2017: Latin America, you can be the exception of the global trend.

The end of the year accumulated several duties and the beginning of the year was quite busy and I do apologize to stop writing for a while but now I am ready to catch up the time lost.Let’s start quickly: the end of the year and a new 2017.

The end of 2016 was quite positive for the Fintech ecosystem in Latin America.Here you have some numbers:

  • # of Fintechs in Brazil: 206 according to the Fintechlab
  • #of Fintechs in Mexico: 158 according to Finnovista
  • #of Fintechs in Colombia: 77 according to Finnovista
  • #of Fintechs in Argentina: 60 according to Finnovista
  • #of Fintechs in Chile: 56 according to Finnovista

In 2016, investments in Latin American Fintechs increased (here you have some examples):

  • For Brazil: Nubank (USD 132M), GuiaBolso (USD 20M) and BankFacil (USD 5M)
  • For Mexico: Kueski (USD 10M), Konfio (USD 8M) and Kubo Financiero (USD 7.5M)
  • For Colombia: Alkanza (USD 3M)

Now in 2017, we know that the number of Fintechs in each country have already increased, governments started structured themselves to learn to deal with Fintechs, Fintech associations has been created (Colombia and Argentina) and even the investors organized themselves to follow better the Fintech growth. In January 2017, new investments were done in the region, Ripio (old BitPago) from Argentina received USD 1.9M and Asaas from Brazil got USD 0.8M.

2017 started positively. Trends? Robo Advisors, Blockchain, Regtech…not really I believe more on Insurtech in the region. Big Insurance companies will finally follow the path that Banks started last year and will learn to deal with insurtechs and new technologies related (IoT for example) to reach a population that do not have an insurance culture.

Challenges? A lot! Regulation, higher investments for mature fintechs, scale, more early stage investments …

Banks will finally go beyond observation…will they finally buy one Fintech, two? why not.

International investments should grow because economic situation in most countries of Latin America is improving.

Finally, and my only certitude, Latin America is not the US or Europe. So if the “booming” of the Fintech sector slowed down there, it does not mean that Latin America will follow the same trend. Fintechs are solving issues that big organizations and even some governments did not want to deal locally. On the other hand, customers seem finally ready to use digital solutions. So  initiatives and projects that can finally change a continent should not be stopped and we should work to foster the fintech culture in the region (in English, Spanish or Portuguese). These are my best wishes for 2017!

 

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Source: The Economist 2017

 

 

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