On Thursday, 22nd June, the Chamber’s Financial Services Group hosted a breakfast conference on financial technology (FinTech). Head of the group, Armando Nuricumbo welcomed panellists and introduced the theme of financial technology which is currently revolutionising the sector - both in Mexico and globally.
Francisco De Hoyos Parra, who leads the public affairs area of Provident Mexico, moderated the panel and began the discussion by inviting panellists to introduce themselves and their companies.
Cynthia Salicrup of Bankaool explained that her company is the first ever branch-free bank in Mexico. Thanks to the resulting reduced costs, Bankaool can offer more competitive interest rates than traditional banking and even allows customers to apply for credit online. This often makes the bank a more attractive option for SMEs.
Joining the panellists was the president of FinTech Mexico, the civil association that aims to structure this new and revolutionary industry in the country. He explained that FinTech can enable investment and gave the example of crowd funding, where anyone can request investment and anyone can invest through FinTech platforms, such as Kickstarter.com. This message was supported by fellow panellist Jorge Bolaños of VARIV Capital - one of Latin America’s leading venture capital firms.
The panel soon began to address concerns regarding security in FinTech with Cynthia clarifying that Bankaool is regulated in the same way as any other bank in Mexico. Jorge also defended the FinTech companies dedicated to crowdfunding that act as a platform for investors and entrepreneurs but cannot necessarily be responsible for the decisions and investments made from such interactions. There was also some discussion over risk mitigation at the ‘Know Your Customer’ stages for the FinTech companies themselves. However, Jorge pointed out that even when someone opens an account in a physical branch, the bank can only take a copy of official ID and proof of address without many tools available for determining whether such documentation is fake. Thanks to FinTech, online banking companies could cross reference an individual’s location by their mobile phone with their address. Applying such technology could even combat money laundering. Also, unlike with traditional money, transactions made with bitcoins (cryptocurrency) are totally traceable through the public ledger, block chain.
The panellists spoke of FinTech as a revolution, and not one that “is coming” but one that “is already here”. FinTech can speed up and facilitate banking in a positive way. In rural areas where there is little access to physical banks and cash machines, there are potential solutions available through the use of online technology. In the United States, Amazon have now launched a cashier-free supermarket where purchases are linked to customers’ smart phone accounts. Cynthia said that Mexico can get there too. Bitcoin also facilitates international transactions where individuals can work for a company in another country and be paid in bitcoin.
There was some discussion towards the end of the panel as speakers debated the reaction of banks to FinTech. All agreed with Cynthia’s reference to the statement of the CEO of Bancomer Mexico that banks who do not consider themselves to be a digital platform will be left behind. However, Jorge added, that banks in Mexico are currently in a comfort zone with outstanding performance compared to the same sector in other countries and are thus reluctant to change.
The Chamber would like to thank the Financial Services Group and panellists for taking the time to share their valuable, first-hand experience with Chamber members. We would also like to thank all who joined us for the breakfast.
Click here for the gallery.