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Open Banking

The southernmost nation of North America regulates its Fintech industries.

As of January 2022, 74% of Mexicans had access to the Internet. The connectivity has risen rapidly and is expected to continue rising since the nation’s Constitution was amended in 2013 to guarantee universal online access.

In March 2018, Mexico enacted its Fintech Law, becoming the first country in Latin America to regulate its digital and technological finance space, as well as one of the pioneers at the global level. Later, in 2020 the Fintech Law was amended when the first rules regarding Open Banking were published.

Financial entities and specialised third parties should obtain prior authorisation from the Central Bank of Mexico to access information through the APIs. Sharing of transactional information of users will be subject to additional authorisation by the Central Bank.

In March 2020, the Comisión Nacional Bancaria y de Valores (CNBV) published the first rules of Open Banking financial API platforms, included in the “Ley Fintech” or “Fintech Law”, which was implemented in 2018 and applies to almost all types of financial entities, both transactional and product data, but does not cover payment operations. 

As of September 2023, the CNBC has committed to the provisions of Open Financial Data by the end of the year. The industry has been awaiting secondary regulation for the Fintech Law and this appears to be expected in three phases: public product, ATM and office location data; aggregated data, and transactional data.

The rules for Open Banking set in 2020 state that application for authorisation must include, among others, evidence that the relevant API meets the interoperability standards, which are set forth in the regulation, a draft interconnection agreement, and a work plan encompassing technical, legal, corporate governance and operative measures that should be implemented with respect to the API.

The model for retail payments adopted in Mexico is a market-wide approach requiring that most payment service providers (PSPs) seamlessly transfer retail payments among themselves.

The use of technology – such as mobile phones, internet connectivity and blockchain – is expected to have a significant reach and speed in Mexico. Around 40 million Mexicans are still unbanked, even as the internet and mobile penetration increase. However, 96% of Mexicans use non-bank payment apps. Smartphones, therefore, are likely to play a key role in Mexico’s online financial ecosystem as it continues to evolve. Interest in alternative payment methods such as cryptocurrency is also on the rise within Mexico, and businesses and financial providers in the region are considering the potential benefits of digital currencies, especially for cross-border payments.

While cash is still the preferred payment method for many – also in online payments – the COVID-19 pandemic has increased card payments significantly. Mexico’s National Institute of Statistics And Geography (INEGI) revealed that the segment of the population making card payments grew from 12% prior to the pandemic to 52% by the end of 2021.

Financial access is a top priority for the Mexican government. It has received further emphasis due to the COVID-19 economic fallout and relief and recovery efforts. Expanding financial access is expected to benefit particularly women, youth, indigenous populations, and people living in marginalised and underserved areas of Mexico. 

Mexico’s online financial ecosystem has seen 16% growth from 2020 to 2021, with 512 FinTechs now offering their solutions. 

Mexico has a large tech talent pool. The Mexican government’s recent infrastructural and educational improvements have resulted in more people having the resources and tools to expand their skills. To show its resolve to end the shortage of technology talent, the Mexican government opened 120 tuition-free specialist technology universities between 2006 and 2012. Every year, over 130,000 engineers graduate in Mexico. With its talent pool of over 700,000 developers, Mexico has become a hotbed of software engineering talent within Latin America.