How to incorporate a financial technology institution in 4 steps
Around 30% of the Mexican banking market1 could belong to Fintech2 companies within the next ten years; but what is the reason for this predicted trend? The current success of the Fintech sector is based on its innovative business models, versatility and its potential to be the problem solver for markets that have been excluded by the traditional financial system. Fintech initiatives have served to increase competition in the financial sector through the use of artificial intelligence, data analysis and technology to create more personalized and accessible services that respond to specific needs of the people without requiring the physical presence of any of the parties, which has also had a positive impact on reducing costs and time.
Mexico is the country with the most Fintech startups in Latin America3. This statement implies a challenge for the authorities that are responsible for the financial sector regulation, since the Fintech sector is looking for the development of specialized regulation that does not impede innovation, but at the same time provides legal certainty and trust.
As a consequence of this accelerated growth, Mexico has made an effort to be at the legislative vanguard and has issued: the Law to Regulate Financial Technology Institutions (the “Fintech Law”), the General Provisions applicable to Financial Technology Institutions (the “Provisions”), the General Provisions referred to in Article 58 of the Law to Regulate Financial Technology Institutions, and the Circular 12/2018 issued by the Mexican Central Bank (“Banxico”).
Companies looking to be part of this technological watershed will need to know the general procedure for transforming a corporation into a financial technology institution (“FTI”).
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1 Finnovista, “Fintech Radar México”, second edition, August 30, 2016.
2 Fintech is the intersection between the financial systems and technology.
3 Finnovista, “Fintech Radar México”, 2016.
