The innovation company Finnnovista said that by the beginning of 2023, there will be 650 financial technology (fintech) companies in Mexico, which is a 26% increase from the previous year.
"Mexico starts 2023 with 650 companies in the fintech ecosystem and with positive expectations from the entrepreneurial sector, which expects to exceed the growth of 2021 and 2022," said Fermín Bueno, co-founder of Finnovista, in Mexico City.
The most recent report, "Fintech Radar 2023," said that the number of new companies or startups in this field in Mexico went from 394 in 2019 to 650 at the end of 2022.
"A large part of the innovation in payment methods in Mexico and the region occurs through fintechs." "Thanks to their innovation, speed, execution capacity, and ability to make quick decisions, unlike other participants," added Mauricio Schwartzmann, country manager of Mastercard in Mexico.
Fintechs last year compared to 512 technology-finance companies in the country in 2021."This is one of the largest year-on-year increases, as it practically doubled the growth registered between 2020 and 2021 (which was 16%)," the report notes.
Meanwhile, the mortality rate of this type of startup in Mexico stood at 9% in 2022, after 46 fintech ventures exited the market. With this, of the 512 companies with which Mexico started in 2022, only 466 ended up active in the same year, although this decrease was less than the 11% recorded in 2021. In this sense, 184 new fintech startups were identified in 2022.
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The segments with the highest number of new startups were lending, with 42; business technologies for financial institutions, with 40; and payments and remittances, with 27. Finnovista's radar shows that 60% of the new companies in the ecosystem are in these three segments. This is more than in sectors like insurtech, proptech, digital banks, and crowdfunding.
Mexico and the world are going through a complicated time, but there is "a relatively stable economic outlook in the country," which is "encouraging for the fintech market." Entrepreneurs are optimistic and expect sales growth at the end of this year to be higher than in 2021 and 2022.
In 2020, 8 out of 10 fintechs had revenues of less than half a million dollars, but by 2022, this proportion dropped to 50%. The number of technology financiers making between $500,000 and $1 million has gone from 14% to 32%.
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Mexico's fintech industry started to grow in the late 2010s, driven by the increasing penetration of mobile devices and digital technologies, as well as by the growth of the country's middle class and the need for financial services among the unbanked population.
The Mexican government has also taken steps to promote the development of the fintech sector, including the creation of a regulatory framework and the launch of initiatives to support innovation and entrepreneurship.
Today, Mexico's fintech industry offers a wide range of services, such as digital payments, peer-to-peer lending, and robo-advisory services, and it is set to grow even more in the coming years.