Arizona and Mexico’s Emerging FinTech Scene
By Ruth Soberanes, Director of Trade & Investment
Financial technology, or FinTech for short, refers to the disruption of financial methods through the use of new technology. Depositing checks on your mobile banking application and utilizing cryptocurrencies for financial transactions are just a few examples of what this new technology allows users to do. In general, the idea is to use technology to make financial services more accessible and effective for the general public.
In March 22, 2018, Arizona’s leadership passed House Bill 2434 establishing a Regulatory Sandbox Program (RSP) that allows FinTech firms to test innovative products in-market for up to 24 months without obtaining a license or other authorizations that might otherwise be required.
While other states and the federal regulators are making efforts to facilitate the use of technology by broad financial entities, Arizona is enabling innovation as the first state to encourage the development of new and innovative products and services to benefit businesses and consumers through a Regulatory Sandbox.
Other countries, such as the United Kingdom, Singapore, and Australia have regulatory sandboxes in operation. Arizona’s bill also includes a reciprocity provision that allows Arizona sandbox participants to operate in other jurisdictions that establish similar programs and vice versa. To this end, Greater Phoenix Economic Council (GPEC), along with partners at the state-level, have been engaging regulators and associations in places like London and Mexico City to promote Arizona’s sandbox program and attract global FinTech companies to the region.
In our travels to Mexico City a few weeks ago, our team discovered a booming FinTech scene where companies are benefiting from similar legislation passed in March 2018. Now financial entities and third parties in Mexico can easily drive innovation and participate in a regulatory sandbox. With the alignment of regulatory bodies, such as the Ministry of Finance and Public Credit, and industry, including associations such as the recently formed FinTech Mexico and accelerator programs through INADEM and Finnovista, emerging FinTech companies from all over Mexico and Latin America (including Spain) are convening in Mexico City.
As GPEC continues to enhance our region’s connectivity to the burgeoning innovation ecosystem in Mexico, leading strategic partnerships such as the Tecnologico de Monterrey, ProMéxico and INADEM, FinTech is another area of opportunity. For FinTech companies, entrepreneurs, and investors from Mexico looking to grow and scale their business in the United States, Greater Phoenix offers a strategic advantage.
With a thriving financial services sector, including large presence of known brands such as State Farm and American Express, coupled with a pro-business regulatory scene, these FinTech companies can take advantage of a competitive U.S. market entry through Greater Phoenix.