutions.
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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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