Is Latin America a new Asia?
India has surpassed China as the top recipient of fintech investment in Asia for the first time, according to a report from CB Insights, but... Latin America surpassed both of countries topping the number of investments and value of those. Seems that Latin America continues to be an emerging hotbed of financial technology growth, while on the opposite end of the spectrum Asia’s fintech industry remains caught in a downward spiral.
Take aways:
Latin America topped both China and India in fintech funding in Q2, with 23 deals worth $481 million.
Deals in China’s fintech sector fell 81% in Q2 to a five-quarter low of 15.
India, which saw 23 deals at VC-backed companies, surpassed China as Asia’s fintech hub.
In terms of investment, China saw $375 million in funding.
India’s funding was $350 million.
Stricter regulation of online lending and other consumer finance areas have contributed to the plunge in Asia.
Investment activity in Asia’s fintech sector dropped to near-historical lows, the report states, while funding grew steadily globally to hit $8.3 billion.
And...
“Latin America continues to attract major global tech players pursuing market expansion,”
LAVCA stated in its report.
“Payments emerged as an area of focus in 2018/2019, with notable activity from Amazon, Apple Pay, Google Pay, MercadoLibre & MercadoPago, PayPal, Stripe, Visa, and others.”
Several LatAm fintech startups are helping to drive the growth, including Mexican electronic payments company Clip, which has raised $147.4 million in funding, and Argentina’s digital banking services firm Technisys, which has garnered $64 million in funding since 2014.
Donna Parisi, global head of finance and fintech at Shearman & Sterling in New York, noted that
“digital startups are disrupting the financial services market in the region, which has historically been dominated by large banking monopolies with high barriers to entry".
“Startups like Nubank, a Brazil-based company, have come in to offer individuals easier access to bank accounts and credit cards which makes Latin America’s large underbanked population a ripe group in which fintechs can flourish,”
she summarises and adds:
“The region’s fast growth in smartphone and mobile internet usage is also paving a path for new mobile payment solutions in these countries to proliferate.”
Zooming out for a global view, fintech deal activity dropped 23% compared to the same quarter last year. But investment remained strong at more than $8.3 billion for the second quarter as a result of several major investment deals for more than $100 million, primarily to established fintech startups.
CB Insight report, Q2 2019.