Friday Briefing: Fun finance for Gen Z

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August 26, 2022

#TopStory 🔝

Tick Tock: 9 seconds to engage Generation Z

Generation Z digital natives (ages 18-25) present challenges for financial institutions looking to win them over: They demand frictionless products and fun financial experiences, and they also want trusting relationships and social responsibility. And it all has to be done fast!

“Generation Z’s attention span is shorter, even than millennials’,” says Celéstin Soubrier, former head of growth at RappiCard Mexico. “You have to understand how 9 seconds is key to be able to catch
the person’s attention, attract them and inspire confidence.”

To do all this, social networks and entertainment platforms are rethinking how they handle communication and deliver solutions in the digital space.

“They are digital natives—they live with information at their fingertips all the time. Our way of capturing them is to go and find them where they are, be it social networks, games, streaming,” adds Andrea Blanco, business leader of the YOY wallet operated by the Industrial and Commercial Bank of China (ICBC) in Argentina.

These and other views were shared at iupana’s virtual event ‘Finance for Gen Z: How to attract and retain new generations‘, which also featured panelists Carolina Arbulú, product manager BCP’s wallet in Peru, Yape; and José Vargas, executive vice president and CEO for the Latam region of Provenir, an AI-powered risk analysis platform.

Is the financial industry ready to broaden its focus to include this group and the new strategies it demands? You can learn more about the most important elements of the conversation here.

Banks lag behind in wow factor

In the area of dynamic and frictionless experiences, fintechs continue to outperform banks, according to Capgemini’s World Retail Banking Report 2022. The report shows that 88% of executives surveyed globally acknowledge they are lagging in their ability to identify new customer segments. And nearly half struggle to offer optimal digital onboarding and personalized products, due to difficulties with enriching their data.

“It’s a trap. Banks, including Latin American banks, are sitting on all that data, which is a gold mine that has been far from easy to control, to stabilize, to extract the amount of intelligence that is there,” said Bernardo Valle, vice president of
FS-Banking at Capgemini for North LatAm, in a media presentation.

Valle says the priority for banks is to find their “wow factor,” which is why they are giving priority to the development of agile technologies such as the cloud or AI.

Content from Temenos

BNPL leads the Revolution in Payment Options

Banks are well-positioned to compete with Fintech BNPL providers by allowing customers to defer or stagger payments at point of purchase.

We invite you to read our e-book to learn more about how BNPL is revolutionizing the payments market offering unique benefits for you.

Explore the E-book

#Strategic Plays 📊

IDB and Davivienda issue blockchain bond  

Taking advantage of the sandbox managed by Colombia’s financial regulator, the IDB Group (comprising the Inter-American Development Bank, IDB Invest and IDB Lab) and Davivienda bank issued a COP$110 million (about US$25,000) bond using blockchain technology. The operation “allowed the testing of improvements in time and cost efficiencies in a full trading cycle in the Colombian capital market,” the IDB said in a statement.

Brazilian Fintechs grow in turnover 

The list of fintechs with an annual turnover of more than R$5 million (almost US$1 million) is growing, despite the global economic turbulence, according to a survey by the Brazilian Fintech Association and the consulting firm PwC. The study also shows that 65% of fintechs expect revenue to
double this year.

Paraguayan and Chilean fintechs close deals

Paraguay Fintech Day saw local players hold meetings with their Chilean counterparts and discuss a total US$5.7 million in investments. The Chilean mission visiting Paraguay comprised 10 fintechs.

Also…

• Brazil’s Celcoin received authorization from the Central Bank to operate as a payment initiator,  allowing it to participate in the country’s open finance system.
• Prometeo, the payment technology fintech, enabled account-to-account (A2A) payments, a solution for direct transfers between
  user accounts.
• Colombia’s Daviplata and Nequi are the country’s most popular digital wallets, with 15.6 million and 13.5 million users respectively. They are followed by Rappipay and Nubank, according to a survey conducted by a local media outlet.

#Regulation ⚖️

In Ecuador, a vote on the country’s new fintech law was put on hold. A source told iupanaPRO that legislators will reevaluate the bill after the addition of a new chapter on trading cryptoassets was leaked.

And in Colombia, the Financial Regulation Unit (URF) set a 36-month deadline for lending institutions to limit risk exposure in their portfolios.

#Mexico 🇲🇽

Fintechs take licensing shortcut…

Fondeadora bought Apoyo Múltiple, a community financial institution in Mexico known as a sofipo, following the leads of fintechs such as Covalto, Nubank and Ualá that have also obtained financial licenses via acquisitions. Similarly, the debit and credit card fintech Klar invested capital in Sefia, another sofipo.

…and Bradesco joins the party

Meanwhile, Brazilian bank Bradesco bought Ictineo Platform, another Mexican sofipo. Alexandre Monteiro, director of Bradescard Mexico, said “the first step will be to offer a digital account.”

Sacbé and Swap obtain fintech licenses

Regulators granted Sacbé Payments and Swap authorization to act as electronic payment fund institutions (IFPEs), of which the country now has 22. Swap is owned by payments unicorn Clip.

Bitso to issue Mastercard debit cards 

Bitso signed an agreement with Mastercard to launch a debit card that will allow customers to use cryptocurrency to make purchases in pesos.

In addition… 

• Broxel and Juntos Financiera signed an agreement to issue debit card.

#Investments 📈

The World Bank granted a R$250 million (US$48.8 million) line of credit to Trademaster, a Brazilian credit and payments fintech for SMEs.

Chilean proptech Capitalizarme raised US$6 million in a financing round led by Angel Ventures. The proceeds will be used for expansion into Mexico.

Citi Ventures invested an undisclosed sum
into Belvo, an open banking technology fintech, as the U.S. financial group looks for companies offering omnichannel financial products.

#iupanaExclusive 🔥

This week, we explore buy now, pay later (BNPL) from a new perspective. Fintechs have capitalized on the product but lenders such as Banco de Crédito in Peru and Banco Galicia in Argentina also want a piece of the action.

• Technological integration with retailers is the key challenge to overcome.
• Business models that charge end customers interest or levy fees on retailers are being tested.
• Banks have more robust risk models, providing them with sustainability and protection in uncertain economic scenarios.

Find out more about how banks view BNPL in our lead story of the week.