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LATAM SPECIAL: MEXICO

TAP-TAPPING ON FUTURE’S DOOR Such is the pace of competitive change in Mexico that, as an established bank, Santander has committed to implementing innovation ‘every day, every minute, in every solution’. According to Carlos Marmolejo, Head of Innovation, it’s working well With 515 fintechs operating in the country, Mexico has the potential to be Latin America’s most dynamic financial market. That was the claim of a Santander Mexico report released this summer which, in partnership with fintech association Finnovista, incubator Endeavor and the UK embassy in Mexico, recorded a 16 per cent year-on-year increase in fintech players. The country is ripe for massive change, with less than half of adults holding a bank account. Cash is king, but Santander believes that harnessing the potential of mobile phone apps and incentivising electronic payments will encourage consumers to embrace digital. “The mobile phone is the key to everything – it’s the branch we can potentially have in the pocket of every citizen in this country,” says Carlos Marmolejo, head of innovation at Santander Mexico. “Many people are underserved by the financial system. But if we can provide the first service they need, which is payments, and give them a good experience with that, the rest will follow.” For several years, Santander’s approach to digital services has been one of collaboration. The bank opened its digital factory – Spotlight – in Mexico City in late 2017, which has sought to harness both the knowledge contained within the global bank, and external sources such as fintechs and universities. It runs the fintech incubator Radar, which opened for its second round this summer and last year worked with three startups that specialised in peer-to-peer payments and QR

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code-based point-of-sale terminals. Among the fruits of such collaboration was the launch in May of Santander TAP, which allows customers to instigate or receive payments through chat platforms. At its launch, the bank said chat was used by 91 per cent of Mexican internet users. Marmolejo says: “At Santander we have two approaches to innovation. One is internal, our employees. Santander is a global bank and we are incentivising a culture of sharing information and ideas between regions, and it works well because innovations can be incorporated fast. “On the external side, we have the likes of the Radar programme, where we’re working with around 15 fintechs at our digital factory to provide new services for customers. “We offer the fintechs access to the various channels we have at our bank and we’re coming up with innovative solutions.” Mexico’s digital banking revolution isn’t just the responsibility of commercial banks such as Santander, however. The country’s government and central bank are keen to see both businesses and individuals switch from cash to more accountable

payment systems, to curb the black economy and improve tax receipts. This autumn sees the launch of CoDi, Banco de México’s QR code-based payment system that is free to use for both merchants and individual customers, who pay through an app linked to their bank account. Then there is the Fintech Law of 2018, which laid the rules for crowdfunding, electronic payments and cryptocurrencies, and next year legislates around open banking and application programming interfaces (APIs). Though Marmolejo says there remains a fundamental distrust of financial systems, he believes people’s needs around payments can weaken their grip on bank notes. “It’s true that people prefer cash, but in Mexico, families’ breadwinners often work in the cities and they need to send money home to villages or small towns,” he says. “Also, more than 20 million Mexicans live and work in the United States, and

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Fintech Finance presents: The Fintech Magazine Issue 13  

Fintech Finance presents: The Fintech Magazine Issue 13

Fintech Finance presents: The Fintech Magazine Issue 13  

Fintech Finance presents: The Fintech Magazine Issue 13