Study reveals upcoming trends for B2C Fintech in Latin America

by James · November 29, 2022

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Many fintech companies in Latin America argue that they financially want to include people who do not have any financial product of this type. In fact, in the region, the use of cash remains at the top: according to the PYMNTS Global Index, 85% of retail spending in LatAm was done with cash.

However, the recent pandemic led to more users contacting their first digital transfers. This was due to increased use of smartphones in e-commerce purchases, according to LatAm Tech Report 2022 by the Brazilian fund Latitud, a study published this week.

This fact also led to people adopting more online services, and “accelerated the growth of digital banking in general,” the report says. In addition, it says that customer service inherited from traditional banks “provides poor quality and leads to customer dissatisfaction due to long response times, high rejection rates, bureaucratic processes, among other problems.”

On the other hand, the report points out that the lack of trust in the financial system and the authorities and the constant weakening of local currencies in the region have led to the use of cryptocurrencies, but not to their regulation. It shows that Argentina is the country with the highest use of these digital currencies, with 21% of total users, followed by Colombia (15%), Chile (14%), Peru (13%), Brazil (13%) and Mexico ( 9 %).

Trends in B2C fintech

Gabriel Vasquez, an Andreessen Horowitz partner dedicated to fintech investments in LatAm, states in the report that “the first wave of B2C fintech, such as neobanks and BNPLs (buy now pay later), discovered that there was no infrastructure available on the the time they appeared, such as new payment processes.” This meant they had to build this infrastructure in-house.

Now there would be a “second wave of innovation, where companies build on existing infrastructure and go to market faster and cheaper. The infrastructure would allow these B2C fintech teams to focus more on their product rather than building their business from scratch .”

The LatAm Tech Report 2022 shows that the trends to watch in B2C fintech by segment are as follows:

Digital banks

Ability to easily compare financial products and services, focusing on different demographics and offering specialized offers.

Digital lending

Limited regulations for this segment, as well as a lack of older infrastructure, prices, customer demographics and associated product offerings.

Payments and remittances

This is a category that blends with the other segments and will continue at that stage.

Investments and wealth technology

Increased demand for alternative assets and investing as a social experience.

Personal finance and education

Increased offerings from major digital banks and lending apps, plus open banking as a way to unlock new products and opportunities.

Insurtechs