Mexico Business Forum 2023 Finance & Fintech - Impact Report

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Finance & Fintech

Mexico’s financial sector is facing an unprecedented wave of innovation, which is revolutionizing the economic landscape and fostering new opportunities for the business community. With a keen focus on expanding financial inclusion, Mexico is emerging as a leader in fintech advancements, offering services that cater to the diverse needs of its population.

The dynamic fintech ecosystem in Mexico is driven by a profound commitment to breaking down barriers and providing accessible financial solutions. Fintechs are diligently working to bridge the gap between traditional banking systems and underserved communities, ensuring that financial services are readily available to all. By leveraging technology and embracing a customer-centric approach, fintechs empower individuals, entrepreneurs and small businesses across Mexico.

This surge of fintech popularity has ignited healthy competition between innovative disruptors and established banks. Traditional financial institutions are now compelled to adapt and evolve their services to remain relevant in this rapidly changing landscape. This competition is a win-win situation for the Mexican market, as it brings forth a broader range of options and fosters a culture of openness and alternatives for consumers.

Fintech growth also transforms the financial industry and fuels economic growth and entrepreneurship. The thriving fintech sector attracts investments, creates jobs and stimulates innovation in related industries. This virtuous cycle of progress is bolstering Mexico’s reputation as a hub for financial technology and attracting the attention of international investors and partners.

At Mexico Business Forum 2023, Finance & Fintech Edition, industry leaders addressed the importance of technology and how combining a new reality with tech can pave the way to becoming a key player in the industry. As the premier event in the Finance & Fintech sector, Mexico Business Forum 2023 provided an ideal space for key decision-makers to share their perspective and build a discussion around the latest trends affecting all industries and sectors of the Mexican economy.

193 companies

28 speakers

297 conference participants

3 sponsors

37% CEO/CFO/ DG/CM/VP

Manager

Conference social media impact Pre-conference social media impact 777 direct impressions during MBF 32,679 direct pre-conference LinkedIn impressions 3.73% click through rate during MBF 2.82% pre-conference click through rate 7.57% conference engagement rate 6.02% pre-conference engagement rate

