On Thursday, Mexican banking regulator CNBV said it received applications from 85 companies to officially operate in the country under its new fintech law, while President Andres Manuel Lopez Obrador’s government pushes for financial inclusion.
CNBV said in a statement that out of 85 fintechs, 60 applied to act as electronic payment processors and 25 as collective funding companies. He did not specify when the authorization process would end.
The government has been looking for both banks and fintechs as it aims to reduce money in circulation to reduce money laundering and corruption and to attract more people to the formal economy.
The CNBV said that fintechs that have not yet requested authorization would no longer be allowed to operate in the country and face sanctions if they do. Fintech’s Mexican law was issued in March 2018.
Phone-based banks have proven a hit among the poor in other emerging markets such as China, India and Kenya. These efforts have been driven by private sector companies that offer user-friendly, affordable applications.
In Mexico, about 44% of the adult population does not own financial products. Many have been sidelined by steep bank fees and past scandals, or too poor to save. Others avoid the formal banking system to stay off the tax collectors’ radar.
Efforts to boost financial inclusion have been led by Finance Minister Arturo Herrera, who told Reuters in an interview earlier this year that the government planned to switch to direct deposits or digital wallets to distribute welfare benefits.
Herrera also expressed optimism that fintechs would eventually bring needed competition to the money transfer business, reducing the cost of remittances sent home by Mexicans abroad and therefore benefit the poor who rely on these transfers.
The announcement from CNBV comes a day after Spanish bank Santander (MC: SAN) said its venture capital fund InnoVentures made a $ 57.5m seed investment in start-up Kt of the Mexican Fintech, in what has been its most recent investment. great in the country so far.
InnoVentures, which has $ 200 million in equity, has invested in 25 fintech startups since it was created in 2014. Mexico’s Clar took on equity capital of $ 7.5 million and $ 50 million in debt./Investing.com