5 fintech trends during the pandemic
Entrepreneur's New Year’s Guide
- Payments and remittances.
- Business technologies for financial institutions.
- Insurer or insurtech.
- Digital banking.
In Mexico, the COVID-19 pandemic accelerated the adoption and development of fintech . Only in the first months of the confinement did the country exceed the number of operations of these companies to reach the levels that were expected for the next five years, according to the Legal Paradox consultancy.
Since 2016, fintech ventures in Mexico have grown at an average annual rate of 23%, according to Finnovista's Fintech Radar Mexico 2020, which implies that the demand for services from these types of companies continues to rise; they are also taking advantage of current circumstances to become key players in financial services.
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70% of the fintech companies that operate in the country are concentrated in Mexico City; However, it is to be expected that due to the pandemic the fintech ecosystem will become more diverse, with emerging companies increasingly innovative and expanding to other cities in the country, which will be key to its development and permanence.
Currently, the first signs of the expansion of fintech can be seen, particularly in some sectors where the pandemic has allowed the incorporation of new dynamics that popularized their use. In this sense, I share five trends that can be seen during the pandemic:
1. Payments and remittances
These fintech companies have been one of the fastest growing companies in Mexico as a result of the pandemic and they lead the offer of fintech services in the country as the sector with the most firms competing to win the market and represent 20% of fintech nationally.
Prospects point to these companies continuing to grow steadily, as they were essential during the harshest months of confinement and will continue to be so during the 'new normal', as they allow payments or transactions to be made through mobile devices or electronic means, preserving the social distancing measures that are still in force in the country.
2. Enterprise Technologies for Financial Institutions (ETFI)
This segment has also had a notable evolution during the first months of this 2020, with a growth of 39% compared to 2019. Which indicates that financial institutions in Mexico demand more development of technological solutions to carry out operations with greater speed, security and accessibility.
3. Insurer or Insurtech
With 39 startups and 46% growth over the previous year, the Insurtech segment stands out as one of the favorites during the pandemic. For me, the boom in this sector could change the landscape of fintech as we know it today in Mexico, since it only represents 9% of the market, but if this trend continues, this figure will undoubtedly change in the short term and could consolidate it. as one of the most outstanding sectors.
4. Digital banking
This sector has been another of the most requested as a result of COVID-19, with a growth of 24% in 2020. Just three years ago, the fintech of digital banking services were not even considered in the Fintech Radar Mexico of Finnovista Instead, today they have proven to be vital in reducing the risk of infection. Many banks have implemented improvements in their digital channels and it is even possible to access 100% digital services thanks to neobanks.
Financing has been key for many businesses during the pandemic, which is why it has become necessary to connect companies in dynamic financing networks.
The way of doing business is changing, as well as the way of obtaining financing. Many companies are understanding this and it is not surprising that fintechs in this sector continue to lead. Today more than ever, financing is key to promoting business development and creating jobs. In Mexico, these fintech companies cover 6% of the national market.