Fintechs set to shake up Mexico’s financial services sector
Citi’s decision to withdraw from consumer banking in Mexico demonstrates the extent to which fintech players have transformed this market. How prepared are the other incumbents to take on the competition?
Citigroup’s planned withdrawal from its Mexican consumer and small and medium-sized enterprise banking business has highlighted the tough operating environment in the country as its economy wrestles with the lingering effects of the coronavirus pandemic.
Chief executive Jane Fraser says that the bank wants to focus on wealthy consumers and large corporates in Mexico, and so is withdrawing from a country that she told Euromoney in 2018 that the bank would never quit “because the scale is so significant and, for Citi, it is our second-largest market after the US”.
What has changed? Five years is a long time in consumer banking and Citi is exiting Mexico at a time when the country’s mass consumer market is increasingly targeted by the country’s burgeoning fintech sector – which has more than tripled in size since 2016, with over 500 fintechs now active, according to Finnovista, a venture development and research firm.
One of those companies is Clara – the fastest fintech to reach unicorn status in Latin America.