Abstract
This work aims to understand the implications that financial technology represents for the Mexican financial system. Considering that the adoption of new technologies in the financial system (Fintech) is increasing, a novel and complex context has arisen with diverse implications in various aspects such as education, infrastructure, and the regulatory and supervisory framework needed to ensure a healthy development of the financial system. Although it has been shown that digitization brings various benefits, such as sustainable development, improvement of financial and social conditions by its impact on financial inclusion, and providing alternative sources of finance to firms, it also bears significant challenges both for telecommunications infrastructure, as well as for the authorities in the search for a flexible regulation that provides protection to both the financial system and its users without stiffening financial innovation.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The Latin American Economic Outlook (LEO) 2020. A joint annual publication produced by the OECD Development Centre, the United Nations Economic Commission for Latin America and the Caribbean (UN ECLAC), the Development Bank of Latin America (CAF), and the European Union (EU).
- 2.
Derived from this concept, in Mexico two approaches are taken for its application:
-
I.
Fintech Sector. It involves the figures provided by law, which have specific characteristics and treatment.
-
II.
Fintech Innovation. It considers the set of technologies that can be applied across the different sectors, seeking operational efficiencies, in cost and the convenience of users; and the set of technologies that can generate new business models and cause digital transformation.
-
I.
- 3.
Bank for International Settlements and World Bank Group (2016). Payment aspects of financial inclusion. https://www.bis.org/cpmi/publ/d144.htm.
- 4.
Igniting SDG progress through digital financial inclusión. Available at https://www.uncdf.org/article/3951/igniting-sdg-progress-through-digital-financial-inclusion.
- 5.
World Bank and the Cambridge Center for Alternative Finance (CCAF) of the Judge Business School of the Cambridge University.
- 6.
Cambridge Centre for Alternative Finance, “2020 Global COVID-19 Fintech Regulatory Rapid Assessment Study”, 3 de noviembre de 2020, available at: https://www.jbs.cam.ac.uk/wp-content/uploads/2020/10/2020-ccaf-report-Fintech-regulatory-rapid-assessment.pdf.
- 7.
According to the countries and loan groups of the World Bank, “advanced economies” include high-income economies, while “emerging market and developing economies (EMEs)” include upper middle income, lower middle and lower income economies. According to this classification, 66% of the respondents in the sample came from “emerging market and developing economies” and 34% from “advanced economies”.
- 8.
In May 2020, about 24% of the branches of the commercial bank in Mexico were reported as closed as a result of the health contingency measures, while 3% of the ATMs presented the same situation.
- 9.
According to data from ENAFIN 2018, 14% of companies that do not accept card payments report that the main reason is the cost of the service.
- 10.
For an account of the evolution of the actions undertaken by both the health and economic authorities of Mexico during COVID-19 pandemic, see Cárdenas (2020).
- 11.
Explanatory statement of the Fintech law. (2017). http://sil.gobernacion.gob.mx/Archivos/Documentos/2017/12/asun_3636969_20171205_1512152544.pdf.
- 12.
Arner, Barberis y Buckley, The evolution of Fintech a new post-crisis paradigm 2015.
- 13.
Ley para regular las instituciones de tecnología financiera. «Ley para regular las instituciones de Tecnología Financiera.» March 9, 2018. https://www.cnbv.gob.mx/Normatividad/Ley%20para%20Regular%20las%20Instituciones%20de%20Tecnolog%C3%ADa%20Financiera.pdf.
- 14.
The ITFs and banks may only operate with virtual assets that are determined by the Banco of México through general provisions.
- 15.
Comisión Nacional Bancaria y de Valores. Press Realese 22 June, 2021. https://www.gob.mx/cnbv/prensa/comunicado-no-65-actualizacion-respecto-al-proceso-de-autorizacion-de-instituciones-de-tecnologia-financiera?idiom=es.
- 16.
Jeník, Flaming and Salman (2020) find, based on four case studies of digital banks in South Africa, India, the Philippines and Mexico, that digital banks can be more competitive than their traditional peers. In particular, they find that the cost of customer acquisition can be between 5 and 15% lower; Furthermore, the operating costs of a digital channel represent only between 1 and 5% of the cost of operating a traditional branch channel; on the other hand, the cost of service to serve a client can be up to 20% lower than in the traditional channel; Finally, in the cases studied, it was found that these institutions can serve groups excluded from the traditional financial system, since between 50 and 60% of their clients were of that condition.
