The emergence of fintech startups has forced banks to adapt to new business models and increasingly dynamic and inclusive ground rules.  The Latin American region known for it’s highly unbanked population, has been an epicenter of upcoming companies uncovering the demand for alternative financial products.

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These fintech companies emerge as game changers, shifting the ecosystem where technology, transparency and the elimination of bureaucratic processes predominate.  They also come to light with the ultimate goal of financial inclusion, especially in regions such as Latin America where large masses of people are excluded from the banking system. 

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For instance, companies like Rappi (a Colombian delivery platform) and Davivienda bank have decided to join forces to create the digital bank, RappiPay Davivienda. Rappi contributes with its capacity for technological innovation while Davivienda assists with its banking experience in offering security schemes and protocols. The purpose of RappiPay Davivienda is to boost digital payments and insurance in Colombia by reducing access and transaction costs, minimizing the use of cash and strengthening the growth of exchanges. The new project will allow people to have a free bank account despite their lack of credit history.

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Neon is a Brazilian company that offers a similar service as a bank, except that it is completely digital and much easier to access. It allows people to open an account and to obtain a debit and a credit card without having to go to a branch and with no maintenance or account opening fees. To start operating you just need a cell phone and an ID. 

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Similarly, Ualá is an Argentine fintech that offers prepaid Mastercards and was initially conceived with the aim of improving financial inclusion in those countries where it operates.  It seeks to change personal finances by offering an innovative product linked to a Mastercard, providing low costs and no branches. Through their mobile phones people carry out different types of transactions, from transfers to paying their bills and without extra costs such as shipping, app download, consumption, renewal or money transfer.

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Nubank, is another illustration of this fintech boom that employs financial technology to provide a more transparent and less bureaucratic service for the clients. Among some of its services, it offers a free credit card, managed from an app and a tax-free digital account. This reduction in customer costs allows Nubank’s products to become more accessible to people who do not have the resources to maintain an account.

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In the subject of personal loans, the emergence of fintech companies, such as credolab, has democratized access to credit allowing better financial inclusion, especially in countries where a large part of the population have no credit history. Credolab makes use of robust data collection systems that, through artificial intelligence, enable the design of reliable credit profiles and improve the credit score of previously excluded people. The precision with which the algorithms works allows companies to include new people to their portfolios without incurring greater risks for loan companies, even if they are not part of the banking system.

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In sum, new market players with an increased technological capacity have forced the entire industry to reinvent itself and to think of innovation as a continuous exercise. More importantly, these players have allowed the emergence of new market niches, previously unthinkable, forcing companies to eliminate entry barriers such as maintenance costs, long and bureaucratic processes or a qualified credit history that previously prevented a person from accessing a financial product.