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Fintech

Payments, lending and neobanks rule fintechs in emerging markets, report says

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Tech investments in emerging markets have been in full swing over the past couple of years and their ecosystems have thrived as a result.

Some of these markets like Africa, Latin America, and India, have comprehensive reports by publications and firms on trends and investments in their individual regions. But there’s hardly a report to compare and contrast trends and investments between these regions and rightfully so. Such a task is Herculean.

Well, a report released today by data research organization Briter Bridges and global inclusive tech accelerator Catalyst Fund is punching above its weight to offer a holistic representation to the darling sector of these three markets: fintech.

The report “State of Fintech in Emerging Markets Report” has three objectives — to evaluate the investment, product, and inclusivity trends across emerging markets.

The team surveyed over 177 startups and 33 investors across Africa, Latin America, and India. Though this sample size used is minuscule, the key findings are quite impressive.

Let’s dive in.

Fintechs have raised $23B across the regions since 2017

There’s no stopping emerging markets’ favorite. The sector has continued to receive the largest share of investments year-on-year for the past five years.

More than 300 million unbanked African adults account for 17% of the world’s unbanked population. So it’s not difficult to see why in 2019, the continent witnessed five mega deals in Branch, Tala, World Remit, Interswitch, and OPay that amounted to a total of over $775 million. While this dropped last year to $362 million, companies like Flutterwave, TymeBank, Kuda have raised sizeable rounds during this period.

fintech funding five years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Latin America is home to a growing base of digital users, enabling regulation and reforms, and vibrant small businesses. And just like Africa, the percentage of unbanked people is high at 70%. Fintechs in the region have seized the opportunity and have been rewarded with mega-rounds that companies like NuBank, Neon, Konfio, and Clip have enjoyed. Collectively, fintech startups have raised $10 billion in the past five years.

In 2019 alone, Indian fintech startups raised a record of $4.8 billion, per the report. Then last year, the sector brought in $3 billion. Over the past five years, they have totaled $11.6 billion with notable big names like CRED, Razorpay, Groww, BharatPe, among others.

Africa’s average seed rounds stand at $1M, India and Latin America average $4M

Per the report, early-stage deals in Africa have been increasing over the past five years totaling over $1.6 billion. Their average size, especially for seed rounds, has grown from $750,000 in 2017 to $1 million in 2020.

For  Latin America, the average seed deal in the last five years was around $5.7 million while India did approximately $4.6 million. The report says the data for the latter was skewed because of CRED’s $30 million seed round.

Image Credits: Briter Bridges & Catalyst Fund

Latin America is IPO-hungry, India breeds unicorns while Africa is just getting started with M&A

Last year, Stripe’s acquisition of Paystack was the highlight of Africa’s M&As because of its size and the homegrown status of the Nigerian fintech startup. Other larger rounds that made the headlines include the $500 million acquisition of Wave by WorldRemit (which happens to be the largest from the continent) and the DPO Group buyout by Network International for $288 million.

Unlike the African fintech market that has noticed mega acquisition deals and many undisclosed seven-figure deals, the Latin American fintech market is a sucker for IPOs. Per the report, fintechs in the region have several $100 million rounds (Nubank, PagSeguro,  Creditas, BancoInter and Neon) and M&A activity is sparse. But a number of them have gone public recently including Arco Educacao, Stone Pagamentos, and Pagseguro

On the other hand, India has more than 25 billion-dollar companies and keeps adding yearly. Just last month, the country recorded more than eight. These unicorns range from established companies like Paytm and new ones like CRED.

Payments, credit, and neobanks lead fintech activity

The report shows that payments companies are the crème de la crème for fintech investment across the three regions. Within that subset, B2B payments reign supreme. The next two funded fintech categories are credit and digital banking.

In Africa, payments startups have seen more investments than credit and neobanks. Flutterwave, Chipper Cash, Wave, Paystack, DPO come to mind.

most funded fintech categories emerging market

Image Credits: Briter Bridges & Catalyst Fund

Latin America most funded fintechs are neobanks. And it is the only region with all three product categories closely funded at $2-3 billion each. Some of these companies include NuBank, Creditas, and dLocal.

