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
Five months in, no companies have requested approval to operate under Mexico’s Fintech Law
New credit bureau launched by Brazil’s biggest banks uses emerging tech for credit scoring
Bank and startup leaders alike say partnering is their biggest pain point
CIO interview: Fernando Turri on Banco Galicia’s tech stack overhaul
Ahead of Mexico’s change in government, startups complain about delays while the central bank assures continuity
Global bank expects financial services sector to ramp up implementation of blockchain applications in 2019
How well do you know the strategies of your competitors when it comes to digital transformation in Latin American banking?
Take our quiz to see!
Can I bring you dinner?
Which bank is tapping its POS network and building APIs to offer a delivery service that it hopes will boost client loyalty?
New challenger bank
A new Brazilian challenger bank called C6 Bank is close to launching. It’s billing itself as the #NextBigFin. The bank is backed by the chairman of which traditional bank?
Mexican banks are starting to use artificial intelligence tools. What’s the main application of the technology currently in Mexican banks?
What’s the biggest digital threat to traditional banks today?
Seems you’re a bit behind on what the rest of the market is doing…
Why not sign up for iupana‘s weekly newsletter to get exclusive news and analysis each Monday on how technology is transforming financial services in Latin America and the Caribbean? (It’s free!)
Not a bad effort…
Want to improve your score for next time? Sign up for iupana‘s weekly newsletter to get exclusive news and analysis each Monday on how technology is transforming financial services in Latin America and the Caribbean. (It’s free!)
Great effort – you’re clearly an expert in technology in financial services in Latin America!
Show your friends and colleagues on social media how well you did with these handy sharing buttons.
- IFC fintech investor calls on LatAm entreprenuers to pay it forward
- Empty queue for Mexico Fintech Law registrations
- Blockchain enthusiasm builds in Brazil, but not everyone wants to be a pioneer
- MercadoLibre’s narrowing margins show costs of fintech pivot
- Latam fintech defined by regulatory advances in 2017, say experts
- Alipay hunts for LatAm opportunities after Openpay deal