According to 2Innovate, 70% of the Latino population has already adopted some form of Fintech technology, and this will continue to grow; The market is expected to reach $300 billion by 2025.
The fintech industry in Latin America has experienced exponential growth, with Mexico and Brazil leading the way. In Mexico, there are 733 fintech companies, while Brazil leads with more than 1,200, and Argentina follows closely, with expectations of surpassing Mexico in the short term, says Pablo Pereyra, Chief Revenue Officer of 2Innovate, the company behind Frame Banking, a SaaS platform for banking and digital transactions.
The fintech market in the region closed in 2023 with 150 billion dollars and is projected to reach 300 billion dollars by 2025. “Approximately 70% of the population [in Latin America] has adopted some form of fintech technology,” says Pereyra, which has helped the market for fintech solutions grow and, with it, the technology requirements.
The executive explains that the pandemic boosted electronic transactions, making companies and banks need to increase their payment capacity, which benefited companies such as 2Innovate, which reported 100% growth.
Financial institutions were forced, then, to change their way of thinking, because “beyond the fact that banks do not necessarily have the same speed of reaction as a fintech, it still pushes them to do new things, to work, to think about presenting different business models. We see that there is a great change in the industry, in what is the traditional view of banking focused on traditional account and loan products, towards a much more focused look at being close to the customer, giving them service, giving them transactions and that is what generates a very interesting space for us,” Pereyra points out.
Thanks to the speed of reaction it offers, 2Innovate has enabled its customers to facilitate financial management through its portfolio with more than 400 types of transactions and a range of services ranging from digital payments to security and digital channel management. “We allow remittance transactions, payment, points… Everything is a combination and a concept that we call convergence. Payment rails (digital infrastructure that essentially allows payments to happen and be processed quickly) are very fashionable today: there are Visa, CoDi, etc. rails. 2Innovate’s platform manages the convergence of all rails on the same platform, combining business rules,” Pereyra explains.
To offer these solutions, it is necessary to have the right infrastructure, as well as specialized human capital. “You have to have people specialized in one or the other, but everything can be summed up by a single specialist in a ‘multi-rail’; Add to that the platform and infrastructure, so we sum it all up in a single SaaS contract. In this way, the same people who learn to make one rail know how to make another because it is the same platform, and without developing more separately,” he says.
Pablo Pereyra says that platforms that require a lot of development can become a challenge for banks and fintechs if programmers leave, for example. So, they chose to avoid that, so that the adoption process would be much faster.
Mexico, a market conducive to fintechs
For the Director of Revenue at 2Innovate, Mexico is a country conducive to promoting innovation in fintechs thanks to the fact that the country “has a very stable economy, new technologies appear, business initiatives, a low dollar that invites more investments; [all this] in addition to the fact that the regulator, the National Banking and Securities Commission, is very active in looking for ways to help financial institutions have adequate technology.”
Pereyra says that an example of this is the investment of five billion dollars by AWS, in the state of Querétaro, to set up its infrastructure. “That breaks down a lot of barriers that existed, since this is how you can run this in the United States and offer software solutions for fintechs in general, operating on AWS, Google Cloud Platform and Azure,” he says.
Fintechs promote financial inclusion
The executive anticipates that fintech convergence will continue to accelerate, with a particular focus on instant payments and interoperability. Central banks, especially the Bank of the Republic of Colombia, are taking the lead in promoting these essential trends.
Robust growth and mass adoption of fintech, Pereyra says, shows that the region is poised for a future of financial inclusion and economic prosperity. However, the fact that 50% of Latin America’s adult population does not have access to formal financial services still needs to be addressed. “We are addressing a critical need. Financial inclusion is not only a business goal, but also a societal imperative that can transform lives and economies.”
Original article: https://acortar.link/l9GzYg