In December, LendIt Fintech hosted the third iteration of its Latin American focused event, LendIt LatAm, in Miami to discuss the fintech sector in the region. 2021 has been a turbulent year for fintech events: virtual events appeared to be the only solution at the beginning before hybrid ones saw success and became the norm. LendIt LatAm was no different, hosting in-person and virtual panels and fireside chats across the two days it ran, covering a range of topics from open banking to cashless societies. Read on to see how the industry responded to the event and what has got them most excited about LatAm fintech heading into 2022.
Day 1 – Overcoming the Barriers to Fintech Adoption in Latin America
Latin America (LatAm) has established itself as a booming fintech region with a lot of potential for future success. However, there are still some barriers to its adoption. Looking to discuss these issues were Dr. Vanies Zimmer, President at Elas Bank and Federico De Simoni, Regional Director of Latin America at Flybits. Moderated by Roger Darashah, Partner Director at LatAm Intersect PR, the panel began by identifying the main barriers to fintech adoption, namely: the absence of a strong regulatory environment and the availability, or lack thereof, of suitable staff/talent.
Having established the impact of regulations on their companies, the conversation moved on to who was pushing for regulatory change. Zimmer noted that “the demand for regulations in Latin America seems to be a bigger concern for large and traditional banks in defending their markets while unicorns fight for a bigger share of the financial yields.”
Carrying on the discussions of incumbent banks’ control of the market, De Simoni said, “In Mexico, there are 80 banking licenses for a population of 150 million inhabitants and in Brazil for 250 million, if not more, there are around 60 banking licenses. Meanwhile, in the United States, we have more than 5000 banking licenses for a population of just over 200 million.
“There are three or four banks integrated into the natural infrastructure of these countries, making it very difficult for new banks to deploy there successfully.”
The panel further discussed adapting to the unbanked, and tailoring fintech solutions to them; how and why fintech talent is so difficult to come by, and how the right education can help develop the next generation of experts.
Day 2 – Is Cash Still the Biggest Barrier to the Growth of Fintech?
The impact of fintechs in LatAm has been so strong in large parts to the traditional cash first mentality of the region and the necessary change to digital methods when the pandemic began. Looking specifically at digital financial inclusion and how LatAm can move to a cashless society, Todd Anderson, Chief Product Officer at LendIt Fintech moderated a panel that comprised of Dom Rozic, CEO of Minka, and Henrique Teixeira, Country Manager at Ripio.
Talking specifically about Columbia, Rozic pointed out 85 per cent of transactions were still done through cash. Adding to this Teixeria said, “I do see a change in customer behaviour, trying to migrate from cash to digital, but cash is still very important in the region and I don’t see it going away in the short term.”
The panellists recognised the trend of incumbents historically controlling the financial sector, but they also spoke about NuBank and how the digital bank had grown and received support from the public. Teixeira further went on to discuss PIX: its day to day usage and how fintech partnerships were the way forward for financial institutions.
Both Rozic and Teixeira agreed that cash usage would dramatically decrease based on efficient fintech rollouts in the region. Rozic believed in five years, cash usage in Brazil could be down to 20 per cent, whilst the rest of the region and in countries like Columbia, it would likely be around the 50 per cent mark.
Day 2 – Payments as the Open Banking Entry Point
When discussing digitisation in LatAm, open banking is often a hot topic due to its rapid development and successful trials and implementation. The panel was made up of FDATA‘s South American Director, Bruno Diniz; Ricardo Taveira, founder and CEO of Quanto; and Nick Grassi, co-CEO and co-founder of Finero Connect.
Once again moderated by Todd Anderson, Chief Product Officer at LendIt Fintech, the panel began by establishing the difference between open banking and open payments. Grassi supported Taveira’s comments saying, “I think it is important to set out that open banking is generally read-only access, whereas open payments are what rewrites it: that’s kind of the relationship and you can build them all into one.”
