Brazilian tech veteran explains fintech’s footprint on Latin American industry
Ricardo Sangion, partner in VC firm TheVentureCity and former country manager of Pinterest Brazil, is one of the Latin American technology pioneers looking at the most promising industries in the region.
Why has Brazil been so successful in digitizing instant payments in such a short time?
When technology caught up with banking, the infrastructure in Brazil was solid enough for large banks to build very sophisticated software platforms quickly. It was a question of having government incentives, regulations and technology investments from the big players to make it happen. At one point, when access to the internet exploded, the Brazilian government pushed all stakeholders to build a model like Pix, the country’s instant payment ecosystem created by the Brazilian central bank. The whole ecosystem was ready to help Pix grow – it was launched in November 2020 and about 55% of the population is now actively using it. In addition, the size of the Brazilian market was also helpful. When there are really big players who come and are eager to participate, it is easier for others to follow.
How has fintech’s success in Latin America helped other industries grow in the region?
Everything is related to fintech because we always have to pay for something, and it has increasingly become something digital. Fintech, for example, has paved the way for the growth of Software as a Service (SaaS) models. By facilitating payments and subscriptions, SaaS has created accounting services, paid monthly, that are both affordable and easy to use for small business owners. We have also seen a large number of new universities emerge with a SaaS model; therefore more investment is made in this industry.
Decentralization is the next big thing for new business models, but how likely is it to catch on in countries like Brazil or Mexico?
These two countries are already ahead when it comes to open banking systems – Brazil much more than Mexico, though. They are not decentralized yet, but they are slowly moving towards highly collaborative environments. Pix, again, is a good example: it is centralized by the government, but many people were invited to participate in the decision-making process. In Mexico, something similar happened with Clip. In 2012, it pioneered a digital payment platform that facilitates transactions through a smartphone, and then the entire ecosystem began to change. The open banking phenomenon began to replicate in other industries: open health ecosystems, where health-related data is shared between doctors, hospitals and patients, or open delivery, which will allow users to choose between more than just one or two logistics players, for example.
