The Fintech phenomenon that emerged after the 2008 financial crisis has evolved. After its strengthening and evolution in Europe, it began to expand and consolidate in the rest of the world. Mexico has been a phenomenon in terms of the incredible development that this topic has had, since only from 2019 to 2020 it had a 46% growth in the number of players (according to Finnovista Fintech Radar Mexico).
One explanation for this regional phenomenon (LATAM) is how the regulator has incorporated the best international practices and has established “clear rules of the game” that have allowed both investors, businessmen and end customers to have certainty about the operations they carry out.
The most relevant places in LATAM are Mexico, Brazil and Colombia. M&A is expected to be a trend during 2022-2023, as it’s expected for Fintechs and Banks to establish strategic alliances.
The LATAM region is the one that receives the most investment in Fintech. Forty per cent of 6MMD ended up in the region, maintaining annual growth of 30%, and although a decrease is expected (which will not be abrupt) we can expect that in the next 3 to 4 years the Fintech market in LATAM will be the largest in the world, replacing Europe.
The way of delivering products to end customers has definitely changed with the accelerated digitalization caused by the pandemic. The opening of digital accounts increased at rates of 300% per year and banking operations are no longer being carried out in branches, with BBVA reporting that in 2021 only 6% of its total operations were carried out in this way.
WHAT ARE BANKS LEARNING?
Banks are learning from Fintech’s agility, user experience and innovative models. Providing services that are fully digital, easy to use and delivered to the market at the right time is transforming banking.
The new regulations encourage technological innovation, exploration and expansion of technology-based business. Neobanks are showing that it is possible and are challenging banks to become agile.
Digital transformation and investment in new technologies is enabling Banks to be more digital and agile, with industry figures such as Mauricio Schwartzman declaring: “Let’s not rule out Banks becoming technological competitors.”
THE REGION’S OPPORTUNITIES
LATAM continues to have two great win-win opportunities in the region. On the one hand, the opportunity of financial inclusion and, on the other, Insurtech.
The opportunity of financial inclusion continues in the region. It is estimated that 60% of potential clients in the region are still waiting for products that allow them to access opportunities to increase their quality of life in terms of credit and savings.
On the other hand, there is great potential to deliver products through Insurtech models that the Fintech community has been waiting for in the region for years.
These data and reflections are the result of two days of exchange of opinions, conferences and time with Fintech specialists from LATAM at the 2022 FINNOSUMMIT.
After my amazing experience at this event, I leave you with the following conclusion: Returning agility to the corporate, coupled with the opportunities in the region, makes us await the arrival of digital Banks with new and innovative platforms, as well as innovative Insurtech solutions.