Fintech Law Goes into Effect in Mexico

It will be a big year for fintech in Mexico, with at least 93 fintech firms in the process of obtaining a Financial Technology Institution (FTI) license.

Lawyer Rene Arce Lozano, an advisor with the international Hogan Lovells law firm, wrote about the new “fintech law”; the first of its kind in Latin America. Many firms will see an authorization in the coming year from the National Banking and Securities Commission.

“Over the last few years,” Lozano wrote, “the fintech ecosystem in Mexico has evolved to become one of the most developed in Latin America.”

Mexico, home to 441 startups- the largest fintech hub in central America- passed the law in 2018 that went into effect this past year 2020, nurturing the creation of dozens of Mexican neo banks and electronic payments firms.

The new law sets regulations for payments and open banking and has stirred up excitement for fintech enterprise in the country as a whole. But according to Financial specialist Stefan Staschen, the law isn’t the cure-all.

“The law covers only two types of fintech companies,” Stashen wrote. “It does not provide regulatory guidance for other services, such as fintechs offering balance sheet lending, big tech companies launching financial services, investment services other than crowdfunding, or central bank digital currencies.”

The new law may be a great start, but it is the first step to broader regulatory approval to the diverse financial tech world. Staschen works at the CGAP– an international advocacy group based in Washington that aims to extend financial inclusion throughout the world.

Kevin Travers was a Reporter at deBanked.