Wait & see
Many players in finance that spoke with The Business Year for the 2021 edition shared that the sector is currently undergoing an incubation phase, as companies take a step back to rethink their models and pilot and develop innovative solutions to meet the complex needs of the market. Banking as a service, the digital transformation, and the need to create better products for Mexican SMEs were common topics.
“The macroeconomic and investment landscape has seen significant changes since the pandemic,” said María Ariza, CEO of the BIVA stock exchange. “All indications are that the Bank of Mexico will continue to lower or maintain low interest rates, reaching ranges of between 3.5% and 4% in an attempt to reactivate the economy. For this and the following years, the most attractive sectors are expected to be those with the most disruptive technology.” The number of fintechs entering the market and banks that are now 100% digital in Mexico, including Banco Sabadell and NuBank, is a clear sign of this trend.
When it comes to pension fund management, there was controversy in mid-2020 when legislators proposed nationalizing the system and allowing funds to be managed by a public entity instead of private retirement fund administrators (AFOREs). After many discussions between the government and the private sector, an agreement was achieved. “In September 2020, the president sent a bill to congress to reform our private pension funds management law,” shared Benardo González Rosas, President of AMAFORE. “The private sector offered to gradually increase the amount of savings it contributes on behalf of workers to increase their pensions. In exchange, the government was willing to strengthen the system and reduce the minimum time required to work formally to attain a minimum guaranteed pension.”
According to González, the government was willing to find an agreement after seeing how useful the partial withdrawals from AFOREs were for workers who had lost their jobs. A total of 1.2 million people had to make partial withdrawals because Mexico does not offer unemployment insurance. “The reform puts Mexico’s system in a better position than all other countries in Latin America, even Chile, which is the first country to have an individualized account system. Right now, after the reform, 90% of workers will have a pension, and that pension will be enough for a decent retirement, at least according to OECD averages,” concluded González.