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237 participants

Total 1,547

• 4Finance

• 500 Global

• Actinver

• Adyen

• Afluenta

• Amazon Web Services

• American Express

• Aper

• Aplazo

• Arces

• Arkangeles

• Arrenda

• ASoFoM

• AU ronIX

• Avaclick

• Avalancha Ventures

• BAnCo AFIrME G rU po FInAnCIEro

• Banco Autofin

• Banco Azteca

• Banco Bancrea

• Banco Del Bajio

• Banco Forjadores

• Banco Inmobiliario Mexicano

• Banco KEB Hana Mexico

• Banco Multiva

• Bank of America Mexico

• Bank of China

• BAnoB r AS

• Banorte

• BAnXICo

• Barclays

• Baubap

• BBVA

• BC Comunicacion

• Beclever SA

• Belvo

• BitCar

• Bitso

• B np paribas

• Circulo de Credito

• Citibanamex

• Clip

• Cn BV

• CoFECE

• Comisión nacional Bancaria y de Valores

• Compartamos

• Conecta

• Conekta

• ConSUBAnCo IBM

• Coppel

• Covalto Bank

• Coztyc

• Credit Suisse

• Creditaria

• Creditas

• Croop

• Crowdlink

• Cumplo

• Cura Deuda

• Dalus Capital

• Dapp

• DataWarden

• Debiti

• Deutsche Securities Casa de Bolsa

• Dey

• Digitt México

• Dila Capital

• Doopla

• Dux Capital

• Elektra

• Endeavor

• Enso

• Eureka & Co

• Expansive

• Factor Expres

• Fairplay

• Finnovista

• Fintech nexus

• Fintonic

• Finzak

• Fiserv Mexico

• Fondeadora

• GBM

• GCL Comunicacion

• GDS Link

• Gentera

• Getty Images

• Google

• Greenberg Taurig

• Grupo Bolsa Mexicana de Valores

• Grupo financiero itnercam

• Grupo pagaTodo

• Grupo Salinas

• Grupo Ultra de Chile

• Hey Banco

• Hilco Global

• HSBC

• Huawei

• Ictineo plataforma

• IG nIA partners

• Iguana Digital

• Infobip

• InTECAM BAnCo

• Intelligential

• Intercam

• InTErproteccién

• InVEX

• IpCom

• Isbit Co

• J. p. Morgan

• Kalto

• KAVAK

• Klar

• Klinc

• KLU

• Konféo

• Konfio

• Kubo Financiero

• Kurios Technologies

• Kushki

• Kyndryl México

• Legal paradox

• Lendera

• Logalty

• Lounn

• Mastercard

• Meda Fintech

• Mercado Libre

• Metricas

• Mica

• Minsait

• Miranda partners

• Mitec

• Mizuho Bank

• Mo Technologies

• Montepéo Luz Saviéén

• Montepio

• Monto

• Mozper

• Multiva

• Mundi

• ninch Company

• novopayment

• now By Invex

• nu

• nubank

• oficina Comercial de Israel en México

• oneBlockchainLab

• ontario International Trade and Investment o ffice

• paso Seguro Creando Futuro SA de CV SFp

• pilou

• prexto Financial

• pulpi

• Québec General Delegation in Mexico

• rappi

• rETnA/HAMoC

• revolut Mexico

• Santander

• Scotiabank

• Simetrik

• Solidwoods Consulting LLC

• Solvento

• Stori

• Superdigital

• SUVI Digital

• Swiss Business Hub

• Syncfy

• Talent.com

• Tapi

• Tauros

• Televisa

• TFG Group

• Thetaray

• Tip

• TMF Group

• Trafalgar Digital SA de CV IFpE

• Treo

• Tu Dinero Digital, S.a. de C.V., IFpE

• Uala

• Uellbee

• Uniclick

• Valhalla Valley Ventures

• VC LATAM Investor

• Vector

• Verifone

• Versatec processing de Mexico

• Vexi

• Visa

• Wenance

• Wollef

• yaydoo

• Zigo Capital

• Zumma Financial

09:00 DISRUPTORS VS. DISRUPTED: DRIVERS OF CHANGE IN MEXICO’S FINANCIAL ECOSYSTEM

Moderator: Sergio Torres Lebrija, BBVA

Panelists: Pablo Cuarón, Mastercard

Andrés Rodríguez Ledermann, Ualá

Iván Canales, nu

Louis Zaltzman, rappiCard

10:00 PAYMENT LEADERS’ NEXT STEPS ON THE PATH TO A CASHLESS ECONOMY

Moderator: Daniel Sujo, McKinsey & Company

Panelists: Alehira Orozco, Mercado Libre

Armando Betancourt, Google

Juan José Galnares, Clip

Othón Moreno, Banxico

11:00 REGULATION ADVANCES DRIVE FINANCIAL INCLUSION IN MEXICO

Speaker: José Luis Ortiz, Adyen

11:20

NETWORKING BREAK - AI-POWERED 1:1 MEETINGS

12:00 BATTLE FOR THE CLIENT ACROSS CHECKING ACCOUNTS, DEBIT AND CREDIT CARDS

Moderator: Álvaro Cubría, McKinsey & Company

Panelists: Matías Nuñez Castro, Santander

Carlos López-Moctezuma, Bancoppel

Luz Adriana Ramírez, VISA

Stefan Moller, Klar

13:00 THE EVOLUTION OF FINANCE: ENVISIONING A NEW DIGITAL AGE

Speaker: Tristen Norman, Getty Images

12:00 WHO ARE THE WINNERS IN CLOSING MEXICO’S SME CREDIT GAP?

Moderator: Patricio Diez de Bonilla, Banco Compartamos

Panelists: Manolo Atala, Fairplay

Armando Herrera, Konfío

Dan Pinchasi, Kalto

Thomas Cluzel, Fondeadora negocios

14:00

15:30

NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS

WELCOME COFFEE BREAK

16:30 EMPOWERING THE NEXT GENERATION: THE ROLE OF OPEN FINANCE IN EXPANDING ACCESS TO CREDIT IN MEXICO

Speaker: Luis Pineda, noW by InVEX

17:00 HOW CAN FINTECHS UNLOCK MAXIMUM VALUE?

Moderator: Fabrice Serfati, IG nIA partners

Panelists: Joaquín Abal, DILA Capital

Eric Perez-Grovas, Wollef

Diego Serebrisky, Dalus Capital

Antonia Rojas, VC LATAM Investor

DISRUPTORS VS. DISRUPTED: CHANGE IN THE FINANCIAL ECOSYSTEM

Mexico’s financial ecosystem is undergoing a rapid transformation, driven by the burgeoning fintech movement that spearheads innovation. The days of relying solely on traditional banking for financial services are fading, as fintech companies have emerged to bridge the gaps left unaddressed by traditional institutions. This dynamic landscape has given rise to an ecosystem that offers customers an expansive array of financial solutions.

Looking ahead, the convergence of technological advancements, supportive legislation and collaborative efforts is poised to nurture the growth of both traditional banking and fintech enterprises over the next five years. Industry leaders at Mexico Business Forum 2023 anticipate that this synergy will pave the way for a more sophisticated ecosystem, benefiting users and bolstering the overall macro economy.

The transformation of Mexico’s financial ecosystem was necessitated by a lack of innovation and accessibility within the traditional banking sector. For years, customers seeking financial services had limited options and faced numerous barriers. However, the rise of fintech companies has revolutionized the landscape by introducing innovative solutions that cater to the unmet needs of users. Enabled by advancements in technology, such as smartphones and cloud computing, fintech companies have been able to disrupt the market and challenge the status quo, says Andrés r odríguez Ledermann, CC o of Wealth Managem ent, Ualá.

By leveraging these technologies, fintechs have created user-friendly platforms, streamlined processes and enhanced financial services, ultimately empowering customers with greater convenience and flexibility. The disruption caused by fintech companies has exposed the gaps in the traditional banking model and underscored the importance of embracing technological advancements to foster competition and drive progress in the financial sector.

The rapid advancement of technology has paved the way for transformative opportunities within Mexico’s financial ecosystem. “ n ew technologies such as open finance, blockchain, data lakes and machine learning hold immense potential to enhance financial services and products offered by both traditional banks and fintech companies,” says Iván Canales, General Manager Mexico, nu. open finance initiatives, for example, facilitate the secure sharing of financial data between institutions, enabling a more holistic view of customers’ financial profiles. Meanwhile, data lakes and machine learning algorithms can unlock valuable insights from vast amounts of financial data, enabling more accurate risk assessments, fraud detection and personalized financial recommendations.

“By leveraging these technologies, traditional banks and fintechs can improve their services, increase operational efficiency and ultimately provide a more sophisticated financial ecosystem for users,” says pablo Cuarón, Vice p resident of Business Development, Mastercard. As the finance ecosystem becomes more technologically advanced, it creates a ripple effect that benefits adjacent industries, such as e-commerce, digital payments and emerging fintech startups.

