Fintech Market Overview

This article does not constitute legal advice.

Fintech in Mexico

Fintech Software

The global commercialisation of products and services in general, and financial services in particular, has been affected by a technology-driven radical transformation. This trend resulted in the financial industry updating the technology within its regulated and supervised environment, as well as in the creation of newer business models that were not addressed by the existing financial legal framework.1

As it stands today, the fintech environment in Mexico is regulated by legislation that relies heavily on financial inclusion and innovation, consumer protection, preservation of financial stability, anti-money laundering and countering financing of terrorism.1

The Fintech Law introduced the following products to the Mexican market:

  1. crowdfunding: the creation of specific entities (crowdfunding institutions (IFCs)) that would serve as marketplaces for peer-to-peer lending, equity crowdfunding and co-investments in assets;
  2. e-wallets: the creation of specific entities (electronic payment fund institutions (IFPEs)) that would allow the collection of funds in Mexican pesos, foreign currency or digital assets from the general public and would hold those funds in custody on behalf of clients, making payments, acting as money transmitters and serving as crypto marketplaces;
  3. open finance rules: rules under which regulated financial institutions must share information on products and services, aggregated statistical information or client transactional data through standardised application programming interfaces (APIs); third-party providers would be licensed to access these APIs;
  4. virtual assets: the Fintech Law provides a definition for virtual assets and allows certain institutions to transact with these assets, subject to secondary regulations issued by the central bank; and
  5. regulatory sandbox: the Fintech Law introduced a regulatory sandbox through which an entity may request a temporary exemption to specific regulations, to test a given innovative model in a controlled environment. 1

In addition to the Fintech Law, other financial laws have been amended to implement the following models:

  • electronic signatures: wording was added to financial laws to allow the use of electronic signatures in financial services. Onboarding regulations were also updated to document a process for remote onboarding;
  • robo-advisers: regulators are now able to amend secondary regulations to allow licensed financial advisers to automate advisory and asset management;
  • money transmitters: IFPEs are now allowed to render money transfer services; and
  • transparency and consumer protection: transparency and financial consumer protection laws were updated to consider IFCs and IFPEs and to acknowledge a digital onboarding and user experience. 1

As a general rule, financial services are rendered in Mexico by entities that are incorporated under Mexican law and are registered or authorised, or both, to operate as such. Registrations and authorisations for financial entities are granted or sanctioned by the National Banking and Securities Commission (CNBV) or the Mexican central bank (Banxico).1

The Fintech Law introduced two specific entities authorised to carry out fintech services: IFCs and IFPEs (jointly referred to as financial technology institutions (ITF)). IFCs are authorised to carry out crowdfunding activities and to serve as a marketplace for peer-to-peer lending, equity crowdfunding and co-investments in assets. See Section IV.ii for a detailed discussion of IFCs and their operations.1

IFPEs, on the other hand, are authorised to collect funds in Mexican pesos, foreign currency or digital assets from the general public, to hold those funds in custody on behalf of clients, to manage e-wallets, to make payments, to act as money transmitters and to serve as crypto marketplaces. IFPEs may also issue debit cards and can participate in payment networks. See Section IV.iii for a detailed discussion of IFPEs and their operations.1

ITF authorisations (for both types of entities) are granted to Mexican corporations after:

  • the entity's business plan, compliance manual, operating manual and technology infrastructure have been vetted;
  • minimum capitalisation requirements have been secured; and
  • the corporate governance and ownership structure have been approved, among other requirements. 1

Crowdfunding in Mexico

Fintech in other countries

  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/mexico
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