This week, we analyze the challenges facing credit fintechs in the region. We also look at how investors are being drawn towards business proposals with established distribution channels. Meanwhile, an Argentine crypto exchange goes cross border and a Mexican exchange prepares to close its doors.
This and more in your Friday Briefing.
You may also be interested in our main note: Navigating the headwinds: Fintechs see risk indicators rise
Fintechs B2B2X attract investment
Packer said that in the current environment, QED portfolio preferences have moved towards companies with a distribution channel that is clearly defined and easily approachable. For example, B2B2X models, or fintechs that work with other companies to reach their customers, be they individuals or businesses.
For fintechs, attracting consumers in the vast ocean that is Latin America’s unbanked will become increasingly expensive. As a result, those that target specific audiences or segments and have an established distribution channel are expected to perform better.
“We’ve played in the credit space, and we see large opportunities there. But, are we looking for new opportunities? Yes, absolutely. We’re looking for opportunities that solve specific transaction pain points, things that would be like a vertical solution for a specific industry,” Packer said. QED recently invested in Brazilian fintech Capim, which is focused on lending to health and dental companies and also offers a variety of business administration services.
Despite the near-term challenges, a new study by QED and Boston Consulting Group (BCG) forecasts the Latin American fintech sector is poised for annual average revenue growth of 29% through 2030.
#Strategic Plays
Lemon Cash expands in LatAm
The Argentine crypto exchange Lemon Cash announced the start of operations in Mexico, Colombia, Ecuador, Peru and Uruguay as part of its expansion strategy, after raising an investment of US$44 million last year. Lemon Cash also said its operations won’t be affected by restrictions imposed by the Argentine Central Bank that bar wallets from handling virtual assets, since its cryptocurrency custody is carried out by a third party in El Salvador.
Mexico’s Volabit closes its shutters
Mexican crypto asset exchange Volabit said it will cease operating from June due to local regulatory changes. “We have watched with concern as Mexico’s regulatory environment has become bogged down with an ill-conceived fintech law and a central bank that acts with an alarming degree of hostility,” the company wrote in a statement.
Binance launches platform to link crypto investors
Cryptocurrency giant Binance launched Capital Connect, a platform for crypto fund managers to link up with institutional investors and facilitate the flow of information. Meanwhile, the exchange suffered interruptions to withdrawals this week due to the high number of transactions on its network, sparking complaints from users.
Open finance: PicPay integrates bank accounts into its app
Brazilian digital wallet PicPay launched a new function that allows customers to manage all their bank accounts using its app, allowing them to carry out all their transactions from a single platform.
Also…
- In México, Bradesco’s acquisition of microfinance company Ictineo could obtain regulatory approval in the fourth quarter, according to El Economista. The deal, which was announced in August 2022, would allow the Brazilian bank to roll out its Bradescard credit card in the Mexican market.
- In Colombia, digital wallet dale!, which is part of Grupo Aval, joined forces with local fintech Plurall to launch a microcredit program that aims to lure borrowers away from loan sharks. Disbursements range from US$90 to US$1,700.
#People
Mastercard appoints head for Peru and Bolivia
Mastercard appointed Pamela Carbajal country manager for Peru and Bolivia. Carbajal has been with the card giant for almost eight years as a market development manager and solution architect.
Capgemini names new president for north LatAm
The technology consulting services company appointed Ramón Álvarez president for northern Latin America. Álvarez has 25 years of experience in the IT industry.
#iupanaExclusive
How much has cloud banking advanced in our region? This week, we spoke with cloud executives from Google and Huawei in Mexico about the barriers that slow down the migration from legacy systems.
- Demonstrating the benefits of the cloud to bank executives is the biggest challenge.
- A considerable number of banks in the region rely on legacy technology, which is incapable of cross-checking information and machine learning.
- The executives said technological transitions can take up to 36 months, depending on which area of the bank is being migrated.
Learn more about the progress of cloud banking and the plans of Google and Huawei for the region in our weekly report.