Connect with us

Featured

Three reasons why fintech companies seek to reach the whole world

Fintech’s race for market coverage began against traditional financial institutions. Today, however, it is the banks that have formed alliances with them to open their services to everyone. Expanding globally was an issue to think about because it was difficult to explore a new terrain where the laws are different. Some brands find it attractive to attack closed niches in emerging cities.

Published

on

Bitcoin logo

It is a fact that fintech companies are globalizing, as there are currently more than 15,000 such companies worldwide, according to the Financial Digitalization Observatory.

Some of these are Monzo and N26, which have started operations in Latin American regions, as well as the Nigerian Fintech, Paga, which announced its plans to expand in Mexico.

“Like any traditional company, companies in this sector can internationalize their services. In different countries, they can find legal similarities or a certain openness to start operations, and being companies that work in the network, the process becomes simpler,” says Sebastian Medrano, director of marketing at Coru.com.

Fintech’s race for market coverage began against traditional financial institutions. However, today it is the banks that have formed alliances with them to open their services to everyone. Here we list three points that explain the reason for this globalization.

This picture show one dollar bills
Fintech’s race for market coverage began against traditional financial institutions. (Source)

Evolution in regulations

Previously, fintech was not available to its local market due to the extensive amount of rules to be able to operate.

In the United States, for example, many authorizations were required in each state in order to operate an insurance firm. Meanwhile, in other countries, only a few banks had permits to operate loans.

“Today this was reduced, in the case of Mexico, with the new Fintech Law has opened the market with a series of regulations. That benefit and make it easier to open a financial technology company. Mexico has become an attractive country for the international fintech ecosystem,” adds Medrano Gallo.

Growth of fintech facilitators

Expanding globally was an issue to think about because it was difficult to explore a new terrain where the laws and even the language are different. Today there are several companies that facilitate the conditions for financial startups seeking to globalize their services.

SEE ALSO  Emerging oil companies that investors should watch out for

To offer regulated financial products and services, fintech can partner with organizations such as Cross River, a company that offers solutions to international lending businesses, or Boost, which specializes in insurance.

Others, such as Konfio, finance other companies by offering an alternative to bank loans. Such is the case of the alliance with Bancoppel in the United States to offer loans to migrants. Together, these enabling layers lessen the friction of expanding into new markets.

This picture show the Bitcoin logo
Club, Adyen, and Qudian.com increased their assets when they decided to expand globally. (Source)

Expansionist desire

While some brands find it attractive to attack closed niches in emerging cities, others seek to offer international services such as Transferwise. A fintech that facilitates sending money with reduced commissions.

This has generated that even banks like Santander will begin to offer international transfer services via blockchain to compete.

Three fintech companies that have more than five billion dollars in sales stand out. These are Club, Adyen, and Qudian.com, these were closed to national markets. However, they increased their assets when they decided to expand globally.

“The disruption has forced traditional companies to lower their prices or innovate with new services. So it has started a race to make a mirror effect with the competition.

Consequently, if a company succeeds with its business model, it is obvious that it will try to replicate in another region,” says Sebastian Medrano.

__

(Featured Image by TheDigitalArtist.)

First published in Entreprenuer, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. B2I assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. B2I is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Valerie Harrison is a mom of two who likes reporting about the world of finance. She learned about the value of investing at a young age upon taking over her family's textile business when she was just a teenager. Valerie's passion for writing can be traced back to working with an editorial team at her corporate job, where she spent significant time working on market analysis and stock market predictions. Her portfolio includes real estate funds, government bonds, and equities in emerging markets such as cannabis, artificial intelligence, and cryptocurrencies.

Continue Reading

Most Popular