The fintech sector has been given a boost by the Mexican government’s law to regulate financial technology institutions, known as the Fintech Act. This means that any platform seeking to leverage the potential of fintech will now be governed by accepted norms and standards. This will provide a much needed credibility boost in Mexico, according to Juan Carlos Flores Acevedo, CEO of the Doopla platform.
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Doopla platform to obtain a license to operate a collective funding institution
In a meeting with the media, Flores Acevedo said that once this platform obtains its license to operate as a collective funding institution under the law, it is expected that investments made through it will increase to the placement of $52 million (MXN 1 billion) a year by 2022.
“In the medium and long term, the challenge will be to attract large amounts of investment. We predict that by 2022 we will be generating more than $52 million (MXN 1 billion) in credit in one year. Not that we intended this, it is simply because of the growth observed in the platform itself and what has happened worldwide and in the Mexican market,” explained the executive.
According to Flores Acevedo, at present about $5 million (MXN 100 million) per year are invested through this platform, which is used for credit, being an institution with a model of person-to-person lending. However, he indicated that the certainty it will provide by obtaining its license to operate under the Fintech Act will increase and even be well seen by institutional investors.
“By capturing $52 million (MXN 1 billion) a year, at least half will be by individuals and for the other half we will require institutional funding: company treasuries, institutional investment funds, banks, credit unions, and, perhaps, with a reform to the Retirement Savings System, even the capacity could be investing through our applicants,” said Flores Acevedo.
The platform offers investment returns
The Doopla executive indicated that this type of platform offers above-average returns on investments in the market. For example, the current return for investors registered on this platform is 18.5% per year, compared to the 28-day, which is 7%.
“Already with the authorization to be a regulated company, that investment will be much easier, more attractive and less complicated to make. Evidently, due diligence will have to be done, but the probability that this type of (institutional) investor will be a source of funding for credit applicants is very high,” he said.
Doopla is a platform that has been on the market for five years, during which time more than $9 million (MXN 175 million) have been granted through it and it has 600,000 registered users. In this context, Flores Acevedo indicated that since 2019, the platform submitted its application for authorization under the Fintech Law, a process that is in its final stage, since the responses to the observations made by the National Banking and Securities Commission have already been submitted for authorization.
“We have done a monumental job in complying with all the requirements of the law and the new Doopla must be consolidated as a Financial Technology Institution. We have the challenges of implementing everything we deliver and living as a regulated institution,” said the executive, who indicated that he expects this authorization to be granted in the coming months.
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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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