This is only half of the work, the role of supportive legislation cannot be overstated in shaping and nurturing a fair and dynamic finance ecosystem in Mexico. Legislative bodies and overseeing authorities play a fundamental role in setting the necessary

“Enabled by advancements in technology, such as smartphones and cloud computing, fintech companies have been able to disrupt the market and challenge the status quo”

Andrés Rodríguez Ledermann CCO of Wealth Management | Ualá

conditions and incentives for both traditional banks and fintech companies to thrive. A robust regulatory framework that strikes the right balance between promoting innovation and safeguarding consumer protection is essential, says Sergio Torres Lebrija, Innovation, Strategy and Sustainability Head, BBVA. With the rapid growth of fintech and the evolving financial landscape, regulators are faced with the task of adapting existing laws and creating new ones to keep pace with technological advancements.

This includes “establishing compliance and monitoring mechanisms that address the unique challenges and risks associated with fintech operations,” says Louis Zaltzman, Chief Growth o fficer, r appiCard. These mechanisms include cybersecurity, data privacy and anti-money laundering measures. By providing clear guidelines and regulatory oversight, authorities can foster a level playing field and instill confidence among users, investors and stakeholders. A fair and dynamic finance ecosystem, underpinned by supportive legislation, not only safeguards against potential risks but also encourages healthy competition, innovation and collaboration between traditional banks and fintechs. This creates an environment where financial institutions are incentivized to continuously improve their products and services, while ensuring consumer protection.

While significant strides have been made, Mexico’s finance market still requires further changes to ensure greater financial inclusion.

Moving forward, a transition towards “collaboration between traditional banks and fintechs will be essential to expand financial services and bridge existing gaps,” enabling more Mexicans to access the benefits of a robust and inclusive financial ecosystem, says Cuarón. Traditional banks can leverage the agility and innovation of fintechs to enhance their existing services, while fintechs can benefit from the resources and customer base of traditional banks. By forging strategic partnerships and collaborations, both types of companies can combine their strengths to deliver improved financial products and services to customers.

Furthermore, the government’s active participation is vital in providing regulatory clarity, promoting fair competition and establishing frameworks that facilitate collaboration while ensuring consumer protection. Through joint efforts, traditional banks, fintechs and the government can establish robust security measures, fraud detection systems and industry-wide best practices. This collaboration not only mitigates risks but also builds trust among users and stakeholders, enabling the finance ecosystem to flourish. However, as the market matures and competition intensifies, the landscape will likely undergo a consolidation, says Zaltzman.

Fierce competition between traditional banks and fintechs will likely prompt strategic alliances, mergers and acquisitions, as institutions seek to strengthen their market positions, expand their customer base and

enhance their competitive advantage. Such consolidations can lead to a more streamlined and efficient finance ecosystem, where institutions with complementary strengths join forces to offer comprehensive and innovative solutions. As the market consolidates, it

becomes imperative for regulatory bodies to ensure that healthy competition and consumer interests are safeguarded, fostering an environment that encourages innovation, transparency and continued collaboration, agreed the industry experts.

PAYMENT LEADERS’ NEXT STEPS ON THE PATH TO A CASHLE SS ECONOMY

Mexico’s cash-driven economy presents several challenges to the country’s financial system and overall economic development. The country stands at a crucial juncture in its journey towards a cashless economy but first it must overcome several challenges, such as financial education, infrastructure development and fostering collaboration among stakeholders. By seizing the opportunity, Mexico can accelerate its digital transformation and provide its citizens with the numerous benefits of a cashless economy while bolstering financial inclusion and security.

Mexico possesses significant opportunities to shift towards digital payments. While smaller countries have surpassed Mexico in the digital economy due to a lack of awareness about its benefits, the country has a tremendous chance to democratize digital payments. “Cash is a highly prevalent payment method in Mexico, and we have seen other countries successfully transition from a cash-prevalent economy to one dominated by digital payment methods,” says Daniel Sujo, Digital p ractice Leader, McKinsey & Company.

Mexico is 10 years behind developed economies in the region concerning digitalization. However, the pace of change is set to be substantial and the opportunity to transition away from cash remains enormous. This acceleration toward digital payments is expected to become increasingl y evident.

In transitioning to digital payments, “Mexico possesses several advantages. As a young country, we have a high smartphone penetration rate and financial services have become more accessible and user-friendly,” says Juan José Galnares, p resident, Clip. Many frictions in the process have been removed, making it easier for individuals to adopt digital financial services. The ease of access and the increasing digital inclusion of users are driving this transition. However, there is still much progress to be made.

The first challenge is to increase financial literacy and educate people on the benefits of using digital financial services. Many people in Mexico are unfamiliar with digital banking services and, therefore, do not trust them. Education is key to addressing

this issue and promoting digital payment use. Governments and private institutions can help by providing training programs to the public on using digital financial services and their benefits.

Education and advocacy are integral to the daily operations of a cashless economy. These efforts play a crucial role in keeping users well-informed about the multitude of benefits associated with digital payment options. o ngoing efforts to collaborate, create informative content and offer incentives are essential in empowering individuals to adopt digital payment methods. By providing comprehensive education that goes beyond basic account usage and by offering hands-on experiences, users can become more confident in embracing the benefits of a cashless society. “To effectively educate users, it is necessary to bring the product directly to them, allowing individuals to experience the safety and efficiency of digital payments firsthand,” says othón Moreno, Director of payments Systems and Market Infrastructure policy and research , Banxico.

