In developed countries, it’s easy to forget that fintech is a global phenomenon. So, today we’re looking at new fintech developments and news where we might not think of looking outside of the usual Silicon Valley, London and other leaders. As proven by Alibaba, financial giant killers can come from anywhere.
Deloitte issued a new report on global fintech hubs, adding profiles on 24 new locations to watch including Sao Paulo, Mexico City, Indonesia, Lisbon, Milan, Prague and Warsaw. Bond Dickinson looks at global trends in fintech in developing countries, collaboration with traditional financial institutions and “suptech” or regulatory trends. TechBullion reports fintech is providing opportunities for the estimated one-third of the world’s population which is unbanked or underbanked.
More than 220 fintech startups wth more than $161 million invested in 2016 make Sao Paulo, Brazil a Latin American fintech leader according to Deloitte. TechCrunch reports Brazil’s fintech boom has already created 244 fintech startups, tripling in the past three years alone. Their detailed report highlights leaders in every category from banking, lending and payments innovators to insurance, legaltech and robo-advisors.
IFC invested $3 million in Buenos Aires-based fintech Moni to expand its credit and bill payment products to underbanked consumers in Argentina. In Mexico, BBVA Bancom acquired payments platform Openpay which manages more than one million transactions monthly. As Mexico prepares regulations for the fintech industry, insurers are also pressing for consumer protection from insuretech startups.
VCs invested more than $53.2 million in more than 200 fintech startups in Turkey in the past four years according to a report from Deloitte. It also projected a value of $15 billion on fintech companies in Turkey. Australia’s Airwallex raised $13 million from China’s Tencent and other investors to expand its cross-border payments platform to Europe.
Philippines fintech startup First Circle raised $1.3 million to grow its SME lending services. At the end of June, the Central Bank of Bahrain will launch the country’s first electronic wallet, providing a range of digital banking and payments services.
Deloitte Publishes Report on Global Fintech Hubs: A Tale of 44 Cities
Deloitte has published a report on emerging Fintech Hubs around the world that analyses 44 different cities. Entitled “Connecting Global FinTech: Interim Hub Review 2017,” the document was released at the opening of the Innovate Finance Global Summit taking place in London this week. The report is an update of a similar document published in 2016 and comes following research conducted by Innovate Finance and SWIFT Innotribe. Innovate Finance recently launched the Global FinTech Hubs Federation as it seeks to build closer ties with hubs around the world through collaboration and knowledge sharing.
The report updates 20 of the hubs profiled in September 2016 and introduces an additional 24 hubs. Hub representatives were asked to provide a broad overview and self-assessment of their hub based on six categories including an index performance score that determines the ease of launching a Fintech business in the hub.
As one may expect, London and Singapore remain the top hubs to set up and grow a Fintech startup, based on their index performance scores. The UK was the first hub to establish itself as a center for financial innovation but Singapore has rapidly built a reputation for embracing disruptive finance as the government has publicly announced the importance of Fintech to its economy. Via crowdfundinsider.com
What Are the Global Trends in the Fintech Sector?
Turning away from the perhaps more beaten track in Europe and the US, there is a lot happening in Fintech in developing markets including India, Indonesia and Mexico (to name just a few) with an explosion of Fintech activity and investment taking place in China.
Perhaps there’s also less fanfare about financial inclusion than there should be. On a cross-jurisdictional basis that was the message conveyed by many, with developing countries particularly focussed on how technology can be used to address the needs of the unbanked or underserved.
Seen as a particular growth area is the use of ‘alternative data’ (non-financial payment related information) and how that can be applied to open up access to the financial and payment ecosystem for those to whom it may have historically been closed due to a lack of formal credit history.
One only needs to think about the amount of information available from schemes such as M-Kopa in Kenya, Tanzania and Uganda (which, as of July 2016, had connected over 450,000 homes to affordable solar power in return for daily payments) and how that could be used to build up a picture of credit worthiness for those involved. Via mondaq.com
Fintech Trends in Emerging Markets
In the developing parts of the world, fintech offers financial services to millions of unbanked people. It’s an important innovative tool in ensuring financial inclusion. Unbanked people account for a third of the world population and are mainly concentrated in emerging markets of Asia, Latin America and Africa. Before the advent of financial technology, the proportion of the unbanked was even bigger.
