Friday Briefing: Uncertainty in Colombia

June 3, 2022

#TopStory 🔝

Uncertainty in Colombia

Colombia’s fintech industry is wondering what the future has in store after a presidential runoff vote later this month and the prospect of changes in regulatory leadership.  

“There is not one strong proposal from any of the parties that’s oriented to the fintech sector,” says Erick Rincón, president of Colombia Fintech, an industry group.

The first round of the election on May 29 saw leftist senator and former Bogota mayor Gustavo Petro finish first with 40.32% of the votes, followed by populist businessman Rodolfo Hernández. Subsequent polling showed Hernández narrowing the gap to the point of a technical tie between the two candidates. 

For fintechs, a Petro victory would mean “it’s going to be more difficult and more expensive to raise capital” because his politics could negatively impact macroeconomic indicators, says Edwin Zácipa, founder of Fintech Latam Hub.

And regulatory uncertainty as the president appoints new authorities could further cloud the outlook for the fintech sector, says Zácipa.

Changes in regulatory management have already begun. This week, Felipe Lega, the head of Colombia’s Financial Regulation Unit (URF), left the post he’s held for more than four years. Under his leadership, the agency made headway with an open banking project and began planning for a massive payment system similar to Brazil’s PIX model.  

“We’re optimistic, and we expect the ecosystem to continue with the adoption” of open banking, says Rincón.

#Regulation 📜

What good is a wallet without money? Argentina has an idea

Wallet providers in Argentina are re-evaluating their strategies after the central bank said they must facilitate customer transactions from accounts in other institutions. Meaning there’s less incentive for users to hold deposits in their digital wallets instead of with a bank. The regulatory move also opens the door for open banking.

Peru seeks financial inclusion data

Peruvian banks will have to file reports numbering their digital customers and transactions as well as the customer’s gender and the type of device they use, under a proposal from the regulator to identify financial inclusion gaps.

Dominican Republic takes the path to open banking

The Dominican Republic is moving towards open banking, starting with financial portability, says Inés Páez, from the Superintendency of Banks.

In other regulatory changes this week:

• Rio de Janeiro ultimately rejected a legislative proposal that would have restricted the use of contactless cards
• The deadline is approaching for the use of a second authentication factor (2FA) in digital interactions with banks in Peru

#Cripto 💰

Brazil to launch CDBC in 2024

Brazil’s central bank digital currency (CBDC) will be launched in the second half of 2024 if pilot projects produce the hoped-for results, a central bank official said at an industry event this week.

#Investments  📈

Bolivia’s Koban closes pre-seed

Bolivian fintech Koban closed a US$2.3 million pre-seed investment round with a group of seven VC funds plus angel investors. Koban, which offers a variety of financial services for individuals, will use the funds to accelerate key hirings and market its services. The firm already has a banking partner for its launch in Bolivia at the end of the year.

#Acquisitions, alliances and expansions 🤝

Payments: Nubank closes alliance with Bexs Pay

Nubank closed a deal with Bexs Pay that will give Brazilians the option of using NuPay to pay for their international purchases. Bexs Pay handles cross-border transactions and integrates with several global payment gateways.

CX: Justa and BigDataCorp join forces

Brazilian fintech Justa has partnered with BigDataCorp to work on improving digital onboarding.

Identity: Truora acquires Zapsign

Truora, a Colombian startup focused on digital identity, bought Brazil’s ZapSign, an electronic signature company, for an undisclosed sum. The deal will give Truora a greater presence in the Brazilian market.

Fintech: a55 opens office in Mexico

a55, a Brazilian credit platform for startups, opened its first office in Mexico and plans to continue expanding in the country.

#iupanaExclusive 🔥

Does BNPL have a future in Brazil?

If there’s a credit model that’s gone from hero to zero in less time than it takes to get through a snazzy new digital onboarding, it would be buy now, pay later. Just look at the global giants— Affirm’s stock has collapsed this year and Klarna is pursuing a financing round that would cut its valuation by some US$16 billion.

In Brazil, however, this form of digital credit at the point of sale never gained much traction. So, is there room for it to grow? Opinions on the future of the BNPL in Brazil are diverse. And the role PIX can play is key:

• BNPL will increase competitiveness, especially by offering alternative solutions to retailers, according to Gastão Mattos, a consultant

• In addition to the existing payment-by-installment options there’s PIX Garantido, a forthcoming service for scheduling payments with PIX.

• The ability to make installment payments with PIX could accelerate adoption of the BNPL model, says Bruno Diniz, a consultant

Find out more in this week’s iupana Exclusive.