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August 13, 2021

Happy Friday 13!

Earnings season gives us a look under the hood at some of the biggest players in LatAm, including MercadoLibre and Softbank. And they are looking fine😎 Elsewhere, more details emerge on Nubank's massive IPO plans, and new regulatory plans are announced in Argentina and Ecuador. Here is the what and the why of LatAm digital banking, fintech and payments this week 👇🏼.

#Softbank 📈

Softbank Group's commitment to Latin America is paying off, and catching the eye of other investors. Its investments in the region returned JPNY219 billion (about US $ 1.98 billion) in profit in the three months to the end of June - an amount similar to the JPNY287 billion earned by its flagship Softbank Vision Fund 1 and 2, which is focused on unicorns, especially in China.

It’s all the more impressive considering its investments in LatAm represent just 5% of its portfolio companies across all its funds worldwide, according to its earnings report.

"Softbank's commitment to Latin America has been successful," Bruno Diniz, managing partner of the Brazilian fintech innovation consultancy Spiralem, told iupana. "In addition to making successful investments in the region, they have also caught the attention of other international funds that are starting to view the region favourably."

Some funds “are suspending investments in China due to the latest (government) interventions in technology companies based there. This may lead to more resources being allocated here,” said Diniz.

SoftBank is slowing investments in China and waiting to see how the regulatory push unfolds, CEO Masayoshi Son said this week.
The Japanese firm invested about US $ 3.5 billion in Latin America as of end-June, with its assets valued at US $ 6.9 billion.

Mercado Pago also reported solid growth in the second quarter and accounted for 34.4% of Mercado Libre's total revenue in the period. The service processed US $ 17.5 billion in transactions, an increase of 56.3% on the previous year though at a slower pace of growth than previous quarters. Mercado Libre reported net income of US $ 1.7 billion, an increase of 93.9%.

Nubank goes global 🌎

Nubank is reported to have hired banks for a Nasdaq IPO that could raise as much as US$2 billion off a US$40 billion valuation. 🤯

The news comes after the Brazilian company said it was investing venture capital in another fintech for the first time. The Brazilian giant led a US $ 44 million investment round for Indian digital bank Jupiter, together with venture capital funds Sequoia Capital and Matrix Partners.

Both neobanks share the goal of "revolutionizing" the financial system, said Nubank, which highlighted the similarities between the Indian and Latin American markets.

Jupiter, which belongs to Jitendra Gupta's PayU India, will be launched officially next month but it has already sparked the interest of users. Some 30,000 subscribers have signed up for its beta version, according to a MoneyControl report.

#Regulations 📝

Argentina will regulate the use of cryptocurrencies in the electronic payment system and the foreign exchange market, said the president of the Central Bank (BCRA), Miguel Pesce.

Pesce said "the Central Bank is not worried about the use of these sorts of instruments in transactions, rather that they could be used to make undue profits from unsuspecting or unsophisticated people."

He also questioned the lack of physical assets to back cryptocurrencies.

"At the end of the day, countries are going to be monitoring (cryptocurrencies) and sooner or later regulation is going to come into existence," said Luciana Della Croce, digital director of the Petersen Group, an Argentine conglomerate that owns four banks

"A currency is successful because of the support it has and because of the trust it creates," she told iupana, in reference to the volatility of crypto.

Meanwhile, in Ecuador, lawmakers took the first steps towards establishing a legal framework for fintechs. Stay tuned to iupana for more details.

#Contactless 💳

In Mexico, the big banks are betting heavily on contactless payments. This week, Santander announced an alliance with Mastercard and Getnet to boost such transactions. They expect one out of every three transactions to be contactless by 2025, aided by the supply of cards, point of sale terminals and a payment platform to handle the technology.

Mexican lender Banorte presented a new generation Visa debit card, with contactless payment technology, invisible security elements — the name, number, verification code and expiration date are not printed — and the ability to connect with digital wallets. Customers won’t need to visit branches to collect the plastic as it will be available from the stores of 7-Eleven and the local chain Farmacias del Ahorro.

New functionality will link Apple Pay with Banorte cards and applications, allowing contactless payment using Apple devices.

American Express is entering the digitalization race with a new product that it says will help Mexicans with no credit history gain access to finance. Amex has partnered with loan fintech Keo, technology company i2C, and loyalty program facilitator PayBack to launch the new credit and analytics service.

#Investments 💰

  • Venture capital firm Newtopia VC set up a US $ 50 million fund to invest in the early stage startups in the region. The fund is led by investors linked to Mural, the latest Argentine unicorn to focus on remote working, as well as the founder of Marea Venture Partners and the co-founder of Yavu Ventures, among others.
  • Startup accelerator Rockstart launched a US $ 30 million fund for Latin American entrepreneurs. The firm aims to finance 50 technology-related companies in the early and middle stages of development.
  • Drip Capital, a fintech specializing in export financing, was launched in Ecuador.
  • Hola Cash, a Mexican fintech specialized in managing bill payments, raised US $ 4.6 million in a seed round. The money will be used to scale the application and promote its use among Mexicans living in the United States who want to support their families.

#iupanaExclusive 🔥

What to do with a really successful digital spin-off brand? We discuss the digital spin-off strategy with Bancolombia and Banregio, and get a #scoop on Financiera Dann Regional's plans for its new digital brand in this week's #iupanaExclusive. Read it here.

Tweet of the Week 🐦

As Nubank is reported to be preparing for a US$2bn Nasdaq IPO, already analysts are throwing shade 📣
Tweet of the week

#FintechQuiz 🙋

New profiles are coming all the time to our LatAm fintech database, iupanaConnects Data
Think you know the sector inside out? Let's see if you know... Which of these fintechs focuses on facilitating loans to employees?
Click on the icons to see if you got it right 🤔

Over and out

All the best from Antony Pinedo, Fabiola Seminario and John Quigley
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