March 23, 2017
The first part of the LATAM FinTech Series explores the region's challenges, in spite of which it is becoming a leading destination for expansion and investment for the world with FinTech leading the space and playing a pivotal role in economy building.
Argentina, Brazil, Chile, Mexico and Venezuela make up the Big 5 Economies of the region comprising over 25 countries across Central America, South America and Caribbean. While Colombia is a fast-growing FinTech market followed by Peru, Panama is increasingly finding itself become a test market for North American startups. Not to mention, Peru is Latin America's fastest-growing economy. The Big 5 still remain the leaders and any socio-politico environmental change in them tips the trade economies for the entire region. Hence, we limit our scope of this commentary only to the Big 5.
The foremost challenge for banks in the region is to establish trust. With the region reeling from a severe banking crisis that lasted more than a decade, it has been established that the Latin American financial system takes far longer to recuperate and the cost of restructuring is far higher. Repeated bank employee strikes that last more than a month, policy changes and the sky-high rates of interest have led to alienating not just a single bank from the masses but the entire financial ecosystem.
Consumers, on the other hand, prefer alternate channels of lending and borrowing to the bank. Card rates in Brazil are in triple digits and last checked, ranged north of 450%. Although there are talks by the current r ...