Moreover, financial education should not be limited to merely introducing the concept of having a digital account. “It is imperative to delve deeper into more sophisticated use cases, empowering individuals to explore the full range of possibilities and advantages offered by digital payments,” says Galnares. By expanding financial education, users can gain a comprehensive understanding of the transformative potential of cashless tra nsactions.

“Financial education is a significant challenge that requires us to convey to individuals that cash does not offer the

same benefits as digital transactions,” says Alehira o rozco, Government r elations Director, Mercado p ago. In ensuring user confidence and security, all participants in the ecosystem play a vital role. To promote financial inclusion, it is crucial to continue forging alliances with organizations focused on this goal. By working collaboratively, it is possible to educate and empower individuals, guiding them towards the advantages and security offered by digital financial services, ad ds o rozco.

Another challenge is Mexico’s limited technological infrastructure. To increase the penetration of digital payments, it is necessary to expand access to the internet and mobile networks and improve the digital payment systems available to consumers. There is a need to build and enhance the digital infrastructure that will enable secure, fast and efficient digital payments.

Infrastructure is a crucial aspect that cannot be overlooked when discussing financial education. It is essential to ensure that the necessary infrastructure is in place to support the growing range of financial products and services. “To eliminate friction and support digital payments, we need to build and improve the necessary infrastructure. This includes developing robust online payment gateways,” says Armando Betancourt, Head of p artnerships, Goog le Mexico.

By expanding the infrastructure, we can onboard more users into the digital payment ecosystem. Implementation of transaction limits with contactless cards is a notable step towards improving security. However, there is still significant work to be done to ensure that merchants have the infrastructure required to enable secure transactions. providing the necessary security measures and ensuring the reliability of these essential elements is a priority. Companies must strive to establish a robust infrastructure that supports the seamless integration of digital payment methods, thereby fostering a safe and efficient cashless economy.

“It is imperative to delve deeper into more sophisticated use cases, empowering individuals to explore the full range of possibilities and advantages offered by digital payments”

Juan José Galnares President | Clip

“There is ample room for collaboration between the private and public sectors in Mexico’s digital payment landscape,” says Moreno. Any sustainable solution must benefit all stakeholders in the long run, and this is where public-private collaboration becomes essential. p ublic infrastructure encompasses not only physical infrastructure but also a regulatory framework and a set of consistent policies that encourage innovation and interoperability. It is crucial to ensure that the systems in place are both efficient and secure. By fostering collaboration between the private and public sectors, Mexico can create a robust ecosystem that supports the

growth of digital payments while prioritizing the needs of all stakeholders.

As Mexico moves towards becoming a cashless economy, several opportunities are opening up. A cashless economy will help to promote financial inclusion and drive economic growth. With more people having access to financial services, businesses will be able to reach new customers and individuals will have more opportunities to invest and save. Additionally, the transition to a cashless economy will reduce the cost of transactions and increase transparency, potentially increasing the efficiency of the overall economy.

REGULATION ADVANCES DRIVE FINANCIAL INCLUSION IN MEXICO

Mexico’s financial sector has been actively pursuing regulatory reforms to foster greater financial inclusion. These regulatory changes aim to address the substantial gaps in the use of financial services within the Mexican population, which have been mostly driven by a lack of trust in the sector.

o ne of the significant milestones in enhancing financial inclusion was the introduction of the Fintech Law. “This legislation prompted financial authorities to adjust the regulatory framework for all participants in the financial sector,”

said José Luis o rtiz Guzmán, Mexico Compliance Attorney, Adyen, during his presentation at Mexico Business Forum 2023, Finance & Fintech edition. “As a result, financial authorities can now offer debit and credit accounts through nonface-to-face means, expanding access to financial services.”

Financial authorities and industry players are pouring efforts and investments in improving user experience. To gain deeper insights into these efforts, it is crucial to consider the n ational Survey of Financial Inclusion (E n IF), which plays a vital role

in identifying the existing gaps in financial inclusion. According to the E n IF survey conducted in 2021, 56.7 million people between 18 and 70 years old, accounting for 67.8% of the population, had some form of formal financial product. This represents an increase from 54 million people in 2018, pointing to the advances in expanding access to financial services within the Mexican p opulation.

r egarding formal savings, the E n IF 2021 survey revealed that 41.2 million individuals aged 18 to 70 had at least one formal savings account, representing 49.1% of the population within that age range. This figure marks an increase from 47.1% in 2018, showcasing a positive trend in the use of forma l savings.

The survey also found that in 2021, 27.4 million individuals between 18 and 70 years old had at least one formal credit account, accounting for 32.7% of the population in that age group. This indicates a 1.6 percentage point increase compared to 2018, demonstrating progress in expanding access to credit services. In 2021, 70.8% of that population used some type of financial channel, with ATMs being the most popular choice, used by 52.1% of the population, followed by financial services at commercial places with 43.9% and banks with 41.5%.

The E n IF survey also plays a key role in identifying gaps in financial inclusion and developing new ways to promote it, explains ortiz. The survey provides valuable information for financial authorities to make necessary regulatory improvements and guides financial entities in addressing the primary areas of opportunity demanded by Mexican customers. By measuring these indicators, stakeholders can work to improve financial access and ensure a more inclusive financial ecosystem that benefits all members of society. “I invite you to use and exploit the EnIF survey, which will help to identify the opportunities that exist in financial services and to provide authorities with information to improve regulation in Mexico,” says ortiz.

