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7 Emerging FinTech Players In Top Latin American Markets

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Talk about fertile ground for fintech companies: In 2014, according to the World Bank, only about half, 51%, of all adults in Latin America and the Caribbean had a bank account, and only 14% had formal savings. Mexico, Peru, Chile and Colombia, collectively the hot spot of recent economic development in Latin America, have about 200 million people.

A host of companies recognize the opportunity, including many from elsewhere in the world that are expanding into Latin America. One of those is Fintonic. a personal finance app that has 350,000 users in Spain. Founded in 2008, it is leveraging its success -- and the Spanish language advantage -- to open an office in Chile, with expansions soon to come in Mexico and Colombia.

I talked to Fintonic's founder Sergio Chalbaud, earlier this month about the landscape for fintech companies in Latin America. Fintonic reminded me of Mint. It connects to your bank account, analyzes activity and offers advice on better spending "by providing real-time alerts, warnings and updates." Investors include Ideon Financial Solutions, Onza Capital, Inception Capital and Atresmedia; Fintonic is expected to be profitable next year.

Here's what's striking: This company looking to expand decided not in the developed "safe" space of Europe, but in Latin America. "We considered Europe as our market, but decided that the opportunity was bigger in Latam and we have some additional competitive advantages in the region," said Fintonic CEO Sergio Chalbaud. He noted by email that the company shares the language. That "looks trivial, but is very important, since everybody in the team can look at the customer support log or social media and understand how the users are reacting to our proposal."

"Secondly we are following the path that the top banks in Spain (BBVA and Santander) opened for us 15 years ago when they decided to have a strategically position in the region. Both this banks have subsidiaries with dominant market shares in Brazil, Mexico, Chile, Colombia and Peru among others."

Fintonic makes money by partnering with banks, which advertise on its platform and generate leads, too.

Fintonic isn't the only company that realizes the potential of Latin America. Problems in Brazils' economy are overshadowing the promise in the rest of continent in some American eyes. But the five Pacific Alliance members (the countries mentioned above plus Costa Rica), with a collective GDP of $2.2 trillion, are expected to grow 3.3 percent in 2014, and 4 percent in 2015. And the finance sector is likely to be at the forefront of that growth. It's worth noting, for instance, that the number of adults in Latin America with bank accounts is up to 55% from just 39% in 2011; things are changing fast.

But there are plenty of obstacles. The lack of financial services, while it makes for a wide-open market, also means that establishing trust and building familiarity is a challenge. And, Chalbaud said, about 90% of the market is controlled by about five big banks. That means that if they don't cooperate with Fintonic in aggregating consumer behavior, the Spanish company could have a big challenge. (Mint and other fintech companies have faced similar challenges in the United States, where big established players dominate finance).

I asked Chalbaud for some ideas for other Latin American fintech companies that are of interest. Here's a quick list of those he sent, supplemented by a little of my research. Many aim at the space occupied by Square in the United States, with hardware and software to make it easier for merchants to accept payments from consumers. In the United States, Square is a convenience; in developing markets in Latin America, where cash is still a primary financial vehicle, a Square-like innovation could have a profound effect because it speeds the economy.

Clip. Pando covered this Redwood City-based startup, which is a Square-like payment processor that has raised more than $5 million; it competes with Sr. Pago.

iZettle. This Swedish startup is marketing an Apple Pay reader in 11 countries, including in Latin America.

Catarse is a Brazilian crowdfunder that has raised 32 million Brazilian Reals on its platform. So far, 223,000 people have backed at least one project on the platform.

Klarna. This Swedish company, which helps online merchants accept payments, is not exactly a startup: It has more than 1,200 employees and $319 million in revenue in 2014. But after taking a major slice of the European market, it's moving into the U.S. and Latin American markets and hired a former American Express executive, Michael Rouse, to help it.

And then there's this interesting company targeting the Hispanic market in the United States. Redwood City-based Oportun offers loans of between $300 to $6,000 to people in California, Texas, Illinois, Nevada and Utah, even those without a bank account.

Finally, you have to add MercadoLibre, the groundbreaking Argentinian e-commerce platform sometimes called the Amazon of Latin America, that is now moving into mobile payments.

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