According to the world bank, between 2011 and 2014, 700 million people opened bank accounts for the first time. This is the period when fintech had started taking roots. Some of the leading fintech emerging markets include: China, India, Brazil, Mexico, Singapore, Hong Kong and South Africa.
Emerging trends include digital banking and payroll; payments and remittances; cryptocurrencies; credit scoring innovations; and microfinance institutions. Via techbullion.com
Sao Paulo Emerges as a New LatAm Hub of Fintech Startups
Brazil’s financial technology market is growing like never before, with the number of fintech (financial technology) startups rising to 220.
“The Brazilian fintech scene is booming,” says research firm Deloitte, which has added the Brazilian city of Sao Paulo to its latest index of global fintech hubs. Brazil has more fintech startups than any other country in Latin America, with venture capital investment reaching US$161 million in 2016.
In the last couple of years, according to the report, many of the country’s financial institutions have made huge investments in fintech startups. Last year, Brazil’s largest bank, Banco do Brasil (Bank of Brazil), set up a lab in Silicon Valley to identify and explore new fintech solutions. Via nearshoreamericas.com
Brazil’s fintech boom offers new vertical opportunities for investors
Fintech is booming around the world. Global investments in fintech companies have continued to rise during the last two years. After international financing for fintech startups hit $19 billion in new funding rounds at the end of 2015, the volume cranked up even higher.
Fintech investments reached a new high of $15 billion in just six months by the middle of 2016, per a BI Intelligence report published last November. According to ABFintechs, the Brazilian fintech association, the fintech startup scene in Brazil has been especially hot. “Based on our latest figures, there are now 244 fintechs in Brazil. The number of startups in the sector have tripled in the last two years,” says Rodrigo Ubaldo, president of ABFintechs.
In Latin America and Brazil, a lack of banking services has created a boom for entrepreneurs and investors seeking to build lucrative fintech innovators there. While 85 percent of Brazilians now live in cities, 40 percent remain excluded from traditional banking systems, according to São Paulo-based Itaú Unibanco, the largest private bank in Latin America. Via techcrunch.com
IFC invests in Argentine fintech Moni
IFC, a member of the World Bank Group, has invested $3 million in Moni (www.moni.com.ar), a Buenos Aires-based FinTech platform, to expand its credit and bill payment products to underbanked consumers in Argentina.
Moni seeks to innovate in the traditional consumer financial services industry by using proprietary technology to transform the process of applying for a loan and paying for telecom, utility and other bills, through a simple and user-friendly mobile app.
Founded in 2013 by Argentinean entrepreneurs Juan Pablo Bruzzo and Alejandro Estrada, Moni will use IFC’s investment to accelerate its growth in Argentina. It will also help the company further improve the borrowing conditions for its customers with lower-interest rates and more sustainable credit products such as micro installment loans. Moni’s platform has made possible more than 200,000 loans. Via bnamericas.com
BBVA advances its fintech strategy with the acquisition of Openpay
Openpay is a Mexican startup that offers an advanced platform of physical and electronic payments for businesses. Created with software developers in mind, the platform offers a wide range of online payment solutions and functionalities, outstanding among which are its sophisticated anti-fraud models.
Currently, Openpay has a network of more than 15,000 payment reception points in Mexico, connected in real time through its Paynet network, and manages more than one million transactions a month. The Openpay platform is used by more than 1,000 businesses in Mexico, from startups to SMEs and large corporate clients.
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BBVA Bancomer supports the entrepreneur ecosystem through its Innovation Center and propels fintech companies with its Open Talent (OT) competition. It also promotes direct associations with startups to validate their business models and offers financial services to help customers. Openpay was a finalist in Open Talent 2015, in an event that involved 652 projects from 63 countries and close to 200 experts. Via twst.com
Mexican insurers demand level playing field as insuretechs emerge
As Mexico is busy crafting a legal framework for its exploding fintech industry, its insurance sector is also eager to both utilize and regulate firms innovating the risk business through technology.
