Latin America has five fintechs among the most innovative in the world. The fifth edition of the Fintech100 report produced by consulting firm KPMG in conjunction with Australian venture capital firm H2 Ventures features two Brazilian neobanks–Nubank (16th) and Banco Inter (28th)–and the startup focused on secured credit Creditas (41st). They are among the 50 most innovative and consolidated fintechs in the world.
In the second sublist, of the 50 emerging fintechs that are at the forefront of financial technology, are the also Brazilian Rebel, focused on personal credit, and the Argentine Ualá–in this second selection there is no rank, just a list of fintechs highlighted in alphabetic order.
The veteran and the rookies
In the top 50, Nubank is already a veteran, but has lost positions over previous years. It ranked 12th in 2017, 7th in 2018, and now is on the 16th position. Perhaps the explanation for this lies in the astonishing rise of the Asian fintechs.
Overall, China dominates the report, with Ant Financial, Alibaba‘s financial arm, topping the ranking, along with nine other fintechs listed. Next comes the United States, with 18 fintechs.
Banco Inter and Creditas debuted in the report in this issue, and already in relevant positions. Both received part of SoftBank‘s massive investments in Latin America in 2019–in the case of Banco Inter, indirectly through the purchase of shares.
While Banco Inter celebrated the milestone of 4 million users last December and the move to a new headquarters, which could house its 1,500 employees, Creditas launched new credit modalities, announced its arrival in Mexico and also the creation of a technology center in Spain.
The consistent rise of Banco Inter
One of the criteria observed by KPMG and H2 Ventures for the Fintech100’s selection is the capital increase of the assessed fintechs over time. In the case of Banco Inter, this is a result of a set of factors that have strongly attracted local and foreign investors.
Unlike other fintechs that focus on banking and financial services, Banco Inter is a profitable company. In the third quarter of last year, for example, the company achieved a net profit of BRL 11.8 million with total revenues of BRL 297 million in the period, an increase of almost 40% over the third quarter of 2018. In the year, the company recorded a net income of BRL 56.8 million until September, a growth of 19.6% over the same period of the previous year.
And differently from other Latin American competitors, Inter is, in fact, a bank. It has a growing credit portfolio, focusing not only on individuals but also on micro and small entrepreneurs, an investment arm, called ‘PAI’, and a range of possibilities yet to be explored, and with experience in the Brazilian regulatory environment to do so.
No wonder, in August of last year, according to a survey by consultancy Economatica for the Brazilian newspaper Valor Econômico, was the most valued bank in the world (447.54%), with estimated market value of BRL 16 billion. The high appreciation was also influenced by a large new investor, who joined the company just a month earlier.
In late July, the fintech raised BRL 1.25 billion (more than $300 million) in a share offering that was mostly won by SoftBank through a Miami-based investment manager called LA BI Holdco LLC. The Japanese company took 8.1% of Banco Inter after disbursing BRL 760 million for 19 million units (groups of shares).
When it debuted at the Brazilian stock market in April 2018, fintech had 435,000 customers and was valued at BRL 1.9 billion. Today it has an estimated market value of over BRL 11 billion and expects, based on the current pace, to reach 8 million customers by the end of 2020. SoftBank, after acquiring more shares of controlling families, now owns almost 15% of the Brazilian fintech.
In an interview with LABS, Banco Inter’s investor relations director, Helena Lopes Caldeira, explained that this set of factors, combined with a rapid decision-making structure that facilitates the establishment of partnerships, is what make up the great Inter’s differential when compared to other Brazilian companies: “Inter’s ability not only to attract (new) customers, but to monetize this customer base,” said Helena.
The launch of Banco Inter’s super app last November is a direct proof of this; debuted with over 60 partners in a kind of marketplace for financial and non-financial products and services.
Helena confirms that there is an international expansion plan in course, starting with Latin American countries, as Nubank and Creditas have been doing, but that it will not be implemented in the short term.