Efforts to bridge the gaps in financial inclusion continue to evolve, driven by regulatory reforms and the commitment of financial institutions to cater to the diverse needs of the Mexican population. These ongoing efforts reflect Mexico’s dedication to fostering an environment where individuals can maximize their economic potential and actively participate in the economy.

Through regulatory reforms and data-driven initiatives like the E n IF survey, Mexico’s financial sector is moving towards a more inclusive future. Mexico aims to empower individuals and create a more inclusive

and prosperous society by addressing trust issues and expanding access to financial products and services. Continued collaboration between financial authorities,

industry players and stakeholders will be essential in ensuring the success of these endeavors and driving sustainable economic growth.

BATTLE FOR THE CLIENT ACROSS ACCOUNTS, DEBIT AND CR EDIT CARDS

To deliver enhanced value to consumers and businesses, it is imperative for participants in the financial services industry to harness their distinctive capabilities and foster collaboration, ultimately offering a seamless and efficient customer experience. This collaboration can be facilitated through technological advances. But while these advances present remarkable opportunities, they also introduce risks that bear significant long-term implications for both users and the broader economy, agreed industry experts at Mexico Business Forum 2023.

This pursuit of excellence necessitates strategic partnerships and collective efforts, where each stakeholder brings forth their strengths to forge a comprehensive and integrated solution. An inter-stakeholder collaboration between traditional banks, fintech companies and government becomes particularly indispensable in a landscape characterized by market volatility and the imminent integration of emerging and disruptive technologies.

The financial services industry is witnessing the early stages of market disruption and innovation. While advancements in technology have introduced transformative

possibilities, the industry is yet to fully realize its potential in terms of enhancing financial inclusion and delivering increased value to consumers and businesses, says Álvaro Cubría, p artner, McKinsey & Company. To truly champion financial inclusion, stakeholders in this sector must transcend traditional approaches and embrace novel strategies. This entails leveraging physical infrastructure and cutting-edge technologies to create an ecosystem that fosters seamless financial interactions. Moreover, it necessitates a shift in focus towards improving the customer experience, where personalized and userfriendly solutions become the norm.

r ecognizing the evolving needs of the financial services industry, stakeholders are increasingly realizing the importance of collaboration and strategic partnerships. Traditional banks, fintech companies and government entities each possess unique strengths and capabilities that, when combined, can lead to the development of comprehensive and integrated solutions. By forging strategic collaborations, these stakeholders can pool their resources, expertise and technologies to address the multifaceted challenges and opportunities of the industry.

“Traditional banks bring established infrastructure, regulatory expertise and a wealth of customer data, while fintech companies offer agility, innovation and advanced technological capabilities,” says Stefan Moller, CEo and Co-Founder, Klar. Government entities provide the regulatory framework and a broader perspective on economic policies. Together, these stakeholders can co-create and implement innovative solutions that cater to the evolving needs of consumers and businesses, offering a seamless and efficient customer ex perience.

Through strategic partnerships, “they can leverage their collective strengths to navigate market disruptions, capitalize on emerging technologies and drive the industry forward,” says Carlos LópezMoctezuma, CE o , Bancoppel. The result is an ecosystem where collaboration becomes the cornerstone of success, fostering an environment of continuous improvement, adaptability and sustainab le growth.

The significance of inter-stakeholder collaboration becomes ever more salient in light of the global financial services landscape undergoing a profound transformation “driven by the convergence of market volatility and the integration of emerging and disruptive technologies,” says Luz Adriana r amírez, Mexico Country Manager, VISA. p resently,

the industry faces the challenges posed by market volatility, characterized by factors such as high inflation, market uncertainty and geopolitical tensions like the r ussia-Ukraine war, as well as persistent disruptions in the global supply chain. These volatile conditions introduce uncertainty, making it imperative for stakeholders to navigate through complex economic l andscapes.

Simultaneously, “the integration of emerging and disruptive technologies, such as artificial intelligence, blockchain and digital currencies, presents remarkable opportunities for innovation and efficiency,” says Matías n uñez Castro, Head of Digital, Innovation and r emote Channels, Santander. However, harnessing the potential of these technologies while curbing their potential risks requires collective efforts from traditional banks, fintech companies and government bodies. Traditional banks can leverage their deep industry knowledge and regulatory expertise to ensure compliance and manage risk in this rapidly evolving landscape. Fintech companies, with their agility and technological prowess, can develop innovative solutions that streamline processes, enhance security and improve customer experience. Government bodies play a crucial role in establishing regulatory frameworks that foster innovation, protect consumers and support the responsible adoption of emerging technologies.

By collaboratively navigating the challenges and capitalizing on the opportunities presented by market volatility and emerging technologies, stakeholders can position themselves at the forefront of the financial services industry, adapt to changing dynamics and drive sustainable growth. An ongoing practice that reinforces this approach is the proactive evaluation of potential risks, prompting companies to ask the crucial question: “What can kill us now?” suggests Moller. This becomes

especially critical given the unforeseen risks that may accompany emerging technologies like machine learning, where companies must exercise caution to avoid crossing boundaries in the use of personal user data, which is essential for building and optimizing such technologies. This ongoing conversation within the industry underscores the necessity of a riskaware approach.

However, “risk is an inherent precondition of operating in this industry”, says n uñez. To mitigate risks, companies must undergo important cultural changes and establish frameworks that incentivize safe and responsible innovation from within. It is in this context that collaboration becomes paramount, as each stakeholder possesses blind spots and can benefit from the perspectives and expertise of others, says r amírez.