Continuing to discuss the success of open payments, Grassi compared Brazil’s PIX payments to Mexico’s CoDi, “Brazil’s success case is a huge benchmark and aspirational goal right now for all of Latin America. It would be wonderful if we could approach any kind of PIX’s success. We do have CoDi actually, but that’s a different way of handling payments which hasn’t been as successful so far.
“The last numbers I looked at, there were 120-130 million PIX accounts, whereas in Mexico there were only 6 million CoDi accounts, so there’s a huge difference. However, I do think there is a lot of potential in the other markets especially in Mexico to financially include many more people.”
Talking to PIX’s success, Taveira said, “PIX is now the second most used form of payment in Brazil. It’s second only to cash and that’s an impressive and scary statistic considering the effort to overtake debit cards and other forms of transfers.”
Speaking to NovoPayment‘s Chief Growth Officer, Angelique Strauss, and Ricardo Taveira, founder and CEO of Quanto (a panellist from the event), we found out what they enjoyed most and what they were looking forward to the most in 2022 in terms of Latin American fintech.
Hopes and expectations of LendIt LatAm 2021?
“Our goals heading into LendIt LatAm were to meet with companies who are disrupting the space, generate leads, and start meaningful conversations about how fintech innovations can continue improving access to financial services for unbanked populations. Last year, LendIt LatAm had to be remote, so watching these brilliant people and companies gather in person brought even more life to an already vibrant fintech community.
“We were also very proud of our CEO, Anabel Perez, who spoke on a panel about how NovoPayment and similar fintechs are defining Banking-as-a-Service in LatAm. She spoke to BaaS’s potential to drive significant impact across its widely variable markets and how it connects and supports other fintech trends we’re seeing embraced. She was able to connect dots between BaaS and the larger fintech ecosystem as a whole to educate those unfamiliar with BaaS, which is always a priority for us. We received very positive feedback from attendees, who felt the panel was relevant and resonant.” – Angelique Strauss
“I was hoping to talk to like-minded individuals; being able to hear from people and connect with them in person, at least for me made quite a difference. In general, I think being able to be in the middle of everybody talking about the same issues in person is the most efficient and effective way to communicate.
“Being a panellist, we are able to put our viewpoints across but we’re also able to collect experiences and learn from other countries. I always have a great time being on a panel with Nick [Grassi] from Finero, who does something similar to us in Mexico; but Mexico is a whole different country and whole different system but its always nice to exchange notes, making sure we’re all covering our respective geographies and sharing the lessons we’ve learned. I think that’s certainly something that was mission accomplished for me, but it certainly can be done to a greater extent next time.” – Ricardo Taveira
What was the highlight of the event?
“LendIt LatAm is one of the first big events we’ve attended since the pandemic started so we were excited to be there in person to meet with the LatAm fintech community. The event was an important showcase of how far the LatAm market has grown, even during a pandemic. Despite it still being a relatively new sector in LatAm, experiencing the camaraderie among attendees was energizing. It’s clear that as a community, we all believe in the importance of helping each other grow.” – Angelique Strauss
“Taking part in a panel was probably the highlight of the event for me because of the conversations we have. The questions Todd [Anderson] asked us were great and the ability to exchange views with the others who can provide a broader context on payments and open banking in Latin America, was really enjoyable.” – Ricardo Taveira
What are you looking forward to the most in 2022 based on what you heard from the event?
“In 2022, we’re looking forward to the continued evolution of the fintech and BaaS sectors in LatAm, specifically how these solutions will continue improving lives through increased financial and technological accessibility, and how we will continue to see our entire ecosystem expand and become more interconnected.” – Angelique Strauss
“For the most part, I am very excited about how the payment scene will turn out in Brazil. In addition to what was discussed on the panel, I am very curious about the possibilities of Buy Now Pay Later in Brazil. We have a very different financial environment, and we hope that things like checkout financing and those segments that have been developed elsewhere, will be born in a far more competitive manner than you’ve seen in other countries.” – Ricardo Taveira