Fintech In Latin America: Will The Rising Tide Impact All? – Technology

Historically, there is major disparity in Latin America when it
comes to financial inclusion and one of the catalysts for the
recent boom in fintech companies is the growing demand to close the
gap using technology. To gain more insight about this dynamic that
has significantly impacted the region, we interviewed Ingrid Barth
(“IB”), a leading Fintech entrepreneur and founder of
Linker Bank, and Miguel Arias (“MA”), CEO of K Fund and
former head of Telefonica’s venture interests.

1. How has the fintech landscape evolved globally and in
Latin America in particular over the past years?

MA: The fintech landscape has changed
dramatically. Founders have become more sophisticated, massive
funding has poured into Latin American companies and consumers
appreciate the benefits of using new tools, apps and services which
have become mainstream. It is a night and day difference. It is
impossible to talk about the development of fintechs in the global
environment without also talking about the regulatory sector,
central banks, and regulatory entities (for example, capital
markets also have a role in the innovation sector) in deciding
how to include more people in the financial system.

IB: In Brazil, we estimate that at least half
of the population is unbanked or semi-banked, that is, that has
poor financial services. So, it was in this context where the
urgent need for financial inclusion coupled with the fintech and
technology sector that we saw developments in this sector
accelerate. What is happening in Brazil is part of a global
movement that touched on several themes: technology, the
development of startups, the existing demand from people who were
not yet inserted in the financial market, or poorly inserted, and
the regulatory environment.

2. Though we talk about Latin America as a region, we
understand incentives and regulations greatly vary from country to
country. In your view, are there any jurisdictions that you
consider fintech friendly?

MA: Brazil is quite fintech friendly despite
being bureaucratic and difficult to navigate. However,
nowadays Brazil is a leader in open banking. In addition,
countries like Mexico and Chile are creating interesting mechanisms
in their new fintech laws to regulate crowdfunding proactively,
while other countries are enabling sand boxes and providing spaces
where startups can validate the feasibility of their projects
before scaling up their investment efforts.

IB: Although Brazil has a mature, well
regulated and secure financial market, it is not very inclusive due
to several factors, including lack of trust in traditional banks
and the cost to maintain an account. But, since 2014, we have made
important advances with the creation of payment institutions, and
the development of legislation to encompass arrangements in the
payment market, which has allowed us to create digital payment
accounts that today are paramount within the universe of the
strongest fintechs. I believe that this combination of demand, the
search for better, cheaper and more personalized alternatives with
the favorable regulatory environment, made Brazil to have such
fintech boom, which, in my opinion, is still just beginning.

3. What are the most pressing challenges faced by founders
when considering/ assessing a company that delivers innovation in
the fintech sector?

MA: This varies greatly depending on the
maturity of the market, but right now in markets like Brazil, the
biggest challenge is the strong competition, not just by the
incumbent, but by other well-funded scale-ups, which have the
resources and the ability to branch out and expand with new
segments or adjacent spaces very quickly.

IB: Speaking as a fintech founder, when you
create a fintech product, your MVP (minimum viable product) has to
be functional and it has to be secure. I have this joke that, even
if a fintech is not actually a bank, it must have the security and
technology of one. This is derived from good, experienced
professionals, who often go to a bank instead of a fintech, because
they are able to pay much more for the professional services
that are not necessarily present in the beginning of a
fintech’s operation. This ends up putting very strong pressure
on fintech founders to obtain capital (via venture capital and
investors) to finance the minimally operational project and get it
up and running. Additionally, you are not only competing for these
good, experienced professionals with other funded fintechs, but
also with the entire financial market. That’s a lot of pressure
to meet the demands and scale a fintech business.

4. As you look towards the future, what are your hopes for
greater financial inclusion in the Latin America region?

MA: The region is the home of some great
initiatives that use new technologies and its platforms, like
blockchaincrypto, to create tools and services that help with
financial inclusion. I like the efforts in this sense that are
being led by the Inter-American Development Bank lab.

IB: More than the innovation of financial
products and services, what would be excellent for financial
inclusion in the region would be finding a model that also provides
financial education. The fintech model is innovative because it
ends up educating users through the use and simplicity of products,
which combine technology. However, we know that there is still a
long way to go in terms of financial education and its ability to
reach the population. Consequently, expanding financial products
and making them more democratic makes people use these services for
a good purpose (such as for credit). There is no way to talk about
financial inclusion without talking about financial education.


In a world where need meets opportunity, the Latin American
fintech world has found in the unbanked consumers/population a
fertile ground for growth and inclusion. The current boom related
to the fintech activity might be just the beginning of a financial
transformation. Market dynamics and regulation make Latin America
a promising place to start a fintech company. As a result,
these new winds of change should also carry with them a path to
economic growth and a bridge to financial inclusion.

Meet our Interviewees

Ingrid Barth: Ingrid is the founder and current
COO at Linker Bank. She has also served as a member of the open
banking board at the Brazilian central bank, acted as executive
director of the Brazilian fintech association, and has been a
member of the Comite de Jovens Empreendedores (young entrepreneur
committee) at the São Paulo State Industry Federation. In
addition, Ingrid is currently the Vice President of the Brazilian
Startup Association.

Miguel Arias: Miguel is a Partner at K Fund.
Miguel has over 15 years in the venture capital market, starting in
the webcasting industry with his company Imaste, which was later
acquired by ON24 Inc. Miguel later became an integral part of
CARTO(DB), while working from its Madrid and NYC offices.
Subsequently, he was appointed as Global Entrepreneurship Director
at Telefonica, where he led investments in more than 130 startups
in Europe and LATAM in fields such as Cybersecurity, Data, AI, and

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