These ‘insuretechs’, like fintechs, are growing rapidly in Mexico. Eduardo Hernández, commercial director of industry group Hackers and Founders, told local outlet El Economista there are nearly 150 digital insuretech tools under development in Mexico, about 6% of which are already in operation.
Mario Vela, president of insurance association AMIS, told El Economista he sees insuretechs as potentially being able to reduce expenses that cut into insurance firms’ profit margins. AMIS general manager Recaredo Arias Jiménez, however, warns that such firms still require regulation and that insuretechs must be required to play by the same rules as traditional insurers. Via bnamericas.com
FinTech Ecosystem in Turkey
According to the ‘FinTech Ecosystem in Turkey’ report, which is prepared in collaboration with Deloitte, BKM and FinTech İstanbul, FinTech market in Turkey is growing rapidly and investments in this area are expected to increase. The amount of FinTech investments in Turkey, which was $ 4.6 million in 2012, grew by 175% in 2016, reaching $ 29 million. Venture capital and angel investment networks have invested a total of $ 53.2 million in FinTech initiatives in Turkey in the last four years (2012-2016).
The overall size of the FinTech market in Turkey, with more than 200 companies, is currently estimated to be worth $ 15 billion and growing at an annual average of 14%. Despite the rapid growth and development, the relatively new field of financial technologies in Turkey has not yet reached the optimum size. This points to the high potential of FinTech in Turkey.
‘FinTech Ecosystem in Turkey’ report points out that the FinTech sector will continue to grow with an annual average growth rate of 14% and that the geopolitical advantage of Turkey will help Turkey turn into a regional financial technology center in the near future. Via www2.deloitte.com
Airwallex raises $13M led by Tencent to bring cross-border payment service to Europe
Australia-based cross-border payments startup Airwallex has closed a $13 million Series A round to expand its reach across Asia Pacific and into Europe. The deal was led by Chinese internet giant Tencent — marking its first investment in an Australian startup — with participation from Sequoia China, MasterCard and existing investor Gobi Ventures.
Airwallex was founded last year to tackle the issue of cross-border transactions at scale. Unlike predominantly consumer-focused services such as TransferWise — which actually opened an Asia Pacific HQ last week — Airwallex targets businesses, allowing them to make and receive international payments at scale at both a lower cost and with less hassle.
Beyond convenience of faster payment and reconciliation, the Melbourne-based startup, which previously raised $3 million last summer, has forged relationships with trading partners to help its customers save money on their overseas transactions. Via techcrunch.com
First Circle raises $1.3M for its SME lending service in the Philippines
First Circle, a fintech startup enabling SME lending in the Philippines, has raised $1.3 million. The capital was provided by Accion Venture Lab, which is attached to finance-focused non-profit Accion, and Deep Blue Ventures. First Circle raised $1.2 million last year, and it counts 500 Startups, IMJ, and Key Capital among its backers.
SME lending is a given in most Western countries, but the challenges are more acute in emerging markets where there’s a lack of data on customers and banks tend to prioritize larger, more established clientele where the risk is perceived to be lower.
Yet, SMEs represent a hugely important part of growing economies. In the Philippines, a Southeast Asia-based country with a population of nearly 100 million, SMEs represent 99 percent of all registered companies yet contribute to just 40 percent of economic output. Financing is a major issue, with SMEs accounting for less than 20 percent of all bank loans in the country. Via techcrunch.com
Bahrain’s CBB to launch national electronic wallet
The Central Bank of Bahrain (CBB) announced that it is working closely with BENEFIT to launch the first phase of the national electronic wallet, the first of its kind in the Kingdom, at the end of June this year.
The wallet will enable instant payments via smart phones and will facilitate the collection of payments electronically through debit, credit and prepaid cards and online bank accounts, for online and in-store purchases. Customers will also be able to transfer funds using the wallet for Fawri, Fawri Plus, online bill payment and other types of payment services that will be available in future. Via bna.bh
Author: Douglas Hall, Publisher & Executive Editor
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