November 11, 2020 4 min read
Opinions expressed by Entrepreneur contributors are their own.
Today there are several types of fintechs to improve personal finances; however, not all are available in the Mexican market. Despite this, there are some efforts by companies to incorporate elements that improve financial management.
In Mexico, “the lack of financial culture has made many Mexicans choose to continue saving ‘under the mattress’ and that their finances are not good, since the lack of basic financial knowledge inhibits the ability to apply them, which leads to people use informal savings and credit methods and, even, schemes that may represent a risk to their assets “, warns the Consultative, Scientific and Technological Forum (FCCyT), in a study on Financial Education in Mexico.
Proof of this is that only 47% of adults in Mexico have a bank account, and 68% have at least one financial product, according to the 2018 Financial Inclusion Survey (ENIF), from the National Institute of Statistics and Geography (Inegi).
In contrast, Mexico is a country that has very high access to the internet (70.1%, according to the Federal Telecommunications Institute) and mobile devices (75.1%), so there is a market need to include itself financially and there are the means to do so, we have technology, but we didn’t have the how.
And that market was where fintech companies saw an opportunity to redefine the population’s conception of financial products, and encourage their use through efficient, accessible and user-friendly products. It was not a lack of demand, it was a lack of supply of flexible, easy-to-use financial services that were available to users.
Types of fintech for personal finance
Today there are several types of fintechs to improve personal finances; however, not all of them are available in the Mexican market. Despite this, there are some efforts by companies to incorporate elements that improve financial management.
In general, these fintech companies stand out for three elements: speed in their operations, lower costs and access not limited to a region and schedule. Some types of these companies are:
Alternative financing. These companies are responsible for granting loans, with the plus of having lower interest rates than traditional banking, in addition to asking for fewer requirements. The credit can be requested through its website or application, the response time is less than that of banks, and some have apps that allow you to manage payments and schedule them by date, among other benefits.
Of means of payment and electronic channels. This refers to movements such as payments, transfers and purchases. And although in the country there are already banks that have these services through their electronic channels (website or app), the fintech companies went further and offer services such as savings accounts in which you can schedule payments on a regular basis and set goals; Expense management, that is to say that you can set a cap every so often and include fixed debts to have a better perception of monthly, weekly or daily expenses, among other services.
Personal finance management and wealth management. These are clearly focused on advising the user to make better use of their money. They diagnose their financial situation and offer alternatives to pay off debts, improve savings, hire services such as insurance or loans; that is, they act as a virtual financial advisor.
Before hiring these services, certain precautions should be taken, as with any digital product, so it is important to check that they are legitimate fintech, this is done very quickly with a search on your website, you also have to check if they have mentions in the media or reviews, this will help us know if they are not an illegal company.
Related: 5 Fintech Trends During the Pandemic