Investment arrives (more) slowly but surely
Financial investment in Latin American fintech companies is set to remain on course this year but won’t be testing last year’s record given choppy economic conditions.
The fallout from the pandemic and the war in Ukraine is hitting the region, leaving businesses and consumer to grapple with high inflation, rising credit costs and a slow economic recovery.
These factors could lead to scarcer financial resources for the fintech sector. But investors are confident that there is room for new business models with solid fundamentals, which will keep the capital flowing.
“Last year, [the fintech sector of] Latin America received the highest investment in its history, even in a context of COVID-19 and unfavorable political or economic developments,” Jorge González, managing partner of G2 Momentum Capital in Mexico, which owns stakes in fintechs such as Finerio and Kubo Financiero, told iupana.
This year, however, González expects a 10% reduction in its venture capital outlays; that compares with last year’s 269% jump in inflows to a record US$13 billion amid an unprecedented number of mega rounds and new unicorns, according to data from CB Insights.
More challenging economic conditions are also having an impact on political stability, such as in Peru, which this week saw fresh protests over the rising cost of living. This has a knock-on effect on country risk indicators and the valuation of fintech companies.
“The instability being experienced now clearly has an impact; initially it affects the valuations of public entities, which results in a devaluation of private companies. But I don’t see a price crisis,” he says.
Nubank’s market capitalization, for example, stands at about US$34.5 billion, after reaching about US$52 billion in its IPO in December.
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Colombia close to publishing open finance regulation
Colombia will debut its voluntary open finance regulation sometime between now and May, Felipe Lega, director of the Financial Regulation Unit (URF), told iupanaPro. He called the publication of the rules a “starting point” for a debate on implementing open data in other sectors, such as telecommunications.
Ecuador’s Fintech Law ‘on the right track’: Superintendency
Ecuador’s banking Superintendency expects a prompt approval of the country’s fintech law. That’s despite its warning that there are technical aspects that still need to be resolved and the fact that the industry has criticized the bill. “This regulation has a future and is on the right track,” Luis Lucero, director of legal procedures at the Superintendency, told iupanaPro.
Banxico resumes audit and sanctions
Mexico’s central bank, Banxico, resumed inspections of regulated entities on April 5 as well as sanctions for violations such as holding allegedly counterfeit money. Both had been suspended due to the pandemic.
This week in iupanaPro we present a compendium with the latest staffing changes at Mexico’s National Banking and Securities Commission (CNBV) as well the most relevant decrees in the regulatory agenda of Peru’s securities regulator, the SMV, which have been put to a public consultation.
Treinta raises US$46m with PayU’s help
The Colombian fintech, which hosts a platform for financial management of SMEs, closed a series A investment round for US$46 million that saw significant participation by the online payment platform PayU. Treinta is rapidly growing in user numbers and recently told iupana that it’s exploring credit alternatives for entrepreneurs in the region.
Finkargo raises US$7.5m to expand to Mexico
Finkargo, a Colombian import financing platform for SMEs, closed a US$7.5 million seed round co-led by Quona Capital and Maya. The proceeds will help finance its expansion into Mexico.
PayU buys Colombia’s Ding wallet
PayU, a global online payments platform, acquired Credibanco’s digital wallet Ding, giving it a license to operate in Colombia’s financial system and strengthening its ecosystem of solutions in LatAm. The size of the transaction wasn’t disclosed.
PayRetailers acquires Paygol and Pago Digital
PayRetailers, an electronic payment services provider, bought the platforms Paygol in Chile and Pago Digital in Colombia. The acquisitions strengthen PayRetailers’ payment coverage in LatAm and expands its cross-border payments capacity.
Openbank and Nequi expand in the region
Openbank, the digital bank of the Santander group, plans to start operations in Mexico in 2024, its second market in LatAm after launching in Argentina last year. Patricia Benito, the digital bank’s CEO, said the initial strategy will be “family & friends.”
Meanwhile, Nequi, the Colombian neobank that recentlyvseparated operationally from Bancolombia, plans to expand to El Salvador and Guatemala in 2023.
Dando enters Colombia
Dando, the CFG Partners-owned fintech specializing in consumer loans, set up shop in Colombia to compete in the market for libranzas, or payroll loans, which are a popular in the country.
Belvo appoints manager for Mexico
Belvo, the Spanish open banking API platform, appointed Alejandro Servín CEO in Mexico. The executive previously led and founded fintechs such as Pagaloop and Punto a Punto.
Graphene names new CEO
Brazilian digital credit platform Graphene has appointed Felipe Moreno CEO. Prior to his role, Moreno was CEO at Voiter, a bank focused on the commercial sector.
Wealthtechs are venturing into the vast pension savings market with products for retirees in Latin America. Tapping this historically underserved sector could prove lucrative for digital asset managers considering:
- Retirement savings in Latin America are around $822 billion.
- The growing internationalization of these fintechs shows that their business model is replicable in the region and easily expandable.
- Local regulation creates spaces for new savings solutions; such is the case for Fintual in Mexico, which has introduced a personal retirement plan.