Em Conversa looks to uncover the secrets in Latin America (LatAm) that have caused the fintech market to boom, from being worth less than $50million in 2016, to $2.1billion in 2022. This week we head back to Brazil to learn about digital payments from Dock‘s CEO, Antonio Soares.
Dock is a provider of modern financial technology infrastructure in LatAm that powers more than 40 million active accounts and more than three billion annual transactions, serving Brazil, Colombia, Peru and Mexico. The company recently became one of the first in the LatAm market to offer a complete technology portfolio for digital payments and banking-as-a-service through its cloud-based platform.
Joining the company in 2012, Antonio Soares has a wealth of experience in the payments space in Brazil and LatAm, and shared with us his insights on how the pandemic and trends seen across the world have impacted the LatAm payments market.
How has the Latin American fintech market evolved since the pandemic?
We have a lot of fintechs here in Brazil, like NuBank, and a lot of companies that are purely digital, in large parts due to the pandemic. When analysing the LatAm payment market’s evolution, you must look at a company’s intentions: are they a digital payments organisation, or are they digitalising the payments process? We aim the help both. The way we do this is by understanding consumer behaviour. Consumers are changing their habits and we are now seeing a transition, as consumers, including the older generation, are looking toward digital commerce. Newer, younger consumers are already in favour of a solely digital experience: that is what we have seen in Brazil over the last few years. A lot of digital companies have appeared and a lot of older companies have had to evolve to offer something digital in order to survive – we are helping both types to enable them to offer their customers the optimal digital payments experience.
What does the future look like for Dock? What does your road map and growth plan look like?
One year ago, we were operating solely in Brazil, but we quickly realised that some of the obstacles we were facing in Brazil, were similar to the rest of the LatAm countries: access to financial services, underbanked populations to name a few. We realised we could apply what we were doing in Brazil to the rest of the region.
We decided to acquire a Mexican company last year to enter the market. Why? Because Mexico is one of the biggest and most relevant markets in LatAm, with a market as big as Brazil’s. We have not stopped there though. We have operations in Colombia, Peru, and recently Chile and Argentina but we have plans to expand to other countries, like Ecuador, too.
I think it’s important to note we are using the same software in these countries that we used in Brazil. This means we can speed up our growth and scale in each new country with only a few adjustments to the platform to meet country-specific regulations.
In your opinion, what is the general feeling towards cryptocurrency in LatAm?
We believe that we have all the infrastructure needed to enable the use of crypto services, as the underlying technology that runs your crypto wallet is similar to that which would hold your dollars or Brazilian reais. Therefore we believe any country in LatAm could use crypto services if they wanted to.
In LatAm we have a lot of underbanked or completely unbanked populations, which have very little to no financial education. Therefore, crypto will likely penetrate the high-end population, not the low end, at this time, as they will be the only ones to understand it and its uses. This could change in the future, but currently, it will only benefit a small number of people.
Is its usage different to the rest of the World’s? I’d say so simply due to its number of users, but maybe a few years from now the offer will be the same.
Will crypto’s growth impact fiat currencies and payment localisation services?
If you look at LatAm’s past, when inflation was very bad in a lot of countries, people would store their money using the dollar to protect their earnings’ value. I think crypto will be one of these alternatives as people look to protect their money from local currency and the high inflation rates. This will bring a lot of additional movements from governments and the regulations surrounding crypto, not in a bad, anti-crypto way necessarily, but how you move the money safely.
How is the importance of financial inclusion impacting incumbent banks in the region?
At the end of the day, customer experience is what matters. In terms of simplicity and ease of use, the new challenger banks win every time. It’s extremely easy and safe to open a new account as all you need is the app on your phone, and to complete the biometric protections and you’re set: you have a debit card (both virtual and physical) and in some cases, even a credit card. In the past, you had to go to a bank, fill out a form, wait a few days before approval etc. The whole process could take up to a month. The customer experience provided by challengers is amazing. when compared to this.
Here in Brazil there are a lot of retail companies that pay their workers in cash. They do this because the workers don’t have a bank account or financial services account, but the cost of physical money is so high. You need a safe, security, protected transport to move these assets… digital banks on the other hand deliver the same service without the hassle and provide a solely digital experience.
The same can be said about PIX pay if you’re looking at a payments service that is challenging the previously laborious process in place. Traditional payment methods would require a POS system to receive the payment, where as PIX enables a seamless and instant transaction without this. I think payments systems like PIX will be a trend we see in LatAm, as it is a proven way for cash first economies to become digital.