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Fintechs and financial institutions: The Union is strong

In recent years, Latin American Fintech companies have been recipients of approximately $ 8 billion in investment.

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own.

The world is watching with interest the flourishing of the Fintech sector. Latin America is one of the regions with the highest growth in this industry, with Mexico being one of its protagonists, together with Brazil .

According to some analysts, around 1,858 native Fintech companies are identified and operating in Latin America, of which 441 are Mexican, 14% more between 2019-2020 and with an average annual growth of 26% . In recent years, Latin American Fintech companies have been recipients of approximately 8,000 million dollars in investment, primarily in the Brazilian and Mexican markets in that order of investment volume, giving rise to a significant birth of unicorns. And, since 2017, they have seen their income in the region double and the expectation, according to some experts, is that they may triple by 2024.

In order to consolidate this growth and its long-term sustainability, one of the success factors will be the adoption of Open Innovation models with Financial Institutions. Although at first glance they appear to be competitors, the synergies are powerful. Fintech companies need to access new markets and consolidate their growth, based on regulated services and products that generate trust, both among citizens and investors. In parallel, financial institutions need to accelerate their innovation and digital transformation, in order to keep up with the speed of changes, both technological and the needs of their clients.

A good example of this marriage between financial institutions and Fintechs is the “ Fintech Goal 2021 ” award, which seeks to identify and recognize the most innovative Fintech in six countries: Mexico, the United States, Colombia, Chile, Brazil, Argentina and Spain . The objective is, in addition to recognizing their innovation and supporting their growth, to start creating an ecosystem of collaboration between Fintechs and the financial system. In this way, Vector is positioned as the first Brokerage House in Mexico with an international award that promotes open innovation in the sector.

Given the maturity that these ventures have shown, by reducing their mortality rate to 4.5% despite COVID, this initiative becomes a great motivation for financial technology startups that seek consolidation and greater projection in the sector, which It will undoubtedly contribute to the democratization of financial services and the promotion of social inclusion in the country.

Collaboration via alliances between financial institutions and Fintech companies is an almost perfect marriage : everyone wins, especially clients who will be able to access differentiated and innovative products and services. As Steve Jobs said, " innovation distinguishes the leader from the follower ." And, this type of alliance can make the difference between being a follower or a leader, for both actors in the financial system. Once again, unity is strength.