Fintechs Empower Latin American Immigrants with Financial Inclusion

In recent years, fintech startups in Latin America have risen to the challenge of providing financial services to financially excluded immigrants, writes David Feliba for the Fintech Nexus News. With the significant Venezuelan diaspora in the region, these digital firms are catering to a customer segment often overlooked by traditional financial institutions. The obstacles faced by immigrants in accessing banking services and securing loans are being addressed by innovative fintech solutions. This article explores the efforts of some fintechs in Latin America, highlighting the importance of remittances in serving this population.

Latin America hosts over 6 million Venezuelans who have left their home country, and this population often encounters difficulties when trying to open bank accounts or obtain loans. Sergio Saravia, CEO of Argentinian remittance fintech Remitee, points out that even within a well-developed banking system in the region, the focus on catering to immigrants remains «virtually irrelevant.» Lack of credit history and a steady source of income make immigrants appear too risky for traditional banks.

The banking infrastructure in Latin America poses additional challenges for immigrants. Saravia notes that there is often a lack of connection between banks and payment institutions across different countries, making it impossible to share customer information or maintain consistent «Know Your Customer» standards, essential for providing financial services to the unbanked.

Fintech startups are emerging as key players in serving the immigrant population. Neobank Ualá, for instance, has grown its immigrant customer base in Colombia, with nearly a quarter of its users being Venezuelan immigrants. The company attributes its success to its digital-only systems, which provide a competitive advantage in serving this segment. Natalia Rios, general manager at Ualá Colombia, emphasizes the adaptability of fintechs compared to traditional entities with legacy systems.

The exodus of Venezuelans to neighboring countries, such as Colombia, has created a significant immigrant community in Latin America, presenting a lucrative market for fintechs to build their customer base. While contributing to financial inclusion, these fintechs also recognize the potential of this young and thriving population. Rios notes that the Venezuelan immigrants have many entrepreneurs among them, which will contribute to their future productivity and success.

Remittances play a crucial role in the lives of immigrant workers. Many Central American economies significantly benefit from the financial inflows from the U.S., while South America, including Venezuela, also relies on remittance networks for financial support. Sergio Saravia’s Remitee aims to provide a cheaper and faster way for ex-pats to move money across borders, addressing the challenges he personally experienced as the son of immigrant workers from Bolivia.

Fintechs in Latin America are making remarkable strides in addressing the financial needs of immigrants, a customer segment that has long been overlooked by traditional financial institutions. By leveraging digital technology, these fintech startups are contributing to financial inclusion, easing remittances, and providing vital financial services to the unbanked. The growth and success of such initiatives are promising steps towards building a more inclusive and resilient financial ecosystem in the region.