The fintech industry in Latin America is among the world’s most vibrant. From the initiatives in Mexico to provide a legal framework that will enable local fintechs to flourish, to the innovations in central bank digital currencies in the Caribbean, to the rising fintech giants like Nubank in Brazil, financial technology is making a major difference in the lives of a growing number of Latin Americans.
For this week’s Finovate Global: Voices, we caught up with Ximena Aleman, co-founder and Chief Business Development Officer of Prometeo, to discuss fintech in Latin America and the power of open banking to improve financial wellness and create opportunity in the region.
Please tell us a little about Prometeo and what drove you to co-launch the company.
Ximena Aleman: Prometeo is a fintech company striving to create an open and connected financial market in Latin America (LATAM). We are building a huge highway of financial information across financial institutions and countries in LATAM. Prometeo is the largest Open Banking API platform in the region disrupting the financial sector in México, Colombia, Brazil, and six more countries. We provide a single point of access to information, transactions, and payments across more than 30 financial institutions and 45 APIs in nine countries of LATAM.
As LATAM entrepreneurs, we are well aware of the tech gap in the financial sector between underdeveloped and developed countries. In particular, the lack of adequate tech infrastructure. So we decided to approach this as an opportunity to build not only a great solution but also a path towards financial access for the region.
What are the drivers of open banking in Latin America?
Aleman: Open Banking is a disruptive innovation that reframes the way banking is carried out. Transactions and communications between customers and institutions are going from taking place behind closed doors to transparent exchanges in the public square. It is no wonder that traditional financial institutions initially viewed the practice with a measure of bemusement or even suspicion.
However, there has been a marked shift in their thinking. Adoption has been slower in Latin America than in other parts of the world, but most of the open banking biggest names in the region have headquarters abroad. Open banking has been a hot topic globally; Latin American associates have taken note and ushered in the conversation.
Another factor that has changed the playbook is the COVID-19 pandemic. The restrictions on daily life and public interactions have forced even the most hard-rooted, traditional financial institutions to review their digital transformation strategies. If customers can’t visit branches, digital channels become the sole venue of exchange.
What do you think it will take to get more women in leadership and founding roles in fintech?
Aleman: I think that as we move forward to a more “gender-balanced” society we have to rethink our financial exchanges from a gender perspective, too. There’s little offered in the financial sector for women and little by little some female fintech entrepreneurs are developing solutions for this segment (for instance, Emma Sanchez’s neobank for women, Jefa). If the startup ecosystem understands that half of the world’s population has been historically financially underserved, and the huge opportunity this is, it won’t take long for women to start developing custom-made products for that segment.
You have said two of the biggest challenges to diversity in fintech are funding and technical training. What can and should be done about this?
Aleman: The gap between VC investments in startups led by women is significant versus those led by men. In the last 10 years, fintech companies led by women have raised 1% of the total investment in fintech. The disparity is really significant.
I believe this gap is multifactorial: historically, the financial and the technology worlds were dominated by men. Also, among VC funds, women in the decision-making process are just a few in number and, per my own experience, men really value having another man as their counterpart.
There’s a lot we can all do: all the stakeholders involved in the fintech sector should make their own changes and push to close the gap. As women, we have to create our support network on every front, talk to mentors, female start-up groups, and above all, be confident and trust your knowledge, your experience, and your ability to navigate through hostile environments. If you feel you are not strong enough in certain areas, seek training. Technical training and really knowing your business is key to build confidence and close this gap.
One of the biggest reasons why women receive less VC investment than men is that so few of them make up decision-makers in VC funds.
How has the pandemic impacted the work you do and the communities you serve?
Aleman: Open Banking has seen a rise in LATAM in the past year, so our business vertical – as everything related to digital transformation in the financial sector – has been benefited by how the pandemic reshaped human interactions. However, no one in LATAM can be a stranger to the economic challenges we are facing today and ahead. There have been huge increases in unemployment, debt, etc. In Uruguay, a year after the pandemic, surfing what might be the country’s second wave of COVID-19 cases, early in the morning in the small towns in the countryside, you will bump into people waiting in line just in one shop, in the local microfinance branch, to ask for credit or pay their debt.
There are many who do not know much about Uruguay. What do you think more people should know about the country?
Aleman: Of course. I’m very proud of my country. We are a small country down in South America, between Argentina and Brazil. We are popular for the quality of our meat and football players, but as noticeable as that is, we are a growing tech hub, in particular for financial services. Uruguay has a long history of providing high-tech software to the financial sector, for instance, we host four banking core software companies (Infocorp, Topsystems, Bantotal, and Mantentia – that was recently bought by Technisys). Most recently, we joined the fintech wave with great B2B solutions like Bankingly or our first local unicorn, dLocal. I think it is worth mentioning the government’s efforts to promote entrepreneurship through the Innovation Agency (ANII) and Development Agency (ANDE). We are well aware that Prometeo was possible thanks to their support and as a startup, we are a result of the whole ecosystem pushing us to grow.
What can we expect from Prometeo over the balance of 2021?
Aleman: We are pushing hard for Open Banking adoption in Brazil, México, and Colombia. For those countries, it’s a challenging shift so we want to provide the best possible solution. That’s why we are releasing a payment feature that allows automated payments across banks in those countries. At the same time, we are on a mission to provide full coverage across LATAM. So this year it’s all about expansion, coding, and growth!
Learn more about fintech in Latin America and the work of Prometeo.
Here is our look at fintech around the world.
Middle East and Northern Africa
- Qatar First Bank went live with its first mobile banking app.
- Egyptian digital payments company Paymob secured $18.5 million in new funding. The round was led by VC Global Ventures of the UAE.
- First Abu Dhabi Bank transitioned its payments business into wholly owned subsidiary Magnati.
Central and Southern Asia
- Indian investment app Groww raised $83 million investment to become India’s latest fintech unicorn. Tiger Global led the round.
- Consumer financing fintech Cred reached a valuation of $2.2 billion after securing an investment of $215 million.
- Meesho, a social commerce startup based in India, locked in $300 million in Series E funding.
Latin America and the Caribbean
- Uruguay-based cross-border payments company dLocal announced $150 million in new funding.
- Itaú teams up with Colombia-based digital platform Rappi to bring financial services to retail and mass affluent customers in Chile.
- Forbes profiles Nubank founder and CEO David Vélez.
- Singaporean challenger bank StashFin raised $40 million in Series B funding.
- NextPay, a Philippine digital bank for SMEs, secured $125,000 in pre-seed funding from Y Combinator.
- Atlantis, a fintech based in Singapore, launched its digital platform for small businesses, BizBank.
- Koa, a Kenyan startup that enables users to save and invest in local mutual funds via their smartphones, launched its mobile app this week.
- Nigerian digital bank Sparkle launched its Sparkle Business service to bring digital business tools to SMEs.
- A new fintech coming to market in South Africa? Mobile operator MTN Group may spin-off of its fibre and fintech businesses.
Central and Eastern Europe
- German challenger bank for Gen Z consumers, Pockid, teamed up with PPS, formerly Prepay Solutions.
- Emerging Europe profiled Kevin, a Lithuanian fintech leveraging PSD2 and account-to-account payments to bring cost savings to merchants.
- Tandem Bank went live with a new SaaS banking platform from Berlin, Germany-based Mambu.