Fintech Revolut bets on Mexico growth, expects remittances as driver

FILE PHOTO: Mexican pesos are seen in this picture illustration

By Diego Oré

MEXICO CITY (Reuters) - (This April 17 story has been corrected to remove the language regarding the cash-on-hand balance being used to pay expenses and short-term debt, which the CEO did not refer to, in paragraph 2 and adds a quote clarifying that the CEO provided details on risk management in paragraph 10)

Financial technology company Revolut expects strong growth prospects in Mexico where it aims to dedicate more than $100 million this year, the firm's top local executive told Reuters, as it looks to take advantage of historic remittance flows.

In an interview on Wednesday, Mexico Chief Executive Officer Juan Miguel Guerra explained that most of the spending plan will be used to hire staff and maintain liquidity ratios.

"We will be watching how the business evolves. The faster it grows, the more bets we will make," Guerra said.

Across Latin America, so-called fintechs have rapidly grown in recent years as they aim to boost financial inclusion via online-only services in countries like Mexico where only around half of workers use traditional bank accounts.

London-based Revolut has attracted 40 million clients worldwide since launching in 2015. Last week, it announced that it obtained a banking license in Mexico, where it aims to facilitate cross-border remittance transactions.

Remittances to Mexico reached a record $63.3 billion last year, mostly from Mexican migrants living in the United States.

Revolut hopes to eventually offer products like bank accounts and services for international shipments, Guerra said, adding the goal is to "very quickly" bring to Mexico its product lineup in Europe.

Beyond Mexico and Brazil, where Revolut also operates, Guerra said he expects further expansion elsewhere in the region where it can "obtain a banking license with few resources."

The executive added that Revolut must manage remittances in Mexico "very carefully" in part because of the risk posed by illicit profits from organized criminal organizations that often flow from drug cartel operations in the United States.

"The scrutiny and security that we bring to the table being a bank operating on both sides of the border is supreme and there's no way of having better control in that kind of transaction than we do."

(Reporting by Diego Ore; Editing by David Alire Garcia and Josie Kao)