India’s top-funded fintech startups are in payments. But it has notable representation in credit and neobanks, some of which have raised nine-figure rounds like Niyo, Lendingkart, and InCred.

Investors are enthused about the future of insurance, payments, and digital banks

From the handful of investors surveyed in the report on their view on future trends in fintech products 5 years from now, most of them chose insurance, payments, and digital banking models.

Investment platforms and embedded models are also areas of interest. They were less keen on agriculture and remittances while wealth tech platforms and neobanks were also ranked lower in priority. How is it that digital banking and neo-banking are at two ends of the spectrum of investor choice? I can’t say for sure.

investors appetite in the coming years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Parts of the report talk about underserved consumers in these regions and how fintech startups are serving them. It also discusses whether these fintech startups promote financial inclusion and what features and products would get them to that point.

In all of this, the glaring fact, which is no news, is that Africa is lagging years behind Latin America and India. Talking with Briter Bridges director Dario Giuliani, he pointed out that he’d lean on five years for the continent to get to where Latin America and India are at the moment. He added that what makes India a better market at this stage is because it isn’t a continent like the other markets and operations are uniform across board.

“It is easier to manage one country than 54 countries in Africa and 20 in Latin America,” he said to TechCrunch. “In Africa, we use the label ‘Africa,’ but we’re very much talking about 4-6 countries. Latin America is basically Brazil, Mexico, Argentina and Colombia who are seeing massive companies rise. India is one.”

One key detail the report mentions is that most fintechs across emerging markets are crossing over to different sectors like crop insurance, credit lines for distributors and vendors, KYC, e-commerce payment gateways, medical finance, and insurance. Guiliani says he expects this to continue.

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Source: https://techcrunch.com/2021/05/06/payments-lending-and-neobanks-rule-fintechs-in-emerging-markets-report-says/

Fintech

Crediverso, hispanic-owned online financial products company raises $3.1 million in seed funding to offer services for the U.S. hispanic community

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Crediverso, hispanic-owned online financial products company raises $3.1 million in seed funding to offer services for the U.S. hispanic community

Crediverso, the Hispanic-owned personal finance products company, today announced the close of $3.1M in seed funding to launch a consumer fintech platform aimed at closing the wealth gap for the 62M+ Hispanic consumers in the U.S., including many who are underbanked. Crediverso’s powerful platform will be launched this summer and is designed for and fully dedicated to the Hispanic community. It offers the first Spanish-language credit checks and a bilingual comparison tool for a multitude of financial products, including money transfer “remittances,” the most essential financial vehicle for immigrants to support the basic necessities of their families living abroad.

Crediverso’s first round of outside investment was led by a group of investors including Bessemer Venture Partners, Act One Ventures, Point 72 Ventures and Clocktower Ventures. This comes amidst a recent fundraising context where of the $130B of venture funding that went towards all startups, only $1.5B went to Black founders and $72M went to Hispanic founders. This means that for every $100.00 of funding to the market in general, only $1.18 went to Black founders and $0.06 went to Hispanic founders.

The lack of financial services options for Hispanics is a lost market opportunity of over $1T, and limits opportunity for the Hispanic community. Crediverso aims to provide the tools to build wealth and reinvest in the Hispanic community. U.S. Hispanics currently spend more than $600B annually on financial products but have only a fraction of the access enjoyed by the general market.

Crediverso aims to disrupt the $700BN global remittances market as the only platform that lets users send money internationally using the cheapest available rate every time. “Individuals can be charged upwards of 15-20% to send money each time they transact,” said Carlos Hernandez, founder and CEO, Crediverso. “We empower consumers to compare options across all providers so they can find cheaper rates and send more money back to their families living abroad. You wouldn’t book a hotel room without comparing prices first, so why would you send half your paycheck without comparing prices?”

Crediverso’s offerings will be accessible via a free and all-inclusive financial products mobile-friendly platform where users can compare and access credit cards, loans, and insurance products. Crediverso will also be the first and only place where users can get a credit check in Spanish. Additionally, the platform will offer a live forum moderated by Spanish-speaking expert advisors where users can ask their money questions to personal finance experts and celebrities from within the Hispanic community.