THE EVOLUTION OF FINANCE: ENVISIONING A NEW DIGITAL AGE

The C oVID-19 pandemic has profoundly impacted the banking sector, catalyzing a significant shift in consumer behavior. Latin America, in particular, has embraced digital banking at an unprecedented rate. This digital transformation presents a pivotal moment for the Latin American financial sector.

“While we are still emerging and recovering from the global pandemic that brought these changes, what is clear to us is that it was an important turning point, especially for the financial sector in Latin America,” said Tristen n orman, Director of Creative Insights for the Americas, Getty Images, during Mexico Business Forum 2023 Finance & Fintech Edition.

In today’s visually-driven world, Getty Images is revolutionizing the financial sector through its groundbreaking VisualG p S tool, which turns visual insights into data-driven solutions. VisualG p S offers valuable guidance to brands and agencies within the financial industry, while

understanding consumer preferences and identifying trends.

The VisualGpS tool has emerged as a gamechanger in market research. With access to a vast image repository and insights from over 7,000 consumers across 25 countries, Getty Images provides a comprehensive analysis of visual habits. The tool provides valuable information on the ever-changing consumer landscape by continuously monitoring and analyzing licensed content.

The VisualG p S data highlights that 83% of Latin Americans now rely more heavily on their phones for banking activities. Additionally, nearly nine out of 10 Latin Americans use their smartphones for product research and three-quarters admit to making in-store purchase decisions based on their phone searches.

Financial brands are now prioritizing well-being when connecting with today’s consumers. Getty Images’ search data from 2022 showed significant increases in

“The integration of emerging and disruptive technologies, such as artificial intelligence, blockchain and digital currencies, presents remarkable opportunities for innovation and efficiency”

Matías Nuñez Castro Head of Digital, Innovation and Remote Channels | Santander

searches for mental health (56%), healthy lifestyle (228%), community (16%) and connection (167%). To establish meaningful relationships, financial brands must accurately reflect the realities of modern life. Getty Images’ data indicates that images depicting everyday situations resonate most strongly with consumers, emphasizing the importance of authenticity and relatability in visual advertising decisions.

“It is important not only to represent these concepts in numbers, but also to be aware of and avoid cliché pitfalls when choosing these images,” says n orman. This is extremely relevant when addressing technological or representation matters, as “it is not about being cliché and representing these concepts just for the sake of it, but asking ourselves how we do it and for what purpose.”

Despite the potential of emerging technologies, financial companies have yet to leverage them in their visual campaigns

fully. Brands have an opportunity to forge stronger connections by visually illustrating a world where these technologies play a central role. When selecting images, brands must avoid clichés and superficial representations. Authenticity and thoughtful image selection must be prioritized to convey the desired message effectively. “ n ew realities demand new forms of representation,” says norman.

Getty Images’ VisualG p S tool empowers brands and agencies in the financial sector to make informed decisions based on consumer preferences. Financial institutions can better connect with their target audience by understanding the visual landscape and leveraging authentic representations, contributing to positive and impactful change in the industry. In an increasingly visual world, Getty Images’ VisualG pS tool enables businesses to stay relevant and resonate with consumers, empowering companies to make informed decisions and foster meaningful connections.

WHO ARE THE WINNERS IN CLOSING MEXICO’S SME CREDIT GAP?

The ease of obtaining credit has opened the banking world to individuals and businesses, but it also poses potential hurdles. The main challenge is the risk of over-indebtedness, which can lead to financial instability for both the borrower an d lender.

Financial education plays a vital role in encouraging responsible borrowing and repayment practices to mitigate associated risks, says Manolo Atala, CoFounder and CEo, Fairplay. He highlights a significant disparity in financial education in Mexico, particularly when compared to

other markets like the US, where credit scores are introduce d earlier.

The lack of education in Mexico should not stop SMEs from embracing financial alternatives, says Armando Herrera, General Manager Financial products, Konfío. Due to the crucial role of SMEs in the economy, it is not feasible to wait for financial education to reach a higher level of sophistication before addressing the credit gap faced by SMEs, he adds. Instead, both initiatives must progress simultaneously.

Companies can also adapt once the period of high demand ends by implementing risk management strategies, such as diversifying their credit portfolios and regularly assessing creditworthiness. Additionally, businesses and individuals can explore alternative lending models, such as peer-to-peer lending and crowdfunding, which can help them to reduce their risk exposure and provide additional funding sources.

Alternative assessment tools can help lenders understand better the payment capability of businesses and meet the substantial demand for financing among SMEs. According to Dan p inchasi, CoFounder and CE o , Kalto, operating as a B2B platform provides the company with valuable insights into the cash flow dynamics of its clients. By managing its clients’ payments, Kalto gains a comprehensive overview of their strengths and weaknesses, enabling Kalto to offer tailored financial solutions and effectively mitigate risks.

“Understanding businesses through their transactional data provides us with valuable information to comprehend their cash flows and offer tailored products that suit their needs,” says p atricio Diez de Bonilla, Director General, Banco Co mpartamos.

Experts concur that data is essential for closing SMEs’ credit gap. “We have to be responsible in analyzing how much credit we can offer and really understand what needs we are solving, so we do not overindebt companies,” s ays Atala.

