Latin America has become ground zero for fintech investment recently; more than $7billion has been invested in LatAm fintech since 2016 according to CrunchBase, and the world’s largest neobank is currently headquartered in Brazil.
One of the largest reasons for fintech growth in the region is the desire to improve access to financial services. As many countries in LatAm remain cash first economies, their governments are trying to push