Fintechs in Mexico: Insights for thriving in a unique market
Mexico is not Latin America. That was the key takeaway from Finnosummit 2024, the region’s premier fintech event held in Mexico City.
During a session hosted by Fuckup Inc., which highlighted failures and resilience in the fintech industry, an Argentine speaker shared her experience of entering the Mexican market with confidence. “I thought I had all the answers,” she said wryly, using air quotes. But, as she admitted, she didn’t.
Any fintech looking to expand into Mexico must recognize that copying strategies from other countries, such as Colombia or Argentina, without adapting them to the local market, is a recipe for failure.
While Latin American countries share similarities, such as language and common challenges—like low financial literacy and complex regulations—Mexico is unique.
“Every Latin American country has its own characteristics, but Mexico is special,” the speaker emphasized.
What Makes the Mexican Fintech Market Unique?
Here are five critical factors every fintech should consider before entering the Mexican market:
- Understand the Landscape
Fintech companies must adapt their products and services to meet the needs and habits of Mexican consumers. This goes beyond assessing banking penetration, internet access, and mobile device availability. A deep understanding of cultural nuances and consumer behavior is essential.
The Mexican market is complex. While it offers significant potential for financial inclusion, reaching underserved segments can be challenging due to regional economic disparities, low levels of financial education, and limited trust in financial institutions.
Traditional banks have a large, established customer base and extensive branch networks, making them formidable competitors. Additionally, non-fintech corporations, such as OXXO (owned by FEMSA), provide similar financial services.
In this crowded market, standing out requires creativity, a clear business strategy, a long-term communication plan, and, most importantly, patience to establish a foothold.
- Comply with Regulations and Help Improve Them
Mexico has one of the most advanced regulatory frameworks in the region. However, the Fintech Law, introduced in 2018, needs updates.
Key areas for improvement include authorization timelines, the publication of secondary regulations, and competition-related policies.
Fintech companies should actively participate in industry groups such as Fintech Mexico, advocating for solutions that benefit both businesses and consumers.
- Build a Strong Brand and Reputation
One common mistake fintech companies make when entering Mexico is assuming their reputation in other markets will carry over. Failing to invest in branding, marketing, and communication to position their products and establish credibility often leads to failure.
In Mexico’s saturated market, standing out requires a combination of intelligence, creativity, and consistent messaging.
Success in fintech depends heavily on effective communication—whether crafting compelling pitches for investors, executing strong sales strategies, managing media relations, or leveraging social media to engage with audiences.
- Forge Strategic Partnerships
Understanding the local financial ecosystem allows fintech companies to build strategic alliances with banks, tech firms, and other institutions. These partnerships can enhance product offerings and help address user needs more effectively.
For example, Kapital Bank recognized a significant gap in the Mexican market: the challenges small businesses face in accessing credit. By combining the agility of a fintech with the stability of a bank, and leveraging technologies like AI and open banking, Kapital Bank positioned itself as a hybrid solution tailored to local needs.
- Plan for Crises and Contingencies
The adoption of digital financial services is growing across Latin America, but it’s still in the early stages. Any negative incident involving a fintech company can undermine trust in the entire sector.
Cyberattacks are another constant threat. A notable example is AlquimiaPay, a Mexican fintech that suffered a major data breach. The incident compromised sensitive user information, leading to a loss of customer trust and legal complaints that severely damaged its reputation.
AlquimiaPay successfully stabilized operations and ensured business continuity in record time, becoming a benchmark case of resilience in the sector. The company implemented advanced cybersecurity tools and optimized its technological processes, strengthening its infrastructure to prevent future attacks. Additionally, it initiated a restructuring process focused on consolidating its market position and expanding its services.
Every fintech must have a robust crisis management plan, including clear communication protocols, defined responsibilities, and strategies to mitigate reputational risks.
In Conclusion…
Expanding a fintech business into Mexico is a long-term endeavor requiring patience, investment, and genuine commitment to understanding the local market. Companies expecting quick wins are likely to be disappointed.
Success in Mexico is built on strong relationships, trust, and an impeccable reputation. Fintechs that focus on these pillars will be better positioned to overcome challenges and establish themselves as key players in the country’s financial ecosystem.