- 17.
Global Financial Stability Report, April 2021: Preempting a Legacy of Vulnerabilities. https://www.imf.org/en/Publications/GFSR/Issues/2021/04/06/global-financial-stability-report-april-2021#FullReport.
- 18.
In 2014, the FATF published a conceptual framework to understand and deal with AML/CFT risks related to virtual assets. In 2028, the Board adjusted its recommendations to include its application in cryptoasset operations and its operators. In 2019, it published a detailed guide about the application of this regulations un the form of an interpretative note, which cleared out the application of the risk-based approach for these activities. In addition, it established the basis for the supervision, register, sanctions and other enforcement measures, and international cooperation. Recently, it published a report identifying some indicators that could help authorities and operators to identify criminal activities.
- 19.
Mexico’s national risk assessment may be consulted in https://www.pld.hacienda.gob.mx/work/models/PLD/documentos/enr2020.pdf.
- 20.
Circular número 04/19, published March 8, 2019.
- 21.
In June 28th, SHCP and Bank of Mexico published their most recent statement about the use of virtual assets by financial institutions https://www.banxico.org.mx/publicaciones-y-prensa/miscelaneos/%7B56A7FE3D-C30E-86ED-E5C9-D9876D47D21E%7D.pdf.
- 22.
The measures and procedures that Fintech institutions must comply with on AML/CFT in Mexico are established as general provisions in article 58 of the Law to regulate financial technology institutions (commonly known as Fintech Law) published in September 10th, 2018. https://www.dof.gob.mx/nota_detalle.php?codigo=5537449&fecha=10/09/2018.
- 23.
Chief Economists Outlook: http://www3.weforum.org/docs/WEF_Chief_Economists_Outlook_June_2021.pdf.
- 24.
FSB, “Summary Report on Financial Sector Cyber security Regulations, Guidance and Supervisory Practices”, October 2017. https://www.fsb.org/2017/10/summary-report-on-financial-sector-cybersecurity-regulations-guidance-and-supervisory-practices/.
- 25.
FSB, “Effective Practices for Cyber Incident Response and Recovery”, October 19th, 2020: https://www.fsb.org/wp-content/uploads/P191020-1.pdf.
- 26.
ENISA. 2021. European Union Agency for Cybersecurity. EU Cybersecurity Initiatives in the Finance Sector. 30 de marzo de 2021. https://www.enisa.europa.eu/publications/EU_Cybersecurity_Initiatives_in_the_Finance_Sector.
- 27.
IADB, “Cybersecurity: Risks, Progress, and the Way Forward in Latin America and The Caribbean”, December, 2020, https://publications.iadb.org/en/2020-cybersecurity-report-risks-progress-and-the-way-forward-in-latin-america-and-the-caribbean.
- 28.
The principles to strengthen information security in the financial system may be consulted in https://www.cesf.gob.mx/work/models/CESF/docs/principios_seguridad_sistema_financiero.pdf.
- 29.
Information related to Bank of Mexico cybersecurity may be consulted in https://www.banxico.org.mx/sistema-financiero/seguridad-informacion-banco.html.
- 30.
Condusef estimations calculated using CNBV data: https://www.condusef.gob.mx/?p=estadisticas.
References
Arner, D., Barberis, J., & Buckley, R. (2015). The evolution of Fintech a new post-crisis paradigm. Working paper 2015/047, University of New South Wales Law Research Series.
Bancomext. (2018). Fintech en el mundo la revolución digital de las finanzas ha llegado a México. https://www.bancomext.com/wpcontent/uploads/2018/11/Libro-Fintech.pdf.
Bank for International Settlements and World Bank Group. (2016). Payment aspects of financial inclusion. https://www.bis.org/cpmi/publ/d144.htm.
Cambridge Centre for Alternative Finance. (2020). 2020 Global COVID-19 Fintech regulatory rapid assessment study. 3 de noviembre de 2020. en: https://www.jbs.cam.ac.uk/wp-content/uploads/2020/10/2020-ccaf-report-Fintech-regulatory-rapid-assessment.pdf.
Cantú, C., & Ulloa, B. (2020). The dawn of Fintech in Latin America: Landscape, prospects and challenges. https://www.bis.org/publ/bppdf/bispap112.htm.
