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Bank + FinTech: Investing in collaboration

Publish date: 11 January 2019

Silvia Cunill, Efma’s, regional manager for Iberia, Africa and Latam, looks at the developing relationship between banks and fintechs across the region.

The Spanish market includes the most important neobanks from Europe. N26 and Revolut already have more than 100,000 Spanish customers. Their value proposition is simple products, which are easy to understand and free. Some players have begun to prepare a freemium offer.

Some local neobanks are challenging the big Spanish banks, focusing on major cities like Madrid or Barcelona. Both cities are developing fintech hubs and competing with the main hubs in Europe to attract talent and projects. Examples include Kantox, a competitive app for exchanging currencies or BNC10, a new challenger bank that is looking for its place in the market with a very easy and free solution. Both are based in Barcelona.

Traditional banks also have new solutions for millennials, for example Imaginbank by Caixabank. Others, like BBVA have begun a complete digital transformation. It has created an easy online banking app that has twice won the award for the best banking app in the world. Santander also has a strong commitment with fintechs and has invested in some using blockchain.

All the main banks in Spain – such as Santander, BBVA and Caixabank – have open banking strategies, not only because of PSD2 but as an opportunity, and they are investing in fintechs to collaborate with. Some of them are thinking of developing a marketplace, fighting against legacy IT but trying to give their customers a better experience.

We are also seeing some new proposals for affluents in the market, such as indexacapital, Finizens or Merkaat, which are trying to approach customers who are dissatisfied with the traditional retail banks.

According to KPMG/funcas, in Spain there are about 300 fintechs, of which 20% are competing with banks, 32% are collaborating with them and around 48% are providing complementary services.

In South America the main fintech ecosystem is Brazil with around 370 fintechs, followed by Mexico and Colombia. All these markets have exploded in last two years. Of special note in Latin America is Bradesco in Brazil with its program inovabra and inovabra ventures, which is helping and investing in a startup ecosystem. The main activities developed by fintechs in this region are payments and remittances, consumer lending, enterprise financial management and crowdfunding. However, special attention must be paid to all the fintechs related to wealth management, which have experienced significant growth similar to other markets.

In Africa, fintechs are helping to build financial inclusion. Many rural areas are without bank agencies, so they have found solutions for all these unbanked people. With the developed countries’ technology, African consumers have been able to jump in straight to the new, frictionless mobile infrastructure forgetting big investments in ATMs or local branches. As well as fintechs serving these people, mobile-network operators are complementing traditional banks, especially in payments and wallets.

Nigeria, Kenya and South Africa are the leading markets in fintech. Organizations such as Standard Bank, which is present in several countries in Africa, are embracing digital technologies through fintechs and increasingly acting like a fintech to develop new solutions for customers with a quick time to market.

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