In Latin America, progress in regulations or legislative discussions to allow greater integration and transparency of banking information – open banking or open finance – is driving the international expansion of regional technology companies that specialize in these areas.
As more countries regulate and allow open banking, companies previously dedicated to one market are finding opportunities to expand and grow their customer base. The same applies to the new electronic payment rules.
For example, Sensedia, a Brazilian application programming interface (API) management platform focused on the financial sector, has launched operations in Mexico looking for opportunities in open banking and payments.
“We started the process six months ago with search activities in Mexico. We already have two contracts, new contracts, with companies operating in Mexico, one of which is an international insurance company headquartered in Germany,” Sensedia’s Latin American business director Alexander Gomes told Binamerica. They said.
Sensedia focuses on banking, payments, insurance and retail in Mexico. The company started operations in America this year.
The company has grown by 70% in the past year, which Gomez attributes to the growth of e-commerce, open banking and marketplace platforms, as well as electronic payments and digital wallets, all of which rely on the use of APIs.
“At least half of our growth is related to being uniquely ‘open’. [open banking, open insurance, open finance]. “I call it ‘open everything,'” he said.
In the year In 2021, the company received a 120mn-real (US$23.4mn) contribution from Riverwood Capital and 80% of the proceeds will go towards international expansion, Sensedia co-founder and head of development Marcelio Oliveira told BinAmerica.
The company reports that it has about 200 customers for all markets, 30 of which are related to its banking operations in Brazil, according to Gomez.
Banks in Brazil include Original and BMG, pioneers in the integration of APIs for payment systems in the country. The latter has implemented the first API implementation for Brazil’s instant payment system PIX, using the Sensedia platform, according to executives.
Executives see Brazil and Colombia at the forefront of open banking maturity, with Mexico coming next, “gradually.” Gómez also said that Brazil is the first country to regulate open insurance.
“Other countries all want to have a standard open banking architecture. At least they should have compatible technology, the executive said.
Sensedia has been supporting companies with technical solutions since 2007, and its products and services include API Management Platform, Adaptive Management and Cloud Connectors, among others.
The company has offices in the UK, Ireland, Germany, Spain, Switzerland, Lithuania, Peru, Brazil and now Mexico and the US.
Competing with multi-product global players such as Google, IBM, Microsoft, Red Hat, Software AG, TIBCO and Axway, among others, the group’s ultimate goal is to have up to 30% of the “modern application platform” market. To Gomez.
PROMETHEUS
Another API company that is moving to expand globally following the growth of open banking is Uruguayan company Prometeo, which claims to be the largest open banking platform led by women in Latin America.
Earlier this month, the company rolled out its account-to-account (A2A) payment solution in Latin America, which was available in Colombia, Peru and Uruguay. Prometheo plans to open an office in Mexico by the end of the year.
“Prometeo’s founding team is from Uruguay and the first APIs were created in that country, so that’s where we have the most experience building infrastructure. “We are facing something similar with Peru, which is our strongest market and where we have more interest in this product,” Ximena Alemán, founder and CEO of Prometeo, told BNamericas.
“What happened with Colombia was that the regulatory framework for the payments startup was recently introduced and it seemed strategic for us to be the first to offer this solution in that market. We also have organic interest from customers in all markets who are already testing our solution.”
The payment solution enables Prometeo customers to integrate bank account payments across their digital channels through the Prometeo platform.
According to Alleman, the payment infrastructure is “a natural next step for open banking in the region.”
The Prometheo API platform hosts more than 40 financial institutions and more than 110 APIs in 10 Latin American countries.
Market
Brazil, the region’s largest financial market, is at the forefront of open banking regulation given the breadth and complexity of its system.
Mexico is among the first to implement open banking regulations in the region. Colombia, Chile and Argentina are in the early stages or have proposed regulatory proposals.
Globally, open banking is projected to blossom into a $43.1 billion market by 2026, according to Allied Market Research. The data platform identified 1,578 banking platforms with APIs available at the end of Q2, an 8% year-over-year increase.
According to Platform, 80 countries will have open banking laws in place by the end of June, and 75 are either implementing open banking laws or close to doing so.
In Brazil, an April study by Cerasa Experian estimated that open banking could inject 760 billion reais of credit into the economy over 10 years, of which 461 billion would go to individuals. In five years, the amount for individuals will be 94bn riyals.
In Brazil, participation in the data sharing ecosystem is limited to companies authorized by the central bank and must provide dedicated APIs for data sharing.
“As the system matures, the flexibility is natural and the benefits are becoming more known, the trend is the access of institutions to open finance and open insurance, as well as the number of users who have permission to share information.” Loren Pazzetto, Head of Open Finance at Grupo FCamara, a digital transformation consulting group focused on e-commerce and finance.
In July, FCamara raised 100mn reais in a revolving credit facility from BTG Pactual to make acquisitions and internationalize its operations. The company is targeting revenues of 500mn riyals by 2022
In addition to Brazil, the company operates in Portugal, Mexico and the United States, and plans to enter Colombia and England in the coming months.
Last week, Mexico-based open banking/finance API platform Belvo received an undisclosed investment from Citi Ventures, the investment arm of Citi Venture Capital, adding to US$43m previously raised in Series A rounds. Proceeds go toward product improvement and expansion.
In the year Founded in 2019, Belvo claims to connect more than 60 financial institutions through its API platform.
It also works with more than 150 clients, including Citibanamex, the second largest bank in Mexico and part of Citigroup, as well as financial institutions and fintechs in Mexico, Brazil and Colombia such as Tribanco, Rapi, Mobiles and Mercadolibre, he said.
