- Fintech Mexico 2024: ‘Overbanking’ or a Supply and Demand Issue? This is What Experts and Members of the Fintech Community Analyzed in Various Forums
- Although these two perspectives may seem distant, a deeper analysis reveals that the differences are not as pronounced. The question is: What will fintech companies do to solve it
The fintech sector in Mexico in 2024 has solidified itself as a driver of innovation and modernization within the financial services industry. However, as it evolves, it faces a series of challenges that have highlighted its limitations in achieving real financial inclusion.
While some experts argue that fintechs are “overbanking” the country, industry leaders contend that the problem is more complex, involving both the supply and demand for their services.
Although these two positions may seem far apart, a deeper analysis reveals fewer differences. The key issue lies in how and when these perspectives are addressed, as both were discussed in various forums held across the country.
Are fintechs overbanking Mexico?
Gabriela Zapata Álvarez, a financial inclusion expert, has pointed out that fintechs in Mexico are focused on serving an already banked segment of the population, which she believes results in “overbanking.”
During a forum organized by the Federal Economic Competition Commission (Cofece) at the National Autonomous University of Mexico’s (UNAM) Law School, Zapata emphasized:
“The population with incomes between 2,500 and 12,000 pesos a month is the excluded group,” she argued.
This group not only lacks access to traditional banking services, but is also not benefiting from fintech innovations.
She also highlighted that many fintechs and other alternative financial entities, such as Sofipos and Sofomes, tend to operate in sectors where payrolls and income levels make it easier for users to access financial products.
However, at the base of the pyramid, where incomes are lower, financial services do not reach the same intensity.
“To have an account with a fintech, you generally need to have another account with a bank, which limits access for people with lower incomes,” she added.
Innovation and access barriers
On the other hand, Myriam Cossío, president of the Association of Payment Aggregators (Asamep), stressed the need for more competition and technological innovation.
“In Mexico, contactless payments are only available to 7% of the population, while in Guatemala, they cover up to 70%,” Cossío pointed out, highlighting the existing technological gap.
José Eduardo Mendoza, commissioner at Cofece, also raised a key question about the identity of fintechs.
“Entities must decide whether they want to be the same as traditional banks or different, but with a clear objective: the inclusion of the entire population,” he said.
This statement underscores the need for fintechs to reassess their strategies to include sectors of society that are currently excluded from the financial ecosystem.
Supply and demand issues in Mexico’s Fintech sector 2024
While some experts highlight the challenges of financial inclusion, fintech leaders emphasize that the situation is not just about demand, but also about supply.
At the STP Summit 2024, José Antonio Murillo, CEO of Rappicard, explained that while there is a demand issue due to the lack of adaptation among Mexican consumers, there is also a supply problem.
“People who deserve access to credit are not being given the right opportunities,” Murillo stated.
He also pointed out that overcoming these challenges requires sufficient investment in understanding the customer.
“The solutions fintechs offer eliminate much of the friction for users, but the informality in which many operate becomes a barrier to entering more formal systems,” he noted.
This is precisely where the two views converge: “overbanking” and the supply and demand for people who could access credit.
A recurring concern among consumers is the perception of neglect by financial institutions, a historical burden attributed to traditional banking, which fintechs must address.
Murillo stressed that improving customer service is key to strengthening trust and dispelling doubts.
“Customers have been poorly served for decades, and this has to change if we want to achieve true inclusion,” he remarked.
Similarly, Juan José Villaseñor, Vice President of Global Payment Networks at Stori, highlighted the importance of understanding customers in order to offer products that truly meet their needs.
“User experience is essential. When people understand how a product works, they start to trust it and recommend it,” he explained.
In an analysis of the challenges facing digital payment methods in Mexico, Felipe Vallejo, Executive Director of Bitso Mexico, brought up a different angle.
He acknowledged the importance of public policy but argued that innovation and creativity must be the pillars of development.
“If solutions only depend on public policies, the sector is in a fragile position. We need creativity to attract customers,” Vallejo argued.
However, the challenge doesn’t end with attracting customers; it’s also about how these fintechs manage to sustain themselves in an environment where, according to Visa’s Sales Director Halan Gobira, there needs to be a standardization of payment models, similar to Brazil’s Pix system. This system, regulated by Brazil’s Central Bank, has achieved massive reach by imposing uniform rules for all participants.
The positive side of all this is that the fintech sector in Mexico is aware of the challenges and risks these issues bring. What needs to happen next is that, consciously, they must work together to avoid competing against each other for possibly the same customers and instead focus on driving actions that benefit the entire sector.
As the saying goes, it’s easier said than done, especially considering that one key actor—the regulator and the federal government—is immersed in structural changes that will likely alter the referee overseeing the game, and perhaps even change the rules.