Fintech is the bet of bankarization in the digital era

In a context of uncertainty, due to the coronavirus and the movement of markets affected by variations in oil prices, seeking prosperity for all and overcoming the challenges of banking in the digital era were the main topics of the 83rd Banking Convention held in Mexico this March 12th and 13th.

However, this event managed to bring together representatives of the financial and banking sector as well as the country’s regulatory authorities, who analyzed the new measures to boost the national economy and achieve, among the greatest challenges, a digital, efficient and secure banking system.

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The disuse of cash is the only way forward

Officially, the way forward in finance for the coming years includes strengthening the disuse of cash, although 91% of payments in 2019 were made in this way, according to data from the Bank of Mexico (Banxico). The Digital Collection (CoDi), presented at the convention last year, did not achieve the expected penetration, and there are still challenges of credibility and confidence in digital transactions, not only by users but also by regulators.

“A pending task of the large entities is to teach more people that being part of the financial system has ample benefits and it is increasingly easier to join, even with devices such as the cell phone. At this point in history, banks are no longer the only ones in charge of educating and financially including people. Fintech companies are also protagonists and co-responsible, given their highly technological component that allows for the massification of information and, consequently, ensures banking penetration”, warned directors of the specialized financial services platform Coru.com, present at the 83rd Banking Convention.

Fintech: the commitment to banking penetration

In Mexico, there is a large sector of the population that cannot access financial services. According to the National Report on Financial Inclusion (RNIF), coverage of this type of service is scarce in several regions of the country: 22.3% of municipalities do not have banks or financial companies. In contrast, developed countries have increased the banking penetration of people by implementing laws, which has generated the infrastructure for technology to develop and for companies to emerge that work in financial inclusion.

Given this panorama, the more than 390 Fintech companies that make up the ecosystem in Mexico are a fundamental part of promoting banking penetration, particularly because of their following components:

1. Speed. Financial service contracting processes do not disappear with fintech, but they do become more accessible thanks to the implementation of artificial intelligence in risk, authentication and verification processes. It is also necessary to identify and confirm data, but with the possibility of doing it from the telephone, which represents a saving of time and money for the consumer and the issuer.

2. Personalization. The various financial technologies facilitate access to products and services that would be more difficult to acquire by traditional means, thanks to a unique experience. “This is the case of Coru.com, a service platform where each user is matched with the most appropriate financial products (credit cards, loans or insurance) for each case, using artificial intelligence and a 100% digital marketplace,” explained Luis Madrigal, the company’s managing director.

“Fintech will help more Mexicans to access a formal financial service. The innovations in this industry allow consumers, who have never been to a bank before, to dare to apply for a credit card or any other financial service,” he added.

3. Low cost. Traditional banking charges commissions and that is very relevant for customers. For 48% of people, one of the reasons to give other financial services a chance would be if they charged lower fees, according to a survey by the Internet MX Association. These are some of the strongest value propositions among the products offered by fintech companies against the traditional banking system: zero commissions, card with free delivery, bonus of the commissions charged by other banks’ ATMs, refund of a part of the money spent (cashback), among others.

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(Featured image by javierhawks via Pixabay)

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

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