Happy Wednesday FinTech Fanatic!
In a significant development last week, the Central Bank of Brazil revealed its 14 picks for the pilot initiative of the Digital Real, set to commence in mid-June. Out of 36 candidates representing over 100 companies, 14 were chosen to participate.
The participant pool encompasses traditional and digital banks, payment processors, credit unions, and operators of financial and cryptocurrency infrastructures: Bradesco, Itaú Unibanco, Santander (with Santander Asset Management, F1RST, and Toro CTVM), Banco do Brasil, BTG Pactual, Nubank, XP and Visa (the only significant card provider selected), Banco B3 (with B3 and B3 Digitas), Banco da Amazônia (Basa) (with TecBan, provider of the Banco 24 horas ATM network, Pinbank, Dinamo, Cres This pilot, marking the second phase of Digital Real testing, will last for an estimated 18 months, starting in mid-June.
The testing is primarily centered around privacy and programmability features, utilizing delivery against payment (DvP), with a federal public bond trade between two financial establishments being the initial use case.
The goal is for each participant to experiment with the redemption, issuance, and transfer of the asset - and its subsequent financial flows - based on its unique business model, without involving real transactions or values. The Central Bank did not select consortium applicants that did not include at least one regulated financial or payment institution with existing access to the National Financial System network.
This exclusion was not surprising since the bank had previously indicated that crypto-native participants should form partnerships with traditional financial institutions to be considered.
Now on to other FinTech news, I listed for you this week:
REPORT
Fintech and SME Finance: Expanding Responsible Access
Access to finance is a critical barrier for SMEs to start, sustain and grow their businesses. About half of the formal SMEs do not have access to formal credit and instead rely on internal funds, or cash from friends and family, to launch and initially run their businesses.
An extensive survey of SMEs in 135 countries showed that access to finance was reported as the most serious obstacle to the current operations of businesses.
👀 NEWS HIGHLIGHT
LatAm FinTechs propose joint open finance regulation.
In a landmark development, FinTech associations from Mexico, Colombia, Peru, and Chile made a significant stride last week by publishing a document proposing joint standards for Open Finance.
👨💻 BLOG
FinTech valuation dip – Correction or crash?
In this WhiteSight blog, Risav Chakraborty and Kshitija Kaur expand upon their analysis from last year, which focused on public market FinTechs, to encompass the noticeable downward trend that has now also permeated private markets.
💬 INTERVIEW
Ecuadorian FinTech Kushki says it is now entering the Mexican market as an acquirer. Its goal is to become “a major player in Mexico without the intermediation or dependence on a bank sponsor.”
💡INSIGHTS
WhatsApp says hello to the Banking & Payments world in emerging markets:
As digital payments and mobile wallets gain traction with growing internet access, tech biggies like WhatsApp are stepping in to fill gaps left by traditional banks.
NOW, ON TO THE SUMMARY OF LAST WEEK'S NEWS
☕️ REGIONAL HIGHLIGHTS
⭐️ Kapital raised $20 million in Series A funding and $45 million in a debt facility, less than a year after securing a $8.6 million seed round.
⭐️ Nubank released a new feature called Extra Limits, which allows bank users to perform transactions via Pix in the credit method. Nubank also became the second-largest bank in Brazil by market capitalization.
⭐️Bitfinex expands in Latin America with Orionx Acquisition.
⭐️ Trébol secured $3 million in seed funding to help modernize how companies in Latin America are onboarded.
BRAZIL
The Brazilian Central Bank has revealed the firms it will work on for its central bank digital currency pilot – and the list includes the crypto-keen neobank Nubank.
Nomad announced it was rolling out a rather innovative product. The fintech, which since 2019 has offered dollar accounts to Brazilians, will now allow its customers to pay in installments for purchases made abroad.
Ebury announces plans to strengthen its proposition in Brazil and Latin America.
COLOMBIA
David Vélez, the co-founder and CEO of Nubank, has once again secured his position as the wealthiest individual in Colombia.
Rappi launched a credit card product that has not achieved anticipated growth says iupana. Despite aggressive marketing, user adoption remains below expectations.
MEXICO
Citigroup said it plans to pursue an initial public offering of its Mexico business Banamex, scuttling a 16-month effort to find a buyer for the unit.
Mexico’s bank regulator CNBV approved FinTech Ualá’s purchase of ABC Capital, allowing the company to move forward with a merger that finalizes its path to a banking license in Latin America’s second-biggest economy.
CHILE
Tenpo is on the verge of receiving a license to offer credit cards, marking a significant milestone toward its goal of becoming Chile's first neobank.
MOVERS & SHAKERS
Eduardo Moore, formerly with Nubank and Bitso, is joining Clara as their new product director in Brazil.
Nathan Marion, previously with Adyen, is now the general manager of Yuno in Brazil, aiming to strengthen the FinTech's local operations.
If you are a fintech startup and have over 100 questions send me an email, maybe I can answer a few.