As Latin America’s internet and mobile internet user growth outpaces the U.S. together with a GDP of 9.5T (larger than India and almost on a par with China), the region, according to techcrunch.com has the unique potential to develop the next generation of tech start-up stars. Added to this is the current opportunity to introduce new technologies to a market which is still dominated by banks and industrial complexes.
Lavca.org reports that VC Investments in Latin America surpassed US$1b for the first time in 2017, doubling the amount committed to startups in 2016. This new wave of investment saw 25 global investors making debut investments in Latin America in 2017, including notable deals from SoftBank, TPG’s The Rise Fund, Telstra Ventures, Rethink Education, and others.
This increase in investment in Latin America coincides with Latin America’s emergence as a key strategic market for a growing list of global tech companies, including Amazon, Google, Facebook, Netflix, Spotify, Airbnb, WeWork, Didi Chuxing, and Uber.
Mexican start-ups capitalise on service deficiencies in financial industry
Mexico is one of the countries to take the lead in the region, implementing a Fintech Law to regulate the financial sector, while introducing networking features of providing access to information of users’ open financial, aggregate and transactional data, which would not constitute a violation of financial secrecy obligations. (finnovista.com)
This makes it easier for the Fintech start-ups as well as the small companies to use the information provided by the banks in order to significantly expand their footprint. This will place fintech startups on a similar footing to banks as well as software companies which are providing similar solutions, enabling the startups to expand their impact and consumer base.
With many clients dissatisfied with banking services A Gallup poll of 2017, showed 3 in 4 customers in Mexico were either indifferent or unhappy with their bank . Fintech firms are able to provide more customer-centric services, addressing this gap, providing the Mexican population with convenient access to financial services. This is a market, where according to forbes.com, 61 percent of Mexican adults do not have a bank account and there are only 14 bank branches per 100,000 inhabitants, that’s 7142 people per branch. As well as this, inefficient transport means that the average time to get to a bank is 42 minutes in rural areas and 22 minutes in cities, according to the National Survey for Financial Inclusion.
According to theoofy.com Finnovista, an accelerator for Fintech startups recently commented that at least 30% of the banking and finance industry can be taken over by the Fintech start-ups quite easily. Fintechs have found the sweet spot by providing both innovative, accessible payments solutions as well as traditional banking services.
There are currently, over 158 Fintech companies in Mexico at the forefront of new innovations which are increasing their market share, pointing to a future where their services play a central role in Mexico’s finance industry.