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[Fintech Brazil] A large addressable market with significant opportunities – Part I

By
Isabella Carvalho
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Techfoliance is excited to share its latest serie [Fintech Brazil] with inside success stories and analysis shared by top local experts and entrepreneurs.

Brazil has been lately on top of international headlines. Political instability, corruption scandals and economic recession have been increasing the perception of risk associated to the country and shadowed (to a certain extent) positive developments that deserves to be highlighted.

Brazil has a vibrant start-up community tackling the various issues the Latin American giant faces by bringing successful business models from abroad and increasing the list of innovations “made in Brazil”.

Investments in Brazilian Fintechs amounted to USD161m in 2016, a staggering 85% growth when compared to 2015, placing Brazil among the top 10 countries worldwide by deal value.

Additionally, Brazil is the leading Fintech hub in Latin America, with over 244 Fintechs.

Leading sectors

32% of the Fintechs operate in payments, the leading sector in the ecosystem. Success cases include MercadoPago, Pagar.me and Nubank, which attracted almost USD180m in investments from Goldman Sachs and well-known international venture funds, including Peter Thiel’s Founders Fund, Sequoia Capital and Tiger Global Management. Finance management and alternative lending come second and third, with 18% and 13% of the Fintech start-ups.

Alternative lending platforms deserve special attention due to its growth and recent capacity to attract investments (e.g. Creditas (previously BankFacil) raised BRL 60m in February 2017 from the IFC, Naspers, Redpoint e.ventures and other leading VC investors, on top of BRL 25m raised previously in June 2016).

Many platforms rely on partnerships with small- to mid-sized banks that lend their balance sheet and license to ensure regulatory compliance, using the partnerships as a leverage to increase scale.

Despite the recent growth and undeniable potential, alternative lending in Brazil faces fundamental issues linked to the country’s underlying economic conditions: high interest rates (12.25% as of March 2017, down from 13% in the beginning of the year) and the availability of several high yield market instruments make it harder to develop compelling securitization mechanisms to resell loan books. Pushing higher interest rates to customers is a possible solution but decreases overall value proposition. Significantly increasing customer base and book size to capture economies of scale, increase cost effectiveness and be able to increase the reward for external investors for taking the risks seems a more viable solution, but such a large player is yet to be emerge in the market.

Fintech has a significant potential to transform the financial sector in Brazil – and Techfoliance will keep you posted about its ecosystem, entrepreneurs and innovators in the next few months.

I would like to thank Fintech ecosystem experts Denisse Cuellar and Bruno Diniz for contributing to this article.

Bruno Diniz is a partner at Innercore Solutions. Based in the main financial hub in Latin America, São Paulo, Brazil, Innercore Solutions Ltd provides Matchmaking, Consultancy and Advisory services on innovation for the Financial Services industry. Innercore Solutions Ltd also makes Events, promote Fairs, Workshops, Hackathons, onsite Trainings and Lectures about Fintech, Innovation and Digital Transformation.

Denisse is a Fintech and entrepreneurship enthusiast. She currently works at BCP Bank of Peru building relationships with Fintech and startup ecosystems in Latin America. Graduated from NEOMA Business School and MBA from University of Chicago, she used to be a consultant and strategist in the Financial Services industry and the Fintech sector. She is a blogger and writes for some publications about the Fintech market in Latin America.

Scotiabank’s digital transformation plan in LATAM

By
Team LATAM
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Scotiabank partners with NXTP Labs, LATAM’s leading start-up accelerator, to access the most promising Fintech start-ups in Latin America.

The strategic partnership was announced at the Fintech Conference 2017 in Bogotá, Colombia’s biggest Fintech event in which Techfoliance LATAM was a proud media partner.

Ignacio Deschamps, Group Head, International Banking and Digital Transformation at Scotiabank, said:

“We are thrilled to partner with Latin America’s premier start-ups accelerator to further advance our global digital banking strategy. This partnership will allow us to gain competitive advantage, accelerate innovation, and form Fintech partnerships to offer innovative solutions to our 24 million customers.”

The Bank will leverage on NXTP Labs’ regional network to access to the most promising Fintech ecosystems like Mexico, Colombia, Chile, and Peru, to help drive its global digital banking transformation, and create bridges between Canada and LATAM.

According to Thayde Olarte, Vice President Fintech Partnership, Innovation at Scotiabank:

“This partnership will allow Scotibank to gain early visibility on transformative trends and technologies in the industry by leveraging its expertise and global scale. The Canadian bank looks forward to boosting its engagement in the Latin American start-up ecosystems to delight its customers across its footprint with simple, personalized banking experiences.”

NXTP Labs is one of the most active early stages Venture Capital funds in Latin America, with significant institutional support and deep regional networks. In 2017 alone, 35 Fintechs across LATAM joined NXTP Labs’ Acceleration Program over 12 weeks and received more than 500 hours of mentorship from over 170 mentors.

Scotibank undertook a broad global digital transformation strategy to create multiple strategic alliances with leading Fintechs and venture capital firms such as QED Investors. As part of this transformation, five digital factories were open in our priority markets to deliver innovative solutions for Scotiabank customers.

The article was first published in Scotiabank Blog

VC funding of Fintech in LATAM is still in its early days

By
Team LATAM
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LATAM has grown significantly in the development of financial technologies in the past years but their development in the region is still in the early days.