Cárdenas, E. (2020). México en la pandemia: atrapado en la disyuntiva salud vs economía. Economía UNAM vol. 17, núm. 51, septiembre-diciembre, 2020. Universidad Nacional Autónoma de México, Facultad de Economía.
Censos y Conteos de Población y Vivienda, Censo de Población y Vivienda 2020. 2020. INEGI. https://www.inegi.org.mx/programas/ccpv/2020/.
Comisión Económica para América Latina y el Caribe. (2020). Agenda Digital para América Latina y el Caribe (eLAC2022) Séptima Conferencia Ministerial sobre la Sociedad de la Información de América Latina y el Caribe. https://conferenciaelac.cepal.org/7/en/documents/digital-agenda-elac2022.
Comisión Nacional Bancaria y de Valores, Comunicado No. 65 Actualización respecto al proceso de autorización de Instituciones de Tecnología Financiera, 22 de junio de 2021. https://www.gob.mx/cnbv/prensa/comunicado-no-65-actualizacion-respecto-al-proceso-de-autorizacion-de-instituciones-de-tecnologia-financiera?idiom=es.
Financial Stability Institute (FSI). (2021). Supervising cryptoassets for anti-money laundering. 7 abril 2021. en: https://www.bis.org/fsi/publ/insights31.pdf.
INEGI, Encuesta Nacional de Financiamiento de las Empresas 2018. (ENAFIN 2018). Octubre del 2019, Comisión Nacional Bancaria y de Valores. https://www.inegi.org.mx/contenidos/programas/enafin/2018/doc/ENAFIN2018Pres.pdf.
Jeník, I., Flaming, M., & Salman, A. (2020). Inclusive digital banking: Emerging markets case studies. Working Paper. CGAP.
LA7EM, Fintech En América Latina, La Democratización de Los Servicios Financieros Tradicionales, 15 Sept. 2019, LA7EM. https://la7em.com/Fintech-en-america-latina-la-democratizacion-de-los-servicios-financieros-tradicionales/.
Ley para regular las instituciones de tecnología financiera. «Ley para regular las instituciones de Tecnología Financiera.» 9 de Marzo de 2018. https://www.cnbv.gob.mx/Normatividad/Ley%20para%20Regular%20las%20Instituciones%20de%20Tecnolog%C3%ADa%20Financiera.pdf.
Palmié, M., Wincent, J., Parida, V., & Caglar, U. (2020). The evolution of the financial technology ecosystem: An introduction and agenda for future research on disruptive innovations in ecosystems. Technological Forecasting and Social Change, 151, 119779. ISSN 0040-1625. https://doi.org/10.1016/j.techfore.2019.119779.
Ross, B., Arner, D. W., & Nathan, J. (2016). The evolution of Fintech: A new post-crisis paradigm? January 2016, University of New South Wales Law Research Series.
Secretaría General, Secretaría de Servicios Parlamentarios. (2019). LEY Para Regular Las Instituciones de Tecnología Financiera. Diputados.gob.mx www.diputados.gob.mx/LeyesBiblio/ref/lritf.htm.
Secretary-General of the OECD, Latin American Economic Outlook 2020 Digital Transformation for Building Back Better. (2020). OECD/United Nations/CAF/European Union 2020. https://www.oecd-ilibrary.org/docserver/e6e864fben.pdf?expires=1624902423&id=id&accname=guest&checksum=5E8F6B631A4B9864B7B3212A7A0F9FE.
Valderrama, C. (2021). Guía definitiva de la Ley Fintech, una visión a 3 años de publicarse. Legal paradox. https://www.legalparadox.com/post/gu%C3%ADa-definitiva-de-la-ley-Fintech-una-visi%C3%B3n-a-3-a%C3%B1os-de-publicarse.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2022 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.
About this chapter
Cite this chapter
Brando, V.V., Lopez, D.M. (2022). Financial System: Challenges and Opportunities of Digital Transformation in Mexico. In: Mora, J.A.N., Aragón, M.B.M. (eds) Data Analytics Applications in Emerging Markets. Springer, Singapore. https://doi.org/10.1007/978-981-19-4695-0_2
Download citation
DOI: https://doi.org/10.1007/978-981-19-4695-0_2
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-19-4694-3
Online ISBN: 978-981-19-4695-0
eBook Packages: Mathematics and StatisticsMathematics and Statistics (R0)