Mexico’s market may be the next foothold for Irish fintech companies looking for more globalized growth opportunities. In Mexico, there is a large underbanked population and a quickly rising use of mobile technologies. Mexico looks to be on the verge of a fintech revolution and many startups in the region are concentrating on low-cost and accessible services to provide to Mexican citizens.
Similar to trends in most countries right now, usage of mobile banking has skyrocketed and is up 113 percent in Mexico from 2018 to 2020. This is largely due to the pandemic with social distancing regulations and restrictions on cash usage in many areas. Though the financial services market remains to be underserved, local consumers and businesses are excited to witness the numerous new services provided through mobile banking.
Most fintech start-ups have begun with offering two services- lending and payments- as they are the most necessary for their target market. Only 47 percent of the population has a bank account so lending and payments are the most crucial to begin with, but there is much room for expansion. Many start-ups operating in Mexico provide a variety of services in a variety of industries such as blockchain, crowdfunding, cryptocurrency, identity/fraud, and wealth management.
Irish fintechs should consider Mexico as a new market for their services. Quite a few firms are already flourishing like Workhuman, AdaptiveMobile, and Daon. Irish exports to Mexico were valued at €83 million in 2019, which was a 36 percent increase from the year before.
Due to how quickly Mexico’s fintech market is developing, any new aspirants will inevitably face challenges. In the past, there had been some corruption that led to distrust of financial institutions. In 2018, a stricter set of fintech laws were implemented and have helped to build back some of the public’s trust.
Another challenge that may present itself is the geography of Mexico. A number of rural areas do not possess even a single bank or ATM, which is a major reason why many citizens do not own a bank account. Though this is a major opportunity for digital banking companies to step in, there is also a concern about access to stable internet connection and mobile services in these rural areas. For these reasons, most fintech companies that are already active are concentrated in urban zones and over half of these start-ups are centralized in Mexico City.
In order for fintech companies to enter the Mexican market, it is imperative that they build trust with local businesses and truly build customer relations. Mexico provides a realistic opportunity for Irish fintechs to build a large platform in a rapidly expanding market.