Startups will need to be strategic and spend more to comply with new rules – but the specifics of the fintech law will drive investment
Mexican fintech startups will be reconsidering their strategic plans after policy details for the country’s fintech law were published this week.
Fintech companies had been waiting for the details, known as secondary regulations, since the groundbreaking Fintech Law was passed six months ago. The rules affect companies offering electronic payments and crowdfunding (known as IFCs under the new law).
“They give clarity about the requirements that startups need to comply with, such as requesting authorization to operate, financial information, accounting aspects, and when they need to get approval for certain corporate changes,” Eliseo Vite, a fintech lawyer, told iupana.
“It paints in very precise colors what the Fintech Law had set out in general terms.”
Still, startups will have to be strategic and invest in material and human resources to make sure that the transition to the new regulation doesn’t sap the industry’s nimbleness, he said.
Companies now need to present operational and financial viability reports to the regulator, Mexico’s CNBV, for example.
And alongside the secondary regulations, policymakers set out anti-fraud and anti-money laundering rules – key areas given the nature of legislation that deals with data portability through application programming interfaces (APIs).
Fintechs classified as ITFs under the new rules will need to spend more on automating systems, and internal processes for client identification, as well as hiring compliance officers to monitor progress.
Additionally, fintechs will need to comply with consumer protection rules when it comes to sign-ups, charges and marketing.
But the industry is betting that greater regulation will also attract more capital from investors keen to enter a market that has a new level of transparency.
“As with all regulation, it implies a cost and a drag on the potential speed of development – but I think that it’s balanced out by the positive elements,” said Vite.
Companies that want to continue operating or launch new startups have 12 months to comply with the new rules.
See also: Mexico fast-tracks open banking rules
Through machine learning, apps and APIs, the Monterrey-based bank aims to get closer to its clients, says CEO Manuel Rivero
Scotiabank is investing USD 10million each year in digital transformation, says Ignacio Deschamps
Planned rules to track credit card receivables centrally could drive competition, tech in Brazil’s payments system
Cyberattacks on financial institutions in Mexico and Chile are ringing alarm bells across the region
Banks already use AI for chatbots, including over platforms like WhatsApp, in a bid to woo clients
C6Bank, a new digital bank backed by BTG’s chairman and two ex-partners, is nabbing talent from leading competitors
Should tech companies be regulated by financial authorities?
No: Any financial services they offer are minor ancilliary business
Maybe: If they seek a banking license
Yes: Any company offering credit or payments should be monitored by financial regulators
- Blockchain enthusiasm builds in Brazil, but not everyone wants to be a pioneer
- Gosocket joins Slovenian blockchain platform to open new investor base for SME finance
- Bancolombia’s Nequi looks to QR, push messages
- Banregio targets bigger presence in clients’ lives with digital services
- Mastercard plans social payments, authentication advances in LatAm
- MercadoLibre’s narrowing margins show costs of fintech pivot