#Friday Briefing: The weekly report on fintech and digital banking

#TopStory 🔝

Delt.ai uses cryptocurrency for traditional credit

Delt.ai, a Mexican startup focused on business management and services, plans to use cryptocurrency to help fund its portfolio of SMEs loans—an example of how decentralized assets are gaining ground within the financial industry.

The fintech received US$25 million of stablecoin financing through TrustToken’s TrueFI blockchain finance marketplace, which is a platform for generating asset-based tokens.

“In the quest to bring the most advanced technology to traditional finance, we needed sophistication and at the same time it had to be easy, scalable and with good rates. The crypto industry meets those requirements, that’s why we chose it,” José de la Luz López, the startup’s CEO and founder, tells iupana.

While many banks and fintechs closely watch the regulatory decisions to provide clarity on the gray areas that characterize crypto, the issue of cryptocurrencies trading regulation isn’t a concern for Delt.ai.

“There’s no change in how you lend to customers, only in funding. This isn’t a regulatory innovation, it’s all very traditional,” says López, noting that customers receive credit in Mexican pesos.

“We are not a crypto company. We don’t plan to offer this type of product,” he adds

#Neobanks 🏦

Revolut seeks banking license in Mexico

British neobank Revolut is seeking a banking permit in Mexico and doesn’t exclude the possibility of speeding up the process by way of an acquisition. “We don’t rule out anything, but for now we are going the organic route,” Juan Miguel Guerra, general director of the neobank in Mexico, told iupana. A banking license would allow Revolut to offer a wider range of financial products than if it operated as a fintech, says Mexican lawyer Leticia Pelayo

N26 branches into “fincare” in Brazil

The German digital bank N26 has partnered with Brazil’s financial planning platform GFAI, in a bid to strengthen its position in “fincare,” in which it offers users advice as well as to financial services. GFAI will participate in the design of Insider, an app that N26 plans to launch this yet.

#Regulation  🖊

Strike two for crypto regulation in Peru

The draft framework law for commercializing crypto assets in Peru has received a second warning, this time from the Superintendency of Banking, Insurance and Pension Fund Administrators (SBS).

The SBS issued an “unfavorable opinion” of the
bill, saying that virtual asset exchanges aren’t within its competency since it only oversees regulated financial companies.

The country’s central bank (BCRP) had previously said that cryptocurrencies “do not constitute legal tender” and therefore it doesn’t regulate them. However, neither regulator has expressly prohibited the use of crypto assets… Did someone mention gray areas?

The SBS recommended that securities market regulator SMV ought to issue an opinion on the draft legislation, considering that virtual assets are a high-risk, speculative investment.

Should the SMV come out against the bill, which was proposed by a small, opposition party, getting it  passed by congress could prove difficult.

#Investments 💵

Neon becomes a unicorn following BBVA investment

The Spanish lender reached an agreement to invest US$300 million in the Brazilian neobank Neon, which becomes the country’s latest unicorn. BBVA will hold a 29.7% stake in the neobank, which focuses on retail banking and SMEs. The Madrid-headquartered bank said the investment will allow it to tap new markets.

Trace Finance raises US$4.3m in seed round

Trace Finance, a Brazilian fintech for startups, received US$4.3 million from HOF Capital. The money will be used to hire more personnel and introduce new banking solutions for entrepreneurs in Brazil and the United States.

PayHop closes US$2.2m seed round

PayHop, a Brazilian fintech catering to SMEs, raised R$11.5 million (US$2.2 million) in a seed round led by Experian Ventures. The firm will use the proceeds to scale its buy now, pay later product and take advantage of new regulation that gives SMEs access to cheaper credit through accounts receivable guarantees.

#Wealthtech 📈

Flink to expand to Colombia 

Mexican investment platform Flink will start operations in Colombia around mid-year as part of its internationalization strategy. The wealthtech has 1.6 million users and aims to reach 4 million by the end of this year. The next markets on its radar are Peru, Chile and Argentin

#Agrofintech ⛏ 🐮

MasterBarter launches credit card and digital account

Brazilian agrofintech MasterBarter introduced a digital account and credit card aimed at rural producers, in partnership with Mastercard. These products will allow it to scale the barter system already used in the country, where producers access credit by pledging income from future harvests.

#iupanaExclusive 🔥

SoftBank: Not all fintechs will survive

Felipe Fujiwara, fintech investment leader at SoftBank Latin American Fund, shared his view on the sector this year in an exclusive interview with iupana. Some highlights…

• More fintech acquisitions are coming: “Fintechs attracted a lot of capital from investors during the last year, but not all of them have the potential to become large companies.”
• With interest rates rising, credit fintechs will have to bear at least part of the higher cost of funding.

 Find out more in this week’s iupana Exclusive.

#Four questions with… Oscar Salas

What piece of advice most impacted your career? 

 ‘Always listen to your first 10 customers.’ It’s important to value the first customers who trust you, always listen to them and keep them with you.

What challenges does the region still face in achieving true financial inclusion? 

There’s still the challenge of financial education. We must understand that technology does not reach everyone. For example, not everyone has a smartphone. We must resolve that.

We must use alternative information to be able to provide our customers with much more than just credit, which
does not generate financial inclusion. Not just access to credit.

What is the main challenge that digital finance must overcome?  

 The challenge is not only to build a good user experience but also to offer a solid financial product. At the end of the day, the financial aspect is the most important.

What differentiates fintech within the financial industry?  

During the pandemic, fintechs have proven their ability to adapt to any context. In addition, it’s become evident the possibility that its reach, with respect to users, is much greater than other financial institutions.

Oscar Salas is Peru CEO at Clara, a fintech that offers solutions for SMEs. Previously, he worked at Kushki, Afluenta, Interbank and Santander’s PagoNXT.

Over and out