The term FinTech is an abbreviated conjunction of the terms “finance” and “technology” in English and refers to any business that uses technology to improve or automate financial services and processes.
FinTechs are part of the evolution of traditional business models towards a digital world. It refers to companies that, through new tools and platforms, develop financial solutions and services, which, for example, enable payments, loans, investments, financial consulting, insurance, among others, through digital means.
Some of the benefits of FinTech technology are agility and efficiency in processes.
The Law to Regulate Financial Technology Institutions (LRITF) aims to regulate the financial services provided by the ITFs, their organization, operation and functioning and the financial services subject to any special regulations that are offered or carried out by innovative means and is based in the principles of inclusion and financial innovation, promotion of competition, consumer protection and prevention of illicit operations.
To organize and operate as a Financial Technology Institution (ITF) it is necessary to obtain authorization from the National Banking and Securities Commission (CNBV), prior agreement of the Inter-institutional Committee, which is made up of public servants from the Ministry of Finance and Credit. Public (SHCP), the Bank of Mexico (Banxico) and the (CNBV).
Those interested in obtaining authorization to act as ITFs must be Corporations constituted or intending to be constituted as such, in accordance with Mexican legislation and that in their bylaws:
- Include in their corporate purpose the performance, on a regular or professional basis, of any of the activities provided for in the Law to Regulate Financial Technology Institutions.
- Expressly provide that, in carrying out their corporate purpose, they must comply with the provisions of the Law and its applicable general provisions.
- Establish a domicile in the national territory, and
- Set a minimum capital necessary to carry out their activities in accordance with the provisions of the General Provisions issued by the CNBV, which will be differentiated based on the type of activities carried out and the risks faced.
The legal entities constituted in accordance with the Mexican mercantile legislation, other than the ITFs, the Financial Entities and other subjects supervised by any Supervisory Commission (the CNBV, CONSAR, CNSF and CONDUSEF), with respect to their areas of competence) or by Bank of Mexico (Banxico), must obtain authorization so that through the figure of Novel Models they carry out any activity whose performance requires an authorization, registration or concession in accordance with the LRIFT or by another financial law.
For more information do not hesitate to contact us.
Gloria Ponce de León & Hernaández