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How Fintech startups are changing financial inclusion

Financial inclusion is still a challenge in Latin America and the Caribbean, although its benefits are clear: it helps reduce poverty and contributes to economic growth. In the area, the percentage of the adult population with access to an account in the financial system is 54.4% (approximately 247.3 million of the 454.7), a figure lower than the world average (68.5%) and still far from the data for high-income countries (93.7%), according to the World Bank. Despite this, the region has had an improvement over the 39% registered in 2011. But it is not yet time to sing victory.

That is why the work of the ‘fintech’ in the region has focused on reducing this gap. The ‘fintech’ environment experiences its particular impulse in Latin America and the Caribbean. In this area, the enterprises are contributing to the financial inclusion of the region, since they have focused their solutions on those people and companies that are sub-banked or completely outside the banking sector.

What did the analysis say?

According to an analysis conducted by the Inter-American Development Bank (IDB) and Finnovista, 46% of these ventures have focused their products on those people and companies, mainly SMEs, that are sub-banked or completely outside the financial sector. “The ‘fintech’ represent an opportunity to offer services to these segments of the population,” says Sonia Monárrez, a member of the Research Group with a Strategic Approach in Business Analytics at EGADE Business School.

The work with startups

Innovation Argentina celebrates its first ‘fast track’ to collaborate better with the ‘startups’ Fourteen areas of BBVA Francés have participated in the first ‘fast track’ program in Argentina, an initiative that aims to promote and generate new spaces for meeting and I work with the world of ‘startups’.

The new technologies are reconfiguring the Latin American financial system

These ‘startups’ are promoting a better performance of companies, for example, speeding up payment options, billing and reducing costs. In addition, innovative firms are providing incentives that encourage savings and investment in the region, says Monárrez. Many are the possibilities offered by these ‘startups’ in the improvement of services, but without a doubt of the 11 business segments that have been identified in the region, there are three that dominate the scene with 58% of the 1,166 projects that the IDB and Finnovista have accounted for in the area. Payments and remittances, loans and business finance management monopolize the market. Its momentum is thanks to the high penetration of smart mobile devices in the region, which reached 67% of the population in 2017, according to GSMA data.

Controlling fintech companies

Among these last three segments, the one of payments and remittances is the jewel in the crown, since it controls 24.4% of the fintech companies in Latin America. In addition it has had an important advance. According to a study carried out by Juniper Research, it is estimated that the value of international mobile remittances exceeded 25,000 million dollars in 2018, an increase of 67% compared to 2015.

“Innovation based on technology is creating new solutions through services designed according to the needs and realities of the client and thus improving their quality of life,” say the Secretary General of the United Nations to Promote Inclusive Financing for Development . In order to expand the opportunities offered by this type of ‘fintech’ services in the region, the action of the private sector as well as that of the public sector is required, warns the agency.

A commitment to the sector

Betting on the ‘fintech’ field is a pillar of BBVA’s digital transformation. In Latin America, the bank has focused on promoting initiatives such as Open Talent, which seeks entrepreneurs with disruptive solutions. The purpose of Open Talent is to identify new financial technology companies in their early stages of development, often in the ‘seed capital’ stage. It is ‘fintech’ that are focusing on new technologies (such as APIs, SaaS, automation and ‘cloud computing’) to develop their products.

“Innovation based on technology is creating new solutions through services designed according to the needs and realities of the client and thus improving their quality of life”.

Trying to find the best ideas

“We want to find the best business ideas to revolutionize the way people and companies manage their data and their money” they say from the institution. In addition, BBVA has launched an open innovation protocol known as a ‘fast track’, which makes it possible to streamline and streamline the processes that the bank develops together with the ‘startups’ during the implementation of new digital products and services. This initiative, which emerged from the Open Innovation area, consists of four stages: definition, revision, implementation and execution.

The challenge is to be able to take the proof of concept from one stage to the other in a short and agile time frame. In Latin America, the ‘fast track’ had its first implementation in BBVA Bancomer, in Mexico, under the name of Open Sandbox, but has been extended to other countries in the region such as Colombia, Peru and Argentina.

Published inStartups
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