Our guest highlights the importance of a local approach when doing business in the region and showcases the enormous impact of artificial intelligence in the financial industry. Join our CMO and discover the opportunities that digitalization offers in LatAm!
We continue our engaging interview with one of the most influential leaders in the Fintech industry. In the first part, we explored valuable insights from Latinia’s successful entry into the market. Now, we delve into the strategic importance of building local teams, key takeaways from Kalonia Venture Partners, and the upcoming challenges and opportunities that lie ahead for the Fintech sector.
Diversity as a means to enrich a company
“The local team is fundamental when creating alliances in Latin America,” said Oriol. It always depends on the chosen strategy, whether it targets a single market, like Mexico, or several. In the first case, one ideal option is for one of the founders to move there. With Latinia, they decided to have a leader based in a strategic location serving multiple markets from one geographic point: Colombia.
Oriol Ros i Mas,“As an investor, I recommend that one of the co-founders commits to making the move and establishing residence in Latin America”
Founder & Managing Partner at KVP.
For them, the role of the country manager was crucial in providing premium service. “If a client is investing two million a year, from day one, they’re going to insist on having someone there.” The country has high talent levels, “especially when it comes to engineers,” he commented.
“We’ve alternated between different options over the years, but now, as an investor, I recommend that one of the co-founders commits to making the move and establishing residence there,” he said. He also emphasized the necessity of working with local teams to enrich and adapt the offerings.
Technology and financial inclusion: A new scenario for Latin America
Personalization and new technologies in the banking sector
Juanjo then asked our guest what technological trends are helping to bank the population in LatAm. Oriol emphasized that the new ways of enhancing the customer journey and achieving hyper-personalization of content are transforming the financial landscape in the region.
“Bank customers are so accustomed to poor treatment that when they receive the right message at the right time, their relationship with the institution transforms. With artificial intelligence, it’s possible to go beyond one-on-one and truly take care of the user. Latin America is still cash-heavy, which is a challenge when it comes to digitalizing the user experience.”
Democratizing credit through alternative scoring
The executive explained that lending and payment systems account for half of the Fintech investment in the region. Banking in Latin America has realized that alternative scoring systems open doors for people who were previously excluded for not having an official financial track record.
For example, having access to information on contracts and payrolls allows startups to offer loans with guarantees. Often, this breaks the vicious cycle of: “Since we’ve never granted you credit before, we won’t offer it to you now.” And in LatAm, “deposits are being incentivized with high yields (up to 15%), precisely to enable lending.”
SMEs: Digitalization and automation as growth tools
The discussion then turned to how Mexico has become a commercial partner of the U.S., driving the technology applied to nearshoring. This allows, for example, improving the efficiency of a truck fleet, streamlining insurance, and enhancing everything related to logistics. “There’s a lot of basic infrastructure being built in just weeks. We’re even talking about building roads for those trucks.”
“I have a lot of faith in the automation of SMEs. It’s an enormous market.” Oriol explained that it’s not just about digitizing their processes but automating them. The challenge is competing with the low hourly cost of someone filling in an Excel sheet, for instance. Given the low cost, they hardly even consider investing in a Saas solution.
Key factors for Kalonia Venture Partners when investing in Fintech
The conversation then focused on Oriol’s role as an investor in Fintech. Juanjo wanted to know what aspects Kalonia Venture Partners value when distributing resources. “As we invest at a very early stage, I’d say the primary factor is the team. We’re not betting on the horse but on the jockey,” Oriol asserted. Ultimately, Fintechs can (and should) pivot within a few months.
“We require investing in someone who aims to pursue a path very similar to the one we took ourselves. We have a manual on all the potential mistakes.” The executive stated that they can help someone save eight months in the sales process to a bank or direct them to the right person within the institution.
💡 Oriol Ros i Mas said…
It’s crucial to have a strategic vision of our client within the bank: Are there third parties who could halt the contracting process? Does the department have a budget?
This basic information enriches the pipeline. Juanjo took on the role of a banking executive looking for a tech partner. “Why do you think they should choose a provider like Latinia or Coinscrap Finance over a larger company?”
Oriol emphasized the need to appeal to their courage. Assuming the temporary risk of trusting a “newcomer” means the bank has the chance to do something big: become an innovation leader, increase its profits, attract a younger clientele, grow its NPS… The benefits are numerous; they only need to overcome the initial resistance to change.
The three phases in the relationship between banking and Fintech
As a History graduate, Oriol draws a comparison between the Banking-Fintech relationship and that of the Romans and barbarians. “I tell Latin American bankers: Over the past 15 years, your relationship has gone through three phases.”
“At first, American B2C Fintechs established neobanks intending to shake the foundations of traditional banking. Thanks to their economic muscle, banks were able to regain ground through million-dollar investments to continue growing their customer base.”
“This format, applied to the Roman world, signifies war. In the second phase, when the Romans decided to ally with some barbarian tribes to defend against the more violent hordes, they saw it as a wise investment. However, in practice, it meant entering the startup’s Cap Table.”
For Oriol, it’s the same in the world of financial technology: “Having a Fintech ally allowed traditional banks to reach a third phase where the Romans no longer want alliances; they want mercenaries.” This way, client-provider agreements are established, which he considers the ideal phase, where the bank gains new ideas, cutting-edge technology, and fast results.
The future of payment systems in Latin America
Juanjo was delighted with the analogy and wanted to involve our guest in one of Coinscrap Finance’s Meets traditions: Facing the final question, “What technology do you think will most change the financial industry in the next 5 or 10 years?”
“I would rather talk about applications than about a single technology. It would be easy to mention quantum computing, artificial intelligence… but the interesting part is trying to see what we can do with them. In other words, what service are you going to build on top of that technology? I still believe in the need to reduce payment friction.”
“We need to establish alternatives to traditional payment systems and focus on the pre and post-payment stages. That is, the payment incentive and the reward for making the payment. To me, this is still a global pain point, especially in Latin America.”
With these words, we finished our chat with one of the greats of the international Fintech scene. We would like to thank Oriol Ros i Mas for his generosity in sharing insights from his life and career. To our dear audience, stay tuned because we’ll be back soon with a new episode of Coinscrap Finance Meets.