“The U.S. Hispanic community is underserved by our current financial services system and Carlos has put together a fantastic team to solve this problem,” said Charles Birnbaum, partner, Bessemer Venture Partners. “We are thrilled to be supporting the company for this next phase of growth.”

Crediverso’s entire platform will be available in English and Spanish, and offered free to use for consumers. Crediverso will also provide free resources assisting with financial literacy like guides, how-to’s, and a full English to Spanish glossary of financial terms.

“The Hispanic community is the largest and fastest-growing ethnic group in the U.S., but it’s also the most underserved,” said Alejandro Guerrero, general partner, Act One Ventures. “As a low-income, first-generation Mexican-American, I saw firsthand my parents’ inaccessibility — like millions of Hispanics still today — to a credit-building journey that was designed for them as native Spanish speakers. Crediverso’s mission is to fix this long-standing broken issue and help generations of Hispanics close the wealth gap.”

Crediverso is actively hiring across a variety of roles to grow the team and plans to launch their full suite of products this summer. The company has already established partnerships with many of the largest global financial institutions, including US Bank, Western Union, Remitly, Transferwise, Worldremit, XE, Ria, Skrill and Bridge 21.

Crediverso was founded by Carlos Hernandez, an entrepreneur who holds three degrees from Harvard. Carlos comes from a Mexican-American family in Los Angeles that has long served the Hispanic community. Carlos decided against a career on Wall Street to dedicate his time to enriching the lives of Hispanics living in the U.S.

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Source: https://www.fintechnews.org/crediverso-hispanic-owned-online-financial-products-company-raises-3-1-million-in-seed-funding-to-offer-services-for-the-u-s-hispanic-community/

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Fintech

New Fintech Angel Investor Network Launched With Execs From Grab, PayPal and Stripe

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Senior executives from the largest fintechs in Southeast Asia have banded together to launch Fintech Angel Operators, a network of up to 100 angel investors bringing their on-the-ground expertise to early-stage startups.

The founding team, from Saison Capital and Finantier, came together with the common goal of nurturing the startup ecosystem.

Saison Capital brings with it a venture point of view while Finantier lends its perspective to building Southeast Asia’s financial infrastructure for young startups and large financial enterprises.

The Fintech Angel Operators network includes individuals who hold senior appointments at top-tier fintechs including Grab Financial, PayPal, Stripe, Revolut and Remitly.

Members of the Fintech Angel Operators network are investors with fintech operational expertise in Southeast Asia who are looking to invest angel-sized cheques into startups.

The group operates with a cohort-based syndicate structure and will include up to 100 fintech founders, executives and operators in its first batch.

Capital from the network will be deployed collectively by investors interested in the deal via a standard angel investment structure. This could include an special purpose vehicle (SPV) entity or AngelList.

For startups operating in specific fintech verticals like lending, remittance or payments, the network will bring access to capital from a curated group of operators in the region.

Investors in the Fintech Angel Operators network are selected via an internal skills matrix to ensure that each specific skill set required to run a fintech, such as hiring, building a technical stack or fundraising, is captured by the expertise of an operator in the Angel network.

The network is evaluating a number of deals and intends to close its first investments by Q3’2021.

keng low finantier

Keng Low

“Whether you’re facing issues with developing your business model, how to approach and work with regulators or facing specific hurdles like regulation – you’ll want someone in your corner who can give strategic advice and solutions from real experience on what works in Southeast Asia,”

said Keng Low, Co-Founder of Finantier and Co-Founder of Fintech Angel Operators.

Keng co-founded Finantier, which is building an open finance platform for SEA. Finantier recently graduated from Y Combinator and is backed by investors such as Addition, GFC and Partech.

Sagar Gupta, Stripe Startup Ecosystem Lead.

Sagar Gupta

“The venture capital ecosystem in Southeast Asia has developed at a rapid pace over the last few years. Yet, it’s rare to have a collection of angels that focus on operational value-add within a particular industry vertical.

I’m super excited to see the impact of the Fintech Angel Operators in the region to build a globally impactful ecosystem,”

said Sagar Gupta, Stripe Startup Ecosystem Lead.

