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TEMPO Payments: The Finnovation Speed in Colombia and Brazil, and Their Submarkets

Latin America is proving to be an excellent breeding ground for fintechs and start ups, as countries like Brazil and Columbia have created a snowball effect for finnovation. In these countries there are currently over 320 and 750 fintechs set up respectively and this number is set to grow as more public and financial products keep being developed. The success of these countries is spreading to the region, putting LatAm’s innovation on par with Asia’s and the US’.

Suren Ayriyan is the CEO and Managing Partner at TEMPO Payments, the Paris-based, European-wide anchor for Stellar blockchain payments. The company offers online, offline and digital backed remittances to nearly 100 destination countries with over 300 physical agent locations as well as a secure bridge to purchase and sell digital assets. 

Here Ayriyan explains how Brazil and Columbia have developed their fintech hubs, paving the way for other countries in the region:

Suren Ayriyan, Managing Partner and CEO at TEMPO Payments
Suren Ayriyan, Managing Partner and CEO at TEMPO Payments

Being principal tech hubs and representing notable financial epicentres of Latin America, Brazil and Colombia are now enjoying a true fintech boom. In fact, these two markets are some of the key leaders of the region’s “finnovation”, helping it to rise to Asia’s or the US’ level.

2020 was a defining milestone for both countries. With skyrocketing investment levels, important infrastructural developments, and regulatory concessions to the fintech ecosystem, the markets opened up to blockchain structures, alternative investment options, and even open banking as one of the most promising segments of the region.

The Colombian fintech industry is now growing at 120% per year and has seen a total investment of over $1billion in the past three years. Its neighbour and the receiver of over half of all Latin American fintech funding, Brazil, represents the fifth largest fintech market globally, receiving 73% more investment last year than in 2019.

Let’s take a look at the role fintech has played in the Colombian and Brazilian submarkets and the current opportunities that exist in both countries.

A unique mix of fintech drivers

Traditionally, the road to entrepreneurship has been rather thorny in the region, with small businesses often lacking access to a line of credit, preventing growth and expansion. That’s why credit fintech, such as small and medium-sized enterprises (SMEs), constitutes the principal part of the Colombian and Brazilian fintech infrastructure.

What makes Colombia and Brazil stand out in terms of global fintech are their specific governmental initiatives to regulation and fintech adaptation. Some of the best examples of ongoing infrastructural changes with the help of fintech are found here.

High mobile usage, a growing number of digital financial services, and exponential fintech investments all contribute massively to the countries’ economic growth. In fact, Brazil alone now contributes to almost half of Latin America’s B2C retail transactions. This allows for other finnovations to snowball, which is why both Brazil and Colombia are now seeing a rise of neo-banks, QR code payments, eWallets, and eInvoicing.

As the third-largest fintech hub, Colombia has enjoyed a fertile fintech ground, with 320 fintech companies now operating in sectors such as digital payments and lending, business finance, and wealthtech. In Brazil, we can find around 750 companies in the same sectors, where lending (constituting 17% of these markets) leads the way.

Public and payroll fintech—a promising submarket 

Cryptocurrency adoption, the high use of remittances, and the combination of these services also represent a segment area with extreme potential, both in Colombia and Brazil. Because of globalisation and immigration, South America has practically become an emergency market for European payment providers; common cross-border transaction routes being Portugal to Brazil and Spain to Colombia. As the two South American nations make up the principal consumer groups of financial products regionally, the fintech market’s appetite for new payment methods and payment gateways are persisting.

Entrepreneurial prospects are SME competitors, such as the Brazilian BTG + Business, Cora, Linker, and Conta Simples, that will continue to challenge traditional banking services and the financial market. However, the demand for fintech goes beyond payment services.

Investors looking to invest in other emerging submarkets in either country have a lot to choose from. Some investment crowdfunding platforms (like Captable and SMU) and other platforms for agricultural, energy, legal, and even entertainment assets (such as Bloxs and Hurst) are just some examples. Mercado Bitcoin, BitcoinTrade and Foxbit, and newer ones, such as Nox Bitcoin and Bitfy, are worth mentioning in the Brazilian cryptocurrency market.

The prediction is that tokenisation will emerge as the key factor for economic growth, equal to insurtech (insurance 2.0) being a promising market in the region.

Going back to the financial services market, the upcoming sub-segment to keep an eye on is “payroll fintech” and salary prepayment solutions. Payroll fintech is a system developed with every relevant actor in mind: banks, employees, and borrowers. The model is based on minimal fees, low levels of missed payments, and minimising salary spending, preventing national debt.

Disrupting payroll and more accessible employee benefits is how HR tech has become the new area of digital financial services. And Colombia is paving the way in so-called “libranzas” and payroll lending, which benefit pensioners in addition to workers in the private and public sector. Similar lending models are currently being adapted for governmental efficiencies in Colombia and Brazil.

Watch out for innovative regulation models

Developments in recent years have shown fintech as a powerful contributor to solving structural challenges in the South American region. As an engine for the national economy, fintech has a lot of potential across sectors. New technology does not only make for new emerging markets and services itself coming out of Brazil and Colombia. As mentioned, these are also the two countries where the most developed regulatory framework can be found.

Known as steady researchers of market-based technology adaptation, the Colombian and Brazilian governments (The Central Bank of Brazil, in particular) must now figure out how to regulate new fintech markets such as payroll lending.

With more public and financial products developing, banking services are a good enough reason alone to look to South America. Here, fintech is a noticeable sector from every angle, and why not only payment providers should look to these countries. Incentives are favourable tax laws for venture capitalists and a seamless startup phase for any business. But it also goes the other way as founders, top-tier investment bankers, consulting firms, and MBA university programs look more in the direction of South American startups and fintech markets.

As the countries keep their position as the Silicon Valley and the financial centre of Latin America—the next generation of local and foreign fintech entrepreneurs and startups will emerge from Colombia and Brazil, which serve the entire region.


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