Fintech is revolutionizing the way people use their money and financial services. See why fintech is hot in Mexico.
What is Fintech?
Fintech, or financial technology, is used to describe tech that seeks to improve and automate the delivery and use of financial services. Fintech was once just employed at the back-end systems of institutions but now has shifted to more consumer-oriented services.
Examples of fintech services include:
- Mobile banking and payments
- Digital lending & credit
- Digital money transfers
- Peer-to-peer payment services (e.g. Venmo, Cashapp)
- Automated portfolio managers
- Trading platforms (such as Robinhood)
Digital banking continues to grow, making it easier for people to manage their money. Artificial intelligence (AI), big data, and blockchain technology drive fintech and allow for decentralized transactions without inputs from a third party or a government agency. As we move from a cash-based society to an increasingly digital one, fintech allows the everyday person to use trading platforms and invest on their own, competing in the same field as traditional banks and financial institutions. The partnership of PagaPhone SmartPay and Western Union allows you to digitally send money from the U.S. directly to the SmartPay digital wallet. Once the money is received, the money can easily be transferred to a bank account, withdrawn as cash from any ATM with the PagaPhone debit card, or can be used with the PagaPhone app to pay for services directly.
Fintech In Mexico
Mexico was one of the first countries in Latin America to issue a law to regulate fintech Institutions. This law has helped promote a healthy fintech domain in Mexico, where users are protected and investors are more active. Mexico is very attractive to fintech companies since 51% of households have internet access, 64% have a smartphone and 30% of Mexicans are classified as digitally native. Over 400 fintech startups call Mexico home, accounting for 20% of total venture investment in the industry – effectively leading the charge in Latin America.
Nearly 40 million people in Mexico – about a third of the population, and over 50% of Mexican adults – are unbanked, due to a distrust of banks. Increased smartphone usage and internet penetration have both enabled Mexicans to become more tech-savvy and accustomed to managing money through devices. The coronavirus pandemic led to a huge shift to digital banking and also showed an increase in bank card usage. Many Mexicans who did not use credit or debit cards before found themselves needing to sign up for cards to pay for things they would normally pay for in cash prior to the pandemic.
Is Cash Still King in Mexico?
New account openings for digital wallets and neobanks are up about 30% in Mexico, and transactions such as bill payments and money transfers are up a whopping 80%. While some of this increase might be due to the pandemic and not being able to go pay bills by cash in person, mobile banking and fintech provide an ease for consumers who need to use them that is a draw all on its own.
Western Union’s app makes it simple and easy to pay bills with bill pay, send money to a bank account, send cash, and send money to a digital or mobile wallet. And for those who still prefer cash, we have over 38,000 agent locations in Mexico that provide the flexibility to send and receive cash.