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Source: https://fintechnews.sg/52123/funding/new-fintech-angel-investor-network-launched-with-execs-from-grab-paypal-and-stripe/

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Blockchain

Visa to acquire Swedish open banking firm Tink for €1.8 billion

Card giant Visa is set to acquire Tink, the Swedish open banking platform, in a deal worth €1.8 billion (roughly $2.15 billion).

The post Visa to acquire Swedish open banking firm Tink for €1.8 billion appeared first on The Block.

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Card giant Visa is set to acquire Tink, the Swedish open banking platform, in a deal worth €1.8 billion (roughly $2.15 billion).

The news comes less than six months after the termination of Visa’s planned $5.3 billion acquisition of Plaid, the San Francisco-based fintech firm – a deal that had encountered significant opposition from the U.S. Department of Justice.

Like Plaid, Tink’s platform allows customers to connect with more than 3,400 banks and financial institutions to access aggregated financial data, helping them to build innovative personal finance tools.

“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” said Al Kelly, CEO and chairman of Visa. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable and secure.”

As part of the Visa deal, Tink will retain its brand and current management team, as well as its headquarters in Stockholm, Sweden.

Tink last raised money in December 2020, when it secured €85 million (roughly $101.5 million) in a round led by Dawn Capital and Eurazeo Growth.

The €1.8 billion transaction, which includes cash and retention incentives, is subject to approval from regulators. Visa will fund the transaction in cash.

Powered by PSD2

Tink’s business model is in part enabled by the EU’s Revised Payment Services Directive (PSD2), which was put into effect in January 2018. The legislation requires banks to give third parties access to the customer data they store, with the aim of driving competition and innovation in financial services.

But the PSD2 framework also paved the way for new payment functionality that allows consumers to make payments directly from their bank accounts without having to rely on intermediaries, like card networks.

In recent months, account-to-account payments have garnered a lot of attention from crypto startups, which see it as a potentially cheaper and easier method of funding wallets.

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Source: https://www.theblockcrypto.com/linked/109441/visa-acquire-european-open-banking-tink?utm_source=rss&utm_medium=rss

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Blockchain

Exclusive: Financial Technology Provider EXINITI Announces Its Official Launch

The UAE-based technology company is offering comprehensive services to global FX and CFD brokers.

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EXINITI, a Dubai-based financial technology firm, announced today that the company has officially launched its services. Founded by Mohamed Rashad, an industry veteran, the company aims to facilitate international FX and CFD brokers through innovative technology services.

According to an official press release shared exclusively with Finance Magnates, services from EXINITI will support emerging companies as well as well-established businesses in the global financial markets.

Bank Account Alternative. Business Account IBAN.

The company highlighted that its core offering has various services, including an online and scalable CRM package, back-office support systems, client/IB portal solutions, MT5/4 white label solutions, and support with customizable website integration and development.

Additionally, the company will provide extensive support to the brokers including web development and hosting services to help the companies run their operations smoothly and efficiently.

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Commenting on the official launch, Mohamed Rashad, CEO and Founder of EXINITI, said: “EXINITI was founded because there was a gap in the market in terms of technology-related advancements and support for financial services. EXINITI provides everything a Forex and CFD brokerage requires to get set up correctly from day one. We have also perfected the solutions needed to run a brokerage’s day-to-day operations smoothly and in the most efficient and scalable way possible.”

In addition to the mentioned services, EXINITI allows for integration with the most commonly used payment solution providers in the industry.

Mohamed Rashad

The CEO of EXINITI has extensive experience in the global financial markets. Before founding EXINITI, Rashad worked with several brokerages, including MultiBank Group and Equiti.com. In his latest role, he worked with FXGate as Head of information technology.

“EXINITI which was founded at the end of 2020 and has its headquarters in the UAE combines technology and functionality to bring to life a suite of new tech and know-how for brokers. The technology provider has launched its website that describes the full suite of brokerage set-up and management solutions that are on offer for financial enterprises to deliver the ultimate experience for their clients,” the company added in the official announcement.

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Source: https://www.financemagnates.com/fintech/exclusive-financial-technology-provider-exiniti-announces-its-official-launch/

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