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Fintech Opportunities in Latin America

The current state of the fintech industry creates opportunities for players in this industry to better serve existing customers, LatAmGrowth SPAC noted.

There is a large gap in the supply and demand of financial products in Latin America given that consumers in the region are very unbanked or underbanked.

For example, according to the National Banking and Securities Commission (CNBV) and the National Institute of Statistics and Geography (INEGI), more than 50% of the Mexican population is not banked, more than 30% do not have financial products and only 31% has credit products.

These dynamics make the economy of the Latin American region highly dependent on cash, with more than 90 and 70% of payments in Mexico and Brazil in paper money, respectively, according to PYMTS and Cardtronics.

Additionally, the banking market in Latin America is extremely concentrated with the top five banks accounting for 69, 70 and 70% of loans in Mexico, Brazil and Colombia, respectively, according to Fitch Solutions and the Colombian Financial Superintendence. These data compare with 56% in the United States.

So the current state of the fintech industry creates opportunities for fintech players to better serve existing customers, introduce consumers to the formal financial system for the first time, and introduce electronic payments and other solutions.

Fintech

LatAmGrowth SPAC believes that the region’s strong fundamentals will translate into attractive opportunities in a wide range of sectors.

Additionally, there are certain industries that he believes are structurally more attractive than others, given a stark supply-demand gap accompanied by new technology and e-commerce drivers.

Also, 80% of the Latin American population lives in urbanized areas, so consumers are concentrated and easier to reach through shipping (e-commerce).

Latin America has the fastest growing smartphone penetration rates, currently around 69%, and is expected to reach 90% by 2022, according to GeoPoll, with internet use becoming more widespread.

The number of Internet users as a percentage of the total population is 64, 62, and 82% in Mexico, Colombia, and Chile, respectively, according to the World Bank, compared to 87% in the United States, according to the World Bank.

These strong fundamentals have translated into a strong boost for private equity within the region, with the value of private equity deals growing at a rate of approximately 52% between 2017 and 2021, reaching a value added of $16.4 billion. dollars, according to Preqin.

 

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