???? Fintech News MX - May Wrap-up

Dear Fintech Enthusiasts,

Welcome to the May edition (1st edition) of the Fintech News MX Monthly Wrap-up! I've compiled the top news stories from the past month to keep you informed about the latest developments in the Mexican fintech ecosystem. In this issue, we'll cover funding rounds, new product launches, industry partnerships, regulatory updates, and upcoming events. Let's dive in!

?? Clara Raises $60M to Lead Payments and Expense Management in LatAm

Clara, the leading expense management platform for businesses in Latin America, has closed a $60 million funding round led by GGV Capital. This investment will fuel the growth of their engineering and product teams, solidifying their position as the leading platform for payments and expense management in the region. With over 10,000 companies in their portfolio and an annual transaction volume of $1 billion, Clara continues to make waves in the fintech space.

?? Fairplay Secures $100M Credit Line to Boost Entrepreneurship

Fairplay, a leader in revenue-based financing in Latin America, has announced the closing of a $100 million credit line from Community Investment Management LLC (CIM). This funding will support their mission of providing technological and financial solutions to e-commerce businesses and marketplace sellers in Mexico. In addition to the credit line, Fairplay has also secured an additional $8.5 million in investment capital from existing partners.

?? Nu Mexico Introduces Secured Credit Card

Nu Mexico has unveiled a new type of secured credit card that will facilitate access to credit for individuals who don't have an existing credit card with the institution. The secured card will function by reserving a certain amount from the Nu account to back it up. The card will be gradually rolled out and made available to the entire Mexican market in the future, providing greater financial inclusion opportunities.

?? Despegar and Bitso Create Cryptocurrency Rewards Program

Despegar, the leading travel platform, and Bitso, the cryptocurrency financial platform, have formed a partnership to allow users of the "Pasaporte Despegar" program in Mexico to redeem their points for cryptocurrencies in their Bitso wallet. This groundbreaking alliance makes Despegar the first travel agency worldwide to offer this type of reward.

?? Mercado Pago Surpasses $1 Billion in Investments in Mexico

Mercado Pago, the digital payment platform, has surpassed the milestone of $1 billion in investments in Mexico, thanks to the participation of over 1.5 million users. These investments, facilitated through GBM Casa de Bolsa, have generated returns exceeding 10%, with over $8 million distributed monthly among investors. Mercado Pago's exponential growth is evident with the addition of 759,000 new users in its third year since the launch of the fund created by GBM for investing in Mercado Pago.

?? Invex Banco and eFactor Expand Financing Options in Mexico

Invex Banco has announced a partnership with eFactor Network, a digital platform specializing in factoring, to boost financing options for Mexican companies and their suppliers. This collaboration will allow Invex to offer a new, agile, and secure financing option to large and medium-sized enterprises, supporting their domestic and foreign suppliers. eFactor Network boasts over 15,000 clients in Mexico and worldwide and has facilitated over $30 billion in financing since its inception in 2009, with over $6.5 billion financed in 2022 alone.

?? Mexican Youth Embrace Investments

A survey conducted by Flink, a Mexican investment app, reveals that 70% of young people aged 18 to 36 invest for the long term, motivated by a better retirement or the acquisition of real estate. Additionally, 50% of them use social media to learn about investments, and 70% are self-taught in financial matters. This growing interest in investment among Mexican youth highlights the importance of financial education and the role of fintech platforms in democratizing access to investment opportunities.

?? Nu Mexico Breaks Records with Savings Product

Brazilian fintech Nu has launched its savings service "Cuenta Nu" in Mexico and has attracted 500,000 customers in just one week. This product combines a savings account and a debit card, offering an annual return of 9%, 24/7 fund availability, and no minimum balances or maintenance fees. The cards are backed by Mastercard, making them accepted at over 90 million establishments worldwide.

?? Volabit Shuts Its Doors

Volabit, the pioneering cryptocurrency exchange in Mexico, has announced the cessation of its operations after nine years of service. According to their statement, this decision was made to focus on other projects, although they did not specify what those projects are. Despite the closure, Volabit assures its customers that all balances are secure and available for withdrawal, and the platform will remain operational until June 9, 2023.

?? Banking Profits in Mexico Increase by 32% in Q1 2023

In the first quarter of 2023, banks in Mexico experienced solid growth in their profits, with a 31.72% increase reaching MXN 70,035 million. This growth is attributed to higher interest income and increased lending activity, driven by the country's strong economic performance. BBVA and Banorte led the way with profits of MXN 22,886 million and MXN 10,309 million, respectively, followed by Santander and Inbursa. Together, the top eight banks accumulated a profit of MXN 57,714 million, representing 82.4% of the total earned by the sector.

?? Leasy Secures $25M Debt to Finance Drivers in Mexico City

Peruvian fintech Leasy has secured a $25 million financing round provided by Lendable with the goal of expanding its base of financed drivers. The company utilizes an algorithm that evaluates alternative data to determine credit approvals. With this investment, Leasy plans to increase its vehicle purchase volume and expand in both Lima and Mexico City, aiming to finance between 30 and 50 vehicles each month.

???? Kala Raises $6M and Prepares to Land in Mexico

Colombian SaaS fintech Kala has closed a $6 million investment round to expand its operations to Mexico and Colombia. With their platform, they have processed over 50,000 loans to date. This expansion will allow Kala to forge alliances with local companies and help more businesses digitize their credit operations, driving their growth in the region.

