{"id":7308,"date":"2023-02-01T17:00:00","date_gmt":"2023-02-01T17:00:00","guid":{"rendered":"https:\/\/amarello.cloud\/january-and-inflation-fintech-to-the-rescue\/"},"modified":"2023-02-01T17:00:00","modified_gmt":"2023-02-01T17:00:00","slug":"january-and-inflation-fintech-to-the-rescue","status":"publish","type":"post","link":"https:\/\/amarello.cloud\/en\/january-and-inflation-fintech-to-the-rescue\/","title":{"rendered":"January and inflation, Fintech to the rescue"},"content":{"rendered":"

\"January<\/span><\/p>\n

<\/p>\n

Reading time 7 minutes<\/span><\/h6>\n
The economy is and will be the central issue of 2023, regardless of whether you are an expert or not, the scenario of uncertainty and concern about the repercussions that inflation will have on the purchasing power of consumers, has the vast majority in search of answers and guidance to be able to prepare. <\/span><\/h6>\n

This after, according to data from the National Consumer Price Index , inflation in Mexico for 2022 will close at a historic 7.82%, its highest level in more than a decade. In addition to a new rebound after the first fortnight of January, which brought inflation up to 7.94% against all forecasts, which expected a slow but clear deceleration in inflation to begin. <\/span><\/p>\n

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Some of the causes of this acceleration in inflation respond to external factors, such as the effects of the changes inherited after the COVID19 pandemic, as well as repercussions of the war in Ukraine, while other internal factors respond to the phenomenon of the <\/span>the January<\/span><\/em>. <\/span><\/p>\n

What is it and how long does it last?<\/span><\/p>\n

As every year, Christmas expenses increase with the excitement of the dates, some people start spending from the beginning of the posadas and do not stop until the end of the celebration of the <\/span>  Reyes Day<\/span><\/em>. Sin embargo, una vez concluidas las celebraciones de Navidad y A\u00f1o Nuevo, cuando el aguinaldo se ha esfumado, los compromisos econ\u00f3micos comienzan a crear estragos en la econom\u00eda.  <\/span><\/p>\n

\"January<\/span><\/p>\n

The beginning of each year marks an increase in the cost of some products and services as a consequence of inflation; and the “hangover” due to the expenses of the celebrations, such as the purchase of gifts, dinner, clothes, etc., which has an impact on the consumers’ pockets and makes it difficult to meet the responsibilities of payment and sustenance, causing indebtedness as a temporary solution or ultimately the lack of payment.  <\/span><\/p>\n

See also: Big Data in the cloud: What stage is your company at?<\/a><\/span><\/em><\/span><\/p>\n

This phenomenon of a generalized rise in costs that occurs every year during the first month of the year is known as the <\/span>January cost<\/span><\/em>According to V\u00edctor Ceja, chief economist of  Valores Mexicanos Casa de Bolsa (Valmex), in statements to the media outlet <\/span>La-Lista<\/span><\/em>: <\/span><\/p>\n

“The January slope concludes when these price increases are assimilated and the festivities end, i.e., it runs from December 12 to February 2, it covers all the holidays and is when prices have a steeper slope.”<\/span><\/em><\/p>\n

If it happens every year, why is it so relevant in 2023?<\/span><\/p>\n

The answer lies in multiple factors: from the integration and volatility of cryptocurrencies, the changes in political regimes in Latin America, the devaluation of the dollar, the appreciation of the peso, but above all the impact of the total resumption of activities, after the live confinement due to the pandemic, as we can see in statements made by experts to the media La-Lista<\/em>: <\/p>\n

According to Ceja<\/p>\n

“It is expected that this 2023 will be more pronounced (the January slope) with a higher price increase than in the two or three previous years because the pandemic is on its way out and people, after the confinement, demand goods and services. The indicators say that there is an important use of credit and debit cards, higher inflation and it could last a little longer, two or three weeks more”.<\/em><\/p>\n

Meanwhile, Manuel Molano, economist, consultant and professor at Tec de Monterrey, points to the same, noting that during 2022 there was accelerated inflation all year. “We would already have to tell you the cost of the whole year<\/em>,” he says and adds that by 2023 inflation will continue to accelerate and he believes it could reach double digits, that is, 10% or higher.<\/p>\n

Under this understanding, core inflation, the more stable prices of products and services that do not vary easily over time, is the one that is of concern, as it is above annual headline inflation. <\/p>\n

What role do Fintechs play? <\/span><\/p>\n

According to the latest National Financial Inclusion Survey, seven out of 10 Mexicans make some unplanned purchase per month. While 63% admitted that they do not have any control over their spending, which would imply that acquiring a debt during the first period of the year would worsen their personal finances.  <\/p>\n

Experts recommend avoiding the use of credit cards and\/or personal loans when you already have a debt, due to the interest rates that are not contemplated by most applicants and end up increasing their debt even more. In addition to not having a financial culture, it is easy to lose track of expenses, acquiring more debt under the illusion of having an extra.  <\/p>\n

\"January<\/p>\n

This situation provides an advantage to fintech platforms, as Diego Paill\u00e9s, CEO of LaTasa.mx<\/em>, pointed out to El Economista<\/em>, since the credits that financial technology companies (fintech) can offer are a viable alternative for those who require a financial solution this season, as they have a lower interest rate compared to credit cards and traditional credits, in addition to the agility in the procedures. <\/p>\n

Check now: Data migration through BigQuery and Google Cloud.<\/em><\/a><\/span><\/h4>\n

According to their statements, 94% of customers who sought credit in previous years, did so with the aim of paying off their debts and facing the January slope. Therefore, fintechs are positioned as a viable alternative, by maintaining lower interest rates, which in addition to a wide variety of options can be adjusted according to the user’s profile, allowing the establishment of a customized offer.  <\/p>\n

In addition, thanks  to their technological integrations with BigData, AI and Machine Learning, they are able to establish a financial health monitoring to their multiple users, also offering different visualizations to allow to have an accurate and efficient expense control, which translates into an improvement for the financial culture for those who resort to these alternatives. <\/p>\n

The financial market and fintechs in Latam<\/span><\/p>\n

Fintechs have not only positioned themselves as an alternative in the face of January’s hard times or the growing inflation, but they have also been able to take advantage of the areas of opportunity that they have detected in comparison to traditional banking. The flexibility and innovation   has allowed them to react quickly to the constant changes and opening of commercial opportunities, based on an innovative service.  <\/p>\n

This has allowed them to take a leading role in the regional economy.  Currently, Latin America has 1,075 companies that have received investment in three major categories: payments, loans and digital banks<\/strong>, which concentrate 95% of the investment for this industry. <\/p>\n

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In 2021 alone, investment in this sector had an increase of more than 200% over the previous year, reaching US$9.8 billion, according to figures from CB Insights, and in the short term its projection is to continue surpassing these indicators.  <\/p>\n

The keys to success in fintechs <\/span><\/p>\n

These are some of the key factors to understand the rapid growth of this industry in Latam, which should be taken into account to establish a digital transformation strategy in our businesses:<\/p>\n