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August 19, 2022

#TopStory 🔝

Argentina: Digital lending on the rise

The potential for data to power credit growth in Latin America is a central issue for digital finance.

And the numbers underline this importance of this trend in Argentina, with fintechs granting ever more loans. The amount lent by non-financial credit providers grew 20% in the second half of 2021, compared with same period of 2020, the central bank (BCRA) reported this month.

In the opinion of Naranja X, a fintech that offers digital accounts, insurance and credit, the key to user preference lies in the customization of products using alternative indicators to evaluate applicants.

“We recently created a new non-financial score with which we analyze people’s habits, resources and payment behavior—outside the traditional variables analyzed by the traditional financial score—to understand their payment capacity,” Nicolás Alsina, the company’s credit, payments and cross-selling leader, tells iupana.

This method for assessing credit allowed the fintech to grant loans to 51,000 new clients during 2021 and another 44,000 between January and July of
this year. That compares with the 900,000 loans issued last year totaling ARS$20.6 billion (US$ 151.6 million).

“In less than 8 months of 2022, we managed to surpass last year’s figure, reaching ARS$ 25 billion (US$184 million), granting more than 700,000 loans,” adds Alsina.

Naranja X’s platform allows loans to be requested and evaluated digitally, and once approved, the money is credited to the user’s account.

This growing preference for digital channels can also being observed in the payment vertical. Some 72% of people over the age of 16
in Argentina use QR codes to pay for their purchases, equivalent to about 20 million people.

#Strategic Plays 📊

Credijusto ➡️ Covalto ➡️Nasdaq

Covalto, a Mexican digital financial platform, said it is preparing to list its shares on the Nasdaq exchange via a special purpose acquisition company, or SPAC, called LIVB. The company (formerly Credijusto) estimates the transaction could raise up to US$177 million in capital before expenses, and would make it the
first Mexican fintech to list in the U.S.

Kushki acquires Mexican paytech Billpocket

Ecuadorian unicorn Kushki acquired Billpocket, a card payment fintech founded more than 10 years ago, for an undisclosed amount. Kushki expects the acquisition to triple the size of its operations in Mexico.

Nubank and Inter grow in users and profits

Second-quarter 2022 financial results were encouraging for digital banks Nubank and Inter, which reported net revenues of US$17 million and US$3.1
million respectively. In addition, Nu users grew to 65.3 million and Inter reached 20.7 million, in both cases increasing more than 50% versus the same period last year. We analyze the results here.

Also…

• Brazil’s Nuvemshop (Tiendanube in other LatAm countries) launched Nuvem Pay in Brazil, a payment solution that streamlines the process of buying products online.
• European SumUp received approval from Brazil’s Central Bank to offer acquiring services.

#Regulation ⚖️

Costa Rica’s Center for Financial Innovation is prioritizing discussion of the country’s open finance and digital lending system. 

And in Peru, a parliamentarian introduced a bill to spur the use of artificial
intelligence, which is expected to fuel a debate around the ethics and the use of technology.

#Investments 📈

Pomelo raises US$15m

Pomelo, a fintech payments technology provider, obtained US$15 million in a Series A round extension that brings the total to US$50 million. It raised the initial US$35 million of the series in November last year.

• Plus, the proptech ProHome Capital raises US$3 million from Bancolombia.

#People 👤

Belvo hires Leandro de Piano

Leandro de Piano becomes vice president of finance at Belvo, an open finance technology fintech. Piano previously worked as director of analytics at wealthtech Warren.

#iupanaExclusive 🔥

This week we had special coverage from Brazil’s Febraban Tech and laid out the next steps in digital banking in the country, which will be monitored by the rest of the continent.

• The digital real (the country’s CBDC) could be launched in 2024.
• Banks are executing aggressive strategies to digitalize all their processes and products.
• The 5G network will speed up processes. Bradesco discusses its plan to adapt to this technology.
• Open finance will be a
  focal point for institutions, which expect to overcome security challenges and develop new business models.

Learn more about the future of digital banking in Brazil in our Monday article.