?? Lemon, the Argentine Crypto Wallet, Expands to Mexico

With financing from a $44.1 million Series A extension in 2022, Lemon expands to Mexico, Peru, Colombia, Uruguay, and Ecuador. The application allows users to send and receive cryptocurrencies without fees, interact with decentralized finance (DeFi), and participate in the world of NFTs. Lemon focuses on facilitating access to crypto and the web3, enabling more users to engage with the new digital economy without borders.

???? Uber Joins the Fintech Revolution in Mexico

Uber, the global mobility giant, has obtained the definitive authorization to operate an Electronic Payment Funds Institution (IFPE) in Mexico, known as UBR Pagos México, under the Fintech Law. The official notification of the authorization was made on May 13, 2023, after Uber satisfied various conditions and observations presented by the authorities. This decision makes Uber the second authorized mobility firm under the Fintech Law, following Cabify and its associated company, Lanapay México.

?? Fintechs from the Pacific Alliance Propose Standardizing Open Finance

Fintech associations from Chile, Colombia, Mexico, and Peru have presented a proposal to standardize the use of open finance in the Pacific Alliance region. The proposal, titled "Open Finance Standards as a Regional Conversion Lever," was presented during the Chile Fintech Forum 2023. The document includes a comparative study of successful practices worldwide that could incentivize and support the implementation of a common open finance standard among the Pacific Alliance member countries. Fintechs aim to inform authorities about open finance and how Application Programming Interfaces (APIs) can facilitate data flow between financial entities, creating a competitive, secure, innovative, homogeneous, and inclusive fintech ecosystem.

?? HSBC to Launch Digital SME Credit Solution to Compete with Fintechs

HSBC is set to launch a digital SME credit solution in Mexico to compete with fintechs. Their new technology, currently in testing, will allow entrepreneurs to share business information through a link, eliminating the need to visit a branch. This move comes in response to how fintechs have revolutionized financing and customer experience. The solution accelerates the credit application process by enabling entrepreneurs to share real-time updated business information, leading to credit authorization rates of up to 60%. The company highlighted that credit demand is lower when physical documentation is required, as it is often not up to date and may lack necessary paperwork.

?? Three new Fintechs enter the regulated sector in Mexico.

In addition to UBR Pagos México, Neritopay and Snowball have obtained definitive authorizations to operate under the Fintech Law in Mexico, increasing the total number of authorized entities to 58. UBR Pagos México, a part of Uber, and Neritopay will operate as Electronic Payment Funds Institutions (IFPEs), and Snowball as a Collective Financing Institution (IFC). These authorizations will be officially published in the Official Gazette of the Federation (DOF) by the National Banking and Securities Commission (CNBV) in the coming days.

?? Oxxo Surpasses Mexican Banks in Coverage

According to the latest report from FEMSA, the operator of Oxxo, the chain has 21,615 stores throughout Mexico, representing an increase of 1,115 units compared to the previous year. On the other hand, the National Banking and Securities Commission (CNBV) reports that commercial banks only had 11,845 branches in March, just 45 more offices than the previous year and half the access points offered by Oxxo. Additionally, Oxxo is ahead in terms of deposits made outside of bank branches, with 8 out of 10 of these deposits being made in one of their stores. Oxxo has focused on bringing financial services to areas often overlooked by traditional bank branches. As a familiar and accessible location for most customers, it has the potential to actively promote financial services, increase trust, and familiarity with the financial system.

???? Ualá Joins the Mexican Banking Space

Argentine fintech Ualá has obtained approval from the CNBV (National Banking and Securities Commission) to acquire ABC Capital bank, facilitating the obtainment of a full banking license in Mexico. This is a significant step that will allow Ualá to expand its product portfolio. With half a million customers in Mexico, Ualá aims to grow to over 4 million in just three years.

?? Citi Abandons Direct Sale of Banamex; Opts for IPO

After over a year of negotiations, Citi has decided to sell Banamex through an Initial Public Offering (IPO), leaving behind direct sale offers. The decision, described by CEO Jane Fraser as a step to maximize the value of Banamex for its shareholders and simplify Citigroup, involves the separation of Banamex's consumer banking and corporate banking from the firm's institutional business. The IPO is expected to occur after the business separation in 2024, and both Citi and Banamex will operate with their respective banking licenses in Mexico.

?? Kapital Secures $65M to Boost SME Financial Management

Kapital, the Mexican fintech, has raised $65 million in a combination of Series A funding and a credit line. The funds will be used to provide comprehensive financial management solutions to SMEs throughout Latin America. Kapital offers a platform where businesses can manage their cash flow and access credit and investments. They have also developed an algorithm that helps clients predict future income and obtain financing.

?? Event: FINNOSUMMIT Mexico 2023

After a successful previous edition with over 1,700 attendees from 26 countries, FINNOSUMMIT, the premier event of the fintech ecosystem, returns this year. The event will take place on September 26 and 27 in Mexico City. FINNOSUMMIT serves as an ideal platform for connecting all participants in the fintech industry, including innovators, entrepreneurs, investors, and media. Attendees will have the opportunity to strengthen their connections within the ecosystem while learning about the latest trends transforming the industry. Previous speakers at FINNOSUMMIT include influential figures such as David Vélez, founder and CEO of Nubank, Nigel Morris, co-founder and Managing Partner of QED Investors, Sinead O'Connor, Head of Consumer Bank at Citibanamex, and Angela Strange, General Partner at a16z. If you're interested in attending FINNOSUMMIT, you can purchase tickets on their website, with special discounts available for startups.

That's a wrap for this month's edition of Fintech News MX! Stay tuned for more exciting updates in the world of Mexican fintech. Don't forget to mark your calendars for FINNOSUMMIT Mexico 2023 and join the vibrant fintech community. Until next time!

Best regards,

Zalo Sánchez

Editor, Fintech News MX