The fintech ecosystem in the Latin American region, including Mexico, has not only consolidated and continues to grow, but has entered a new era, in which it no longer only addresses problems of specific segments, but now any company that leveraged in a technological layer and in regulation, it can offer financial services, such is the case of platforms such as Free Market and rappi.
Andrés Fontao, co-founder and managing partner of Finnishhighlights that what was experienced in the first wave (fintech 1.0) was sowing the seeds and that the different actors such as entrepreneurs, investors, incumbents and regulators began to experiment, but from a vertical perspective.
“Of fintech as a vertical that was solving specific problems for specific segments of the population. And we move into a new era, where fintech should not be seen as a vertical segment, but as a technology platform, a technology layer. This is what happened with the Cloud, with the Internet, where they were born as verticals and ended up being technological layers that can be consumed by any company”, he points out.
In an interview on the occasion of the 2022 edition of the Finnosummit, which this time will be in person in Mexico City, he comments that this trend is already being seen on platforms such as Mercado Libre, Rappi and others that offer financial services to their users. .
“We think that this is the trend that will mark this new era of fintech, where any company can offer financial services, leveraging on this technological layer, introducing fintech plugins such as Buy Now Pay Later (buy now pay later) or as payroll advance solutions to offer your customers, your couriers, your businesses, these financial solutions”, he points out.
He adds that there will be a real explosion in the consumption of digital financial services, not only from native fintech, but also from these companies that are offering finance. “What this allows is that there is an even more massive deployment of digital financial services, supported by fintech.”
BNPL, of the models that will predominate
Andrés Fontao considers that the segments that will predominate in this new era are precisely plugins such as Buy Now Pay Later, payroll advances, and other infrastructure providers.
“Those that are operating in the open banking space, open finance, are a bit the ones that are offering the rails, the infrastructure of this new era of the financial system (…) these are fintech solutions that can be grabbed and plugged in by anyone. In this new era, those two types of fintech are the ones that we really think is going to start to explode,” he says.
Traditional will continue to grow
The co-founder of Finnovista assures, however, that traditional fintechs will continue to grow, but now instead of being a single product, they have enriched the offer for their users.
“We are going to see an evolution, a sophistication of the traditional fintech offer, and we are going to see others that are also entering with more competitive and more segmented bets, perhaps the offer of a Nubank and a Ualá, which are already more similar to a universal bank than a fintech”, he stresses.
He considers, however, that the regulation should evolve in order to introduce new business models.
Three Consolidation Trends
Andrés Fontao expects that there will be three trends in the process of consolidating the ecosystem: banks buying fintech, fintech buying fintech, and fintech buying some banks, especially small ones.
“There are going to be cases where fintechs can and want banks, obviously the most normal thing is that they are smaller banks, where they are buying the license, but I would not be surprised if a fintech with a significant capitalization has the capacity to acquire a bank. also relatively large”, he argues.
These and other topics will be addressed at Finnosummit 2022 which, after two years of absence due to the Covid-19 pandemic, returns to Mexico City on June 1 and 2.