The digital banking sector in South America has been growing steadily, with now over 30 neobanks in the region. Digital banking platforms currently serve more than 50 million consumers out of the region’s (approximately) 430 million residents, according to the latest data from Dutch Fintech consultancy company Fincog.
These new challenger banks have launched operations across the whole Latin American (LatAm) region. However, neobanks haven’t established a meaningful presence in certain countries such as Bolivia, Ecuador, French Guinea, Guyana, Paraguay, Suriname, and Venezuela. These nations, which have been struggling economically, have not yet welcomed their first major, native neobank, the research from Fincog confirms.
Notably, Brazil is now a leading neobanking hub in South America. The country is home to 19 Fintechs among which Nubank, a financial technology Unicorn, is currently the largest banking challenger in LatAm. It was last valued at more than $10 billion.
Established in 2013, Nubank offers various banking products and services such as NuConta, a digital account, an accompanying internationally-accepted credit card, and personal loans as well. Nubank acquired Brazil-based investment broker Easyinvest in September of last year, which indicates that the company could be expanding into wealth and investment products in the future.
Nubank currently serves over 30 million consumers based in Brazil and Mexico. The digital bank recently expanded into its third major market, Colombia.
After the success experienced by Nubank, many other digital banks have now started offering services in Brazil during the past few years. Most of these neobanks mainly focus on niche services for segments such as women (Elas Bank), the LGBT community (Pride Bank), or gig economy professionals (Zippi).
Brazil-based digital bank Neon has become a key player that has established a fairly strong presence in the region. Launched in 2016, Neon introduced a simple digital account. The bank has also made several strategic acquisitions and expanded its lines of products to include various investment products, credit cards, and personal loans.
Neon claims 9.4 million account holders and has about 1 million micro-entrepreneurs through MEI Facil, which is one of its acquisitions that offers payment and various tax products. Neon secured $300 million in capital via a Series C round in 2020.
Brazil’s emerging neobanking sector has put pressure on traditional banks to introduce their own digital banking solutions, according to the report from Fincog. These types of new offerings include Next by Brazil’s second-largest lender Banco Bradesco, and AgZero, which has been introduced by Banco Safra (in October of last year).
Brazil isn’t only South and Latin America’s neobanking leader. The country is also home to the region’s largest Fintech industry which now includes 770 firms (as of August 2020), according to data from FintechLab.
Argentina has also become a major South American digital banking market. The country is home to 5 key Fintech businesses, according to data from Fincog.
Neobank Uala is one of the most prominent names in Argentina’s Fintech sector. Established in 2017, Uala offers a personal financial management mobile app that’s connected to a Mastercard prepaid card that lets customers perform financial transactions, like sending funds and conducting digital payments and making online purchases (in Argentina and overseas).