Mexico is currently in the 59th position of the Most Innovative Countries in the World in 2019 according to the Spectator Index. This in itself is wrong. One thing we know is our county is full of every day innovation. Innovation for the average Mexican citizen to succeed each day of hard work, complicated and tiring commutes, lack of modern infrastructure, some corrupt authorities and a lower than average feeling of security. This is a hard atmosphere to work around and every day, every week, every month, every year, we see the Mexican people adapting to find themselves in a better position to serve their loving interests. This is, without a doubt, social innovation and this is the fabric of our Mexican society.
Our 1 year old Administration, through the Comisión Nacional Bancaria de Valores (CNBV), is aggressively promoting Mexico's first regulatory sandbox in 2020, and with this, Mexico's innovative spirit in the Fintech Sector. The purpose of the financial regulatory sandbox is to promote effective competition in the interests of consumers by allowing firms to test innovative products, services and business models in a live market environment, while ensuring that appropriate safeguards are in place. The sandbox, which was introduced by the UK's Financial Conduct Authority (FCA) regulatory sandbox report in November 2015, and was implemented in June 2016, has been an innovative experiment for both the FCA and the firms testing it in the UK. Since then, the concept has been widely used and adopted around the world.
In Mexico, the financial regulatory sandbox was first introduced when became effective the Financial Technology Institutions Law (Ley para Regular las Instituciones de Tecnología Financiera). The Mexican sandbox consists in a trial period of up to 2 years, wherein the innovative financial services providers have to evidence tangible benefits resulting from their launched products and/or services. If such providers duly show the success behind their products and/or services, they will be entitled to file for a permanent authorization to operate and organize as a financial technology institution, a.k.a. a "fintech".
The development and benefits of those "Innovative Companies" under the authorization and supervision of the CNBV is a road to promote financial innovation in Mexico that brings together public and private sector engaged in one goal - innovation. This is also a gauge to measure the best rules for the market and for the CNBV to feel this atmosphere. Innovative Companies that have potential to generate a benefit or welfare in financial services are those qualified to apply for a permanent position in the market.
The sandbox challenge is a contest created by the CNBV to promote innovation around the board in the Fintech environment. This challenge will reward the winners with legal and financial support, business travel and meetings with already made fintechs in other countries and a license to permanently operate as a fintech in Mexico.
Hogan Lovells is happy to be part of the Sandbox Challenge as a platinum sponsor for the event in which we will be working alongside the CNBV, the UK Embassy, the Prosperity Fund, DAI, Distrito Emprendedor and other distinguished sponsors. The Sandbox Challenge is the first innovation contest of its kind in Mexico and we are committed, as a firm, to helping the Mexican creative spirit find itself, rise again and wrap our market and fintech society in one idea: To innovate for a better tomorrow, keeping our focus small, one step at a time, and keeping our spirit going.
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