According to a recent report published by the Inter-American Development Bank (IDB), around 700 companies have been identified as financial solutions, and in just 2 years between 2014 and 2016, three out of five Fintech start-ups have been created.

According to Allen Cuelli, Senior Director of product solutions at Visa for Latin America and the Caribbean:

“Fintech’s funding for development in Latin America is still low. While there is between 23 and 26 billion dollars of fintech investment globally, the region only accounts 600 million dollars of investment in the sector”.

At the subregional level, Central America and the Caribbean are the one that are receiving the less funding since access to capital and talent pools is “less mature”, said Cuelli.

The LATAM Fintech report, published jointly by the IDB and Finnovista, showed that in 2012 there were only 7.7% of existing Fintech. In 2013, it increased to 14.4%, in 2015 it was 23.2%, and in 2016 it reached 21.8%. By country, the largest fintech ecosystem is Brazil with 230, Mexico (180), Colombia (84), Argentina (72), Chile (65), Peru (16), Ecuador (13) and Uruguay (12).

Despite significant growth rates, Latin America is advancing at lower rates when compared to other regions like Europe, Asia and the Middle East.

“At the macro level, Latin America is underserved in terms of funding, but investors are now seeing big opportunities in the region and more money is coming in from global players” Allen Cuelli said.

Even if some banks are still seeing Fintech stat-ups as threats, the main trend is now to collaborate with these new players to win the battle of customer experience. More investment from traditional players is also expected in the coming months.

 

This article was first published in El Economista

LATAM Fintech Mapping Week #2: Nubi, Alegra, Zuum and Konfio

By
Team LATAM
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0

Every week, Techfoliance highlights four promising Fintech start-ups in LATAM in various verticals: lending, payment, investment, etc. In this weekly FinTech mapping we have Nubi, Alegra, Zuum and Konfio.

Nubi

Nubi is an Argentina based Fintech that has developed a payment solution to let people buy or sell anywhere in the world without the need of a credit card. The solution is working with PayPal and allows to withdraw or fill a PayPal account instantly to access funds.

Discover here: https://www.tunubi.com/

Alegra

 

Alegra is a Colombia based FinTech that has created accounting and billing softwares to make it easier for SMEs to manage their account and pay for bills. It also has a mobile app to access the services anywhere.

Discover here: https://www.alegra.com/colombia/

Zuum

Zuum is a is Brazil based FinTech solution that has been developed by the mobile company Vivo to provide a pre-paid bank account with a debit card to the unbanked. The mobile app also allows clients to do financial transactions such as transfers or payments.

Discover here: http://www.zuum.com.br/

Konfio

Konfio is a Mexico based Fintech that has developed an online lending platform for micro-business loans. The start-up raised $8 million in 2016 from Accion Frontier Inclusion Fund.

Discover here: https://konfio.mx/

 

The Rise of the Colombian FinTech Market

By
Team LATAM
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1

Join Techfoliance LATAM next October the 13th in Bogota for the FinTech conference 2017 by NXTP Labs, one of the most exciting event where Fintech players across LATAM meet.

For the third year in-a-row, the main players of the finance innovation ecosystem, entrepreneurs and investors will meet at Fintech Conference organized by NXTP Labs, with the support of Colombia Fintech and Techfoliance LATAM.

The event, which slogan is “The new industry standard”, will take place on October 13th at JW Marriot Hotel at Bogota, Colombia.

FinTech in Colombia: Key Figures

In Latin America 50% of the population is excluded from the financial system.

Colombia is the #3 Fintech ecosystem in Latin America and has grown 61% in one year.

According to Finnovista, Colombia is home to 124+ Fintech startups.

Payments / Remittances is the biggest FinTech sector with 37 startups, accounting for 30% of the total, followed by lending with 22 startups, representing 18% of the total.

The Insurance segment has grown at a rate of 75% in the last year.

Fintech Conference 2017 At a glance

The attendees will obtain a wide overview of what’s going on with Fintech innovation landscape in the region from industry experts such as Gonzalo Arauz, Lead Investment Officer in The Inter-American Investment Corporation (IIC); Henry Sraigman, Business Development Director in RSK Labs, the first platform of Intelligent contracts secured by the blockchain; Alan Elizondo, General Director of Financial Systems affairs at Banco de México; Thayde Olarte, VP of Fintech Partnership and Digital Banking at Scotiabank (Canada), and many others.

You can see All speakers here

Why you should come?

One of the key moments of the Conference will be the Regional Pitch Competition of the Fintech Regional Acceleration Program of NXTP Labs, where the most innovative startups of Argentina, Chile, Colombia and Mexico will expose its business model before a jury of experts.

The conferences will be conducted around key topics such as:

1/ Digital banks, blockchain and disruptive technologies

2/ Fintechs and its impact in LATAM

3/ The new rules of state entities and banks to adapt to the new Fintech landscape

4/ Acquisitions, alliances and integration with startups as an innovation engine

5/ New technology trends in Fintech at a short, middle and long term

See the agenda for full event details

REGISTER NOW

(we are happy to share 30 free tickets to the first 30 who say Hi! at hello@techfoliance.com)

Techfoliance LATAM is glad to come to this event as a media partner. We will forward you with daily live news so that you can follow the best of the conference if you did not have the chance to attend.

Do not hesitate to contact us before if you want to manage a meeting with our team to share thoughts, become a contributor or pitch your Fintech to be featured on our media!

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