Traditional banking primarily caters to larger clients and often neglects the needs of smaller entities, such as Mexican SMEs. In light of this, Diez de Bonilla argues that SMEs represent a significant market demand, creating an attractive opportunity for innovative credit solutions. “Konfio, as a Mexican company, understands that there is a lag in financial education but SMEs represent three out of every four jobs in Mexico and close to 50% of Mexico’s GDp; it is up to us to help this sector evolve” says Herrera. The needs of Mexican SMEs can sometimes be best recognized by other emerging companies. “Many of us who create these types of solutions targeted at SMEs are also entrepreneurs, and we have empathy for the needs of SMEs,” says Herrera.

“Banks work well with large clients but [Fondeadora n egocios] caters to an underserved sector. This way, we gain experience and each party works with the sector in which they have the highest degree of capability and expertise,” says Thomas Cluzel, General Manager, Fondeadora negocios.

Technology can streamline the credit application process and reduce entry barriers while maintaining appropriate levels of risk management and underwriting. For example, artificial intelligence and machine learning algorithms can analyze vast amounts of data and assess creditworthiness quickly and accurately. “AI and machine learning interplay well in the industry, providing efficient and accurate credit assessments, facilitating risk management and enhancing financial inclusion,” says Cluzel.

“Financial education plays a vital role in encouraging responsible borrowing and repayment practices to mitigate associated risks”

Manolo Atala Co-Founder and CEO | FairPlay

online and mobile platforms can make credit more accessible to individuals and businesses but, to take advantage of newer technology, fintechs have to solidify their products. ”While new technologies are taking up a significant space, we must first prepare ourselves by refining our business models and guiding the users accordingly,” says pinchasi.

However, balancing technological advancements with adequate risk management and regulatory compliance is essential. For example, digital identity verification and secure payment processing systems are crucial to ensure the security and privacy of sensitive financial information.

Clear regulation could bring many potential benefits to Mexico, says Cluzel. Mexican regulation, regarding digital and technological financing, has some strong points that the regulations of other countries do not have, he adds. “SAT’s electronic invoicing system allows us to conduct an alternative credit assessment analysis. This tool is pioneering worldwide. Mexico has very interesting

regulatory tools that provide access to transparency, which is highly valuable,” says Cluzel.

nonetheless, a young sector such as fintech also faces some challenges that require cooperation from the industry. “In Mexico, fraud remains a significant risk. As an industry, it seems that we all strive to collaborate to reduce it by improving the quality of credit assessment using the tools at our disposal,” says pinchasi.

Increasing access to credit can provide significant benefits for individuals and businesses, but it also poses potential challenges such as over-indebtedness and financial instability. Financial education and risk management strategies can mitigate these risks, and technology can streamline the credit application process while maintaining appropriate risk management and underwriting levels. The financial sector must continue to adapt and innovate to ensure that credit is accessible, affordable and responsibly managed.

THE ROLE OF OPEN FINANCE IN EXPANDING ACCESS TO CREDIT IN MEXICO

Financial inclusion has been a longstanding challenge in Mexico but many are taking bold steps to address this issue. For example, by analyzing key statistics and identifying barriers, noW by I n VEX aims to revolutionize the banking landscape, offering tailored solutions to empower

individuals and fostering financial inclusion n ationwide.

“It is not the mere arrival of new players or the process of digitization itself that has transformed the banking landscape. Instead, the catalyst for change lies in the evolving

needs and preferences of the customers,” says Luis pineda, CEo, noW by InVEX.

The Mexican banking landscape has witnessed a glaring gap in account ownership, with only 49% of adults having at least one bank account in 2021. Additionally, credit card usage has seen a steady rise with over 30 million cards in circulation today, compared to 26.6 million in June 2021. However, it is essential to move beyond the proliferation of credit cards and prioritize genuine financial inclusion through comprehensive initiatives.

Despite the advent of digital solutions, cash remains the primary mode of transaction in Mexico, accounting for a staggering 90% of all transactions. reducing reliance on cash and promoting the adoption of digital payment methods is pivotal in advancing financial inclusion and minimizing associated risks.

noW by I nVEX has identified key barriers hindering financial inclusion, including dependence on physical branches, limited customer service, trust issues, credit history reliance and security concerns. To tackle these challenges, noW Bank has outlined a range of solutions aimed at revolutionizing the banking experience.

o ne of the most significant hurdles lies in encouraging saving habits among the population. o nly 38% of Mexican adults currently engage in formal or informal saving practices. This calls for innovative approaches to promote financial education and instill a culture of saving, establishing a stronger foundation for financial stability.

Breaking free from the constraints of traditional brick-and-mortar banking, noW Bank presents a groundbreaking concept: by embracing digital onboarding and postsales processes, it enables customers to access banking services conveniently, regardless of their physical location. This customer-centric approach underscores noW Bank’s commitment to adapt and meet the ever-changing demands of the modern banking landscape. Customer service lies at the heart of no W Bank’s approach. By offering native digital solutions with self-service capabilities and 24/7 human assistance, noW Bank strives to provide personalized support and timely resolution

“It is not the mere arrival of new players or the process of digitization itself that has transformed the banking landscape. Instead, the catalyst for change lies in the evolving needs and preferences of the customers”

Luis Pineda CEO | NOW by INVEX

of customer queries, ensuring a seamless and satisfying banking experience.

Trust-building is a fundamental aspect of financial inclusion. Thus, transparency has to be prioritized by making terms and conditions easily accessible and prioritizing ethical banking practices, explains pineda. By guiding customers through their financial journeys and acting in their best interests, noW Bank aims to establish trust and foster enduring relationships.

