WealthTech in Latin America: Just the beginning

When you think about Latinoamerican countries, you believe that most of Fintechs can solve the problem of Financial inclusion as in other developing countries. In fact, wealthtech in Latin America is also a way to reach financial inclusion. Any kind of investment practice is considered an activity of wealthy people. With the rise of Robo-advisors fintechs, Latinoamerican people can be more involved in investment activities and think outside the box or outside the saving account.

I would like to start with Brazil, where Magnetis, the first Robo Advisor of Latin America was born in 2012. Later, Verios joined the robo-advisor team and today they are the two Fintechs leading the transformation of how investments are done in the country. These Fintechs focused on small investors that today face the problem of paying high administration fees and a lack of tools to monitor the investment results. In addition, to that they resolve the latent discomfort related to brokers who are more focused on reaching commercial goals instead of caring about customers’ needs. Robo-advisors Fintechs in Brazil are democratizing investment access to more customers that did not dare to reach a broker and do have the money to invest. They convey the message that investments can be done by everybody. According to the Investor Pulse 2015 survey, Brazilian millenials are very interested to use this type of solution (74% of surveyed). Having a young population, we expect in a short future a higher adhesion to this new model of investment. In response to this movement, current incumbents are adapting themselves to the technology and try to create their own solutions. The local wealthtech landscape become more complex offering new solutions. For example, Robo-advisors do serve local traders. Finally, I started with Brazil because, it was the pioneer in the Latin American landscape but today Mexico and Colombia have also developed their local robo-advisors solution. The WealthTech is disrupting the financial inclusion concept in the continent.

Thank you to assess my extract at the www.wealthtechbook.com to write a deeper analysis of fintechs in the wealth management world of Latin America.

denisse-cuellar_wealthtech

 

Brazilian Fintech warriors are here

During the last month, I have read several articles from the Brazilian press praising Fintech and key players who are disrupting the current Brazilian Financial landscape. This attention from the media is a clear example that finally and officially the Fintech warriors are here to fight.

Some years ago, most of local banks did not wanted to believe in these players that were disturbing Europe and the US. However, conversely to Europe and the US, the bank system in Brazil is very concentrated and almost 5 banks control all the financial services system of the country. With that, banks were very confident about the regulation and the Central bank actions to restraint any new entrant, especially small startups offering financial services. The reality turned out to be different and the central bank is rather curious and eager to know more about how far Fintech companies can arrive in Brazilian territory.

Even if some financial services executives may still be sceptics about the fintech revolution within the biggest Latin-American country, their organizations started to take some initiatives. Bradesco has launched the InovaBRA program in Sao Paulo to accelerate some fintech startups. They are working on their second edition now. Besides this initiative, since three years ago, there has been a team that travels constantly to New York, London and Silicon Valley to be updated about the new digital trends. Itau Bank has opened a coworking espace in order to gather several startups in a unique environment and boost partnerships and creativity. The idea is to create an entrepreneurship pole in the city. Banco de Brasil has also started to develop some initiatives boosting technology and innovation.

I do expect for the next year, new projects will emerge and more banks and insurance companies will communicate about these opportunities.

But let’s talk now about the success stories that are already disturbing the Brazilians banks.

At the top of the list, we have NuBank. This credit card that can be entirely managed by an application on your cellphone is the new love of most of millennials (80% of the users are under 35). No annuity is paid and the card has lower interest rates compared to a bank. Simplicity and continuous improvement are the key of its success. With 300 thousand people in wait list, this startup received investments from Tiger Global Management, Sequoia Capital, Kaszek Ventures and QED Investors.

For more information, please go to http://www.nubank.com.br

GuiaBolso, one of the Brazilian’s favorite. It is an application linked to your bank account to manage your personal finances, following the expenses and the incomes and even providing some financial advices when required. Today, they have more than 1,6 million users in the country. The company received investments from e.bricks, Valor Capital, Kaszek Ventures, Ribitt Capital ….

For more information, please go to http://www.guiabolso.com.br

Finally, we have Magnetis. It is and Investment online platform with automatized advisors. This technology is new in the country but with great success in the US and Europe. Periodically, the platform reassesses customer portfolio and suggests updates in order to maximize gains. This startup received investments from Monashees, Redpoint, 500startups and angel investors.

For more information, please go to www.magnetis.com.br

These are just three examples of some Brazilian fintech startups, in the next posts I will talk more about other initiatives, because the purpose of the blog is to share about what is happening here in Latin America. There are roughly 150 fintech startups registered in Brazil, according to Clayton consulting.

However, let’s admit that a Fintech company is not as any startup. To be a Fintech success story, you need strong financial services knowledge that is by far a competitive advantage when you are in front of investors. Moreover, the technological structure needs to be robust and safe to ensure accuracy and protection in any transaction. That’s why, on average a normal start-up takes 16 month to start the business but a Fintech start-up needs 22 months.

2015 is ending with the recognition of the growing power of these Brazilian financial startups. What can we expect in 2016? We want larger fintech startups, new ones with disruptive ideas, international examples arriving, blockchain and big purchases … now we are ready to go to the next level Brazil…

Happy 2016!Fintechwarrior