Behind the idea: a55 | Fintech Times
2021 was a watershed year for crypto technology. The volume of cryptocurrency transactions grew by 567 percent year-on-year to reach $15.8 trillion in value, showing that digital asset trading has hit the mainstream. Although the market has seen some correction this year, 2021 was one such Rubicon moment that no one can deny: cryptoassets are here to stay.
Saw it‘It is perhaps not surprising that Latin America was launched in 2022‘pp first crypto-debt operation in the form of a blockchain-based financing model led by LatAm alternative lender, a55.
We talked to Hugo Mathecowitschthe company’s founder and CEOabout the move to decentralized finance and its pioneering approach to financing.
Born in France and raised in Barcelona, Mathecowitsch moved to Brazil in 2013 to take on a business development role in asset management. This is where his entrepreneurial spirit really took off.
He knew there was a future for him in Latin America’s burgeoning economy, which led him to found Amerigo Technology Investment Banking. This venture ultimately failed, but provided Mathecowitsch with invaluable learning and experience, which he used when he started up a55 in 2017.
Five years later, and successful rounds of funding later, Mathecowitsch is still enjoying the thrill of pursuing new ideas and building something genuinely new in a market he’s passionate about.
What has been the traditional corporate response to fintech innovations nationally?
To some extent, we are writing the history of the capital markets here in Latin America with the first hybrid debt operation in Brazil. We managed to raise funds that we‘will use to fund our own investment in companies based on their current recurring earnings and alternative data.
It‘is not only important to the local market, but it paves the way for data-driven companies worldwide to leverage alternative data as a direct, enforceable and reliable source of security, using blockchain technology to unlock liquidity and fund growth.
How has this changed in recent years?
Access to capital has generally never been easier, especially for technology start-ups. Over the last 20 years or so we have‘has seen a global explosion in investment. This exponential growth brings with it both risks and opportunities for both companies and lenders – we are already seeing evidence of this – but it fundamentally means that banks and the traditional financial sector are no longer the only sources of funding.
While we‘Have seen sources of funding go through a transformation, we have‘t seen the same shift in lending criteria until now. a55 has been able to leverage new technology to increase access to financing for companies that have typically been underserved by traditional banking, had limited access to equity financing, or were looking for an alternative to dilutive capital.
Has something created a culture of change within the company?
We‘is an ambitious team and I believe our appetite for innovation helps us maintain a culture that‘is receptive to change and seeks constant improvement. Our customers expect it from us too – they depend on us for the kind of out-of-the-box thinking that allows us to disrupt traditional models and make access to finance more accessible. I believe our collective experience also contributes to change, bringing best practices from previous companies.
Which fintech ideas have been implemented?
Within our guarantee stack, we incorporated open banking, then open finance and now open data applications to improve our revenue projections at the SME level. On the funding side, cryptocurrencies and introduction of decentralized finance (DeFi) Liquidity pools have been among the most transformative fintech ideas we implemented recently.
What benefits have these provided?
I believe the DeFi-based liquidity pools will represent an important additional source of funding for data-rich companies in the future and make hybrid debt the new normal for everyone.
For us, integrating stablecoins and DeFi liquidity protocols into the funding stack represents the best of both worlds – connecting decentralized solutions to traditional financial markets. And increasing the speed and efficiency of administrative operations through technology reduces the costs of cross-border transactions.
Do you see any other industry challenges on the horizon?
We expect blockchain technologies to massively disrupt traditional capital markets with the disintermediation of multiple parties, including asset managers, distributors, administrators and trustees.
We also see challenges on the payments side with continued compression of managed detection and response (MDR) services and the need to reinvent payments with services that add value beyond just processing third-party verification.
Can these challenges be helped by fintech?
Absolutely! At its simplest, fintech is about finding and fixing holes in traditional financial service models or streamlining processes that can be done more efficiently.
Improving access to capital, commodity data and being smarter about how we use this data, both to improve the customer experience and to drive continuous improvement through artificial intelligence (AI) and machine learning, enables us to prevent and be responsive to challenges.
Connecting with the customer and using technology solutions to meet, adapt and exceed their expectations is key to our approach.
Final thoughts…
With the growing demand for smart capital from a55 customers, our technology has allowed us to open up access to finance for companies in the connected economy.
And given the size and energy of the Latin American market, I have‘I am excited to see what new developments this will bring. Also to expand our horizons beyond America and into Europe with some new world thinking.
