Foreign fintech companies flock to Peru

Peru’s fintech industry is expected to pick up this year, driven by favorable regulatory developments and growing demand for more accessible and inclusive financial services.

Javier Salinas, Director of Emprende UP, the Center for Entrepreneurship and Innovation at the Universidad del Pacifico in Lima, Peru, expects the sector to grow from 171 fintech companies, as of September 2021, to more than 200 this year.

Peru fintech companies segment distribution, Source: EY, October 2021

A third of these companies will come from abroad, significantly above the 10% share they had a year ago, Salinas shared with the local newspaper Gestion earlier this year, an influx that will be driven by attractive market conditions and positive developments, including recent crowdfunding rules, law change in the banking and finance sector, as well as early discussions on open banking and open finance.

Evidence of Salinas’ predictions can already be observed in Peru, with several foreign fintech companies having established a presence in the country this year. The Colombian stock trading app Trii was recently launched in Peru, and mentions the country’s low stock trading penetration as an opportunity to establish a dominant position. Trii aims to gather at least 30,000 users in Peru by the end of this year.

Similarly, the Uruguayan fintech company Prex started operations in Peru last year, targeting the country’s large population of banks. So far, growth in Peru has been strong, Gestion reported in June 2022, with more than 100,000 people joining the platform within a year. Plex offers an account with two currencies, physical and virtual prepaid Mastercards, money transfer options, foreign exchange, instant personal loan products and cryptocurrency investment features. The company aims to have at least 350,000 next year, and plans to expand to Chile and Paraguay next year.

Headquartered in London, SumUp is another fintech company that recently entered the Peruvian market. The company, which offers payment solutions, business accounts, cards, invoicing and more to sellers, was launched in Peru in June. Shortly afterwards, it completed a massive $ 624 million round of funding to drive its expansion plans.

New fintech developments in Peru

Recent positive developments in Peru have created a bullish sentiment towards the market among fintech companies, entrepreneurs and other stakeholders.

In March 2022, the Peruvian Ministry of Economy and Finance (MEF) amended a number of laws to promote greater competition in the financial industry.

These changes, which include reducing the capital requirements for money senders, simplifying the licensing and supervision process for companies that do not collect deposits from the public, and regulatory facilitations for fully digital units, will enable the entry of new units and allow expansion of alternative offers, says the international the law and tax firm Garrigues.

These regulatory changes came in the wake of the entry into force of Peru’s regulatory sandbox, the law firm notes, a framework designed to allow market participants to develop and run pilot tests of innovative financial products and services in a safe and controlled environment.

At the Superintendency of Banking, Insurance and Private Pension Fund Administrators (SBS), the government agency responsible for overseeing the Peruvian financial and insurance systems, as well as the private pension fund system, talks on open banking and open finance have begun, an official said. .

In the traditional banking sector, things are also moving at a rapid pace. The government lender Banco de la Nacion debuted with Cuenta DNI last year, a commission-free, fully digital banking offer. So far, nearly two million people have opened an account, Iupana, a LatAm fintech information platform, reported in June. The bank hopes to open another 10 million accounts this year. Peru has an adult population of 24 million.

Grupo Credicorp, the largest holding company for financial services in the country, is working on turning its e-wallet app Yape into a super app, and will introduce a new credit product in April. Launched in 2016, Yape has grown into one of the most popular apps in the country, serving 8.7 million users as of March 2022.

Fintech adoption has increased significantly in Peru in recent years. At the end of 2019, mobile banking services accounted for 40.9% of all transactions in the financial system, up from 6.5% in 2017, said Sergio Urday, economic research manager at the Peruvian banking association Asbanc.

This article first appeared on fintechnews.am

Selected photo credit: Edited from Unsplash