Strengthening Fintechs: The Path to Digital Banking
The transition of fintechs to obtaining banking licenses will promote financial growth in Mexico, as well as enabling them to compete fairly with traditional banks. A study conducted by Moody's Local indicates that several fintechs have introduced innovative models into the financial system, allowing them to increase their market share. With this growth, many of these companies have been working to secure banking licenses in order to compete directly with banking institutions.
According to the analysis, "fintechs focused on loans have sought to differentiate themselves not only in terms of interest rates but also by offering a unique and convenient user experience, along with a range of personalized products." This personalization includes options like selecting the billing date, the ease of conducting transactions through digital platforms, or cards without annual fees, albeit without some benefits. Additionally, Moody's emphasized that traditional banks have been investing in digital solutions for over ten years, and some entities like Banorte, Banregio, or Santander have opted to obtain secondary banking licenses to establish fully digital banks. The analysis concludes that this is favorable for traditional banks, as they will face competition under the same regulatory costs and similar conditions. For fintechs, this regulation will enable them to demonstrate their viability by meeting stringent banking requirements, which will open up a broader range of products, access to the central bank's discount window, and a more robust deposit insurance for their customers, among other advantages.
It is clear that the integration of fintechs into the banking system will not only enrich the offering of financial products and services in the country but will also encourage a fairer competitive environment that benefits consumers. This evolution underscores the importance of innovation in the financial sector, which must continue to adapt to the changing needs of the market.