Another crucial focus area is credit history reliance. noW Bank promotes the concept of open Finance, enabling alternative credit information sources and the sharing of customer demographic and transactional data among issuers. Empowering customers to control their products through preferred apps facilitates the creation of a comprehensive and accurate credit history.

Addressing security concerns is paramount for noW Bank, says p ineda. By ensuring financial security, protecting customer information and safeguarding identities, noW Bank instills confidence in its users, assuring them that their financial well-being is a top priority.

By leveraging technology, promoting transparency and offering customercentric solutions, no W Bank aims to empower individuals, foster responsible banking practices and build a solid and sustainable financial future for all. Through its innovative approach, noW by I n VEX is set to revolutionize the Mexican banking landscape and drive meaningful change in the pursuit of financial inclusion. “Building a solid and sustainable financial future is not solely the responsibility of banks. It is the responsibility of everyone,” says p ineda.

HOW CAN FINTECHS UNLOCK MAXIMUM VALUE?

Mexico’s fintech industry has been growing rapidly, attracting attention and investment from domestic and international investors. However, with so many new players entering the market, it can be challenging for startups to stand

out and differentiate themselves from co mpetitors.

Fintech is a relatively new industry in Mexico and Latin America but there has been extensive efforts to build the

necessary infrastructure for this sector to flourish. “Building the infrastructure to launch financial products like these requires a significant capital investment. In Latin America, we have had to build everything from scratch,” says Antonia rojas, Investor, VC LATAM.

accomplished through targeted advertising and promotions, as well as through the development of innovative products and services that meet the needs of their target customers.

Eric p érez-Grovas, Co-Founder and General p artner of Wollef, explains that while the primary challenge in the past was determining to whom credit should not be extended, nowadays it is far more crucial to identify the ideal candidates for financing. “This is where we have found great opportunities by collaborating with fintechs that have the ability to identify ideal candidates using alternative sources of information and assessment methods,” says pérez-Grovas.

o ne of the critical challenges that fintech startups face in Mexico is the lack of regulatory clarity and certainty. Fintech companies often operate in a regulatory gray area, which generates uncertainty and limits their ability to attract customers and investors. To succeed in this market, fintech startups must navigate the complex regulatory landscape and ensure compliance with applicable laws and regulations. This requires a deep understanding of the regulatory environment and a proactive approach to managing regulatory risks.

Another challenge is building brand awareness and customer loyalty in a crowded market. To differentiate from competitors, fintech startups must develop effective marketing strategies and build strong customer relationships. This can be

Fintechs effectively address the current needs of clients, leveraging the extensive advancements of the digital world. people increasingly demand more remote and digital tools because ultimately it is how they navigate a significant part of their lives. “Fintech is the application of technology in the financial sector, providing more efficient and customer-centric services that align with what clients are seeking. This has emerged because in many countries, the financial sector has focused more on the banks’ business rather than understanding customer needs,” says Diego Serebrisky, Co-Founder and Managing p artner, Dalus Capital.

p artnerships and collaborations can also play a critical role in helping fintech startups to scale and reach new customers. By partnering with established financial institutions, fintech startups can leverage their existing customer base and infrastructure to expand their reach and accelerate growth. Startups can also benefit from partnerships with other companies, enabling them to offer complementary products and services and create a more seamless customer experience.

Joaquín Abal, p rincipal, DILA Capital, identifies collaboration as key in light of the wide market that Mexico represents for fintechs. “Defining fintech companies in Mexico homogeneously is difficult. They all offer different products and serve different markets. However, a common challenge is collaboration and we are seeing many successful cases in Mexico. There is still much to be done and the importance of building partnerships is often underestimated,” says Abal.

Technology can be a powerful tool for streamlining the credit application

“Building the infrastructure to launch financial products like these requires a significant capital investment. In Latin America, we have had to build everything from scratch”

Antonia Rojas Investor | VC LATAM

process and reducing entry barriers while maintaining appropriate risk management and underwriting levels. Fintech startups can leverage advanced analytics and machine learning algorithms to automate the credit underwriting process, enabling faster and more accurate loan decisions. This can help fintech startups to attract and retain customers and build a competitive advantage in the market. p érez-Grovas underlines that a robust technological infrastructure to assess credit has been paramount in choosing the right startups to invest in.

“The economic environment has greatly shaped the business models we see in fintech today. When we think of fintech, the first thing that comes to mind is a card but the models go beyond that and are closer to the user. We are changing a paradigm,” says Fabrice Serfati, Managing Director and General p artner, IG n IA p artners.

Experts highlight a paradigm shift in financial tools driven by technology. rojas emphasizes that the focus has mainly been on digitizing existing solutions. “As we move towards a more integrated world, we increasingly find ourselves using financial products without even realizing it,” she says.

While startups face many challenges in Mexico, they will also find significant opportunities once they learn to navigate the regulatory landscape, differentiate themselves from competitors and build strong partnerships and customer relationships. By leveraging technology and innovation, fintech startups can transform the financial services industry and drive economic growth and development in Mexico.

Another main challenge brought up by p érez-Grovas is the growing need for specialized talent: “In any company we invest in, the most important challenge is talent. The fintechs we work with already have in mind who they will incorporate into their teams even before a problem arises that requires it. Finding this talent is i mportant.”

At their core, fintechs need to generate trust for the sector to find the balance it needs. “Access to liquidity remains a central challenge, especially for those providing credit. Fintechs are not traditional banks and must prove their liquidity in the medium and short term,” says Serebrisky. Experts concur that transparency and trust are key to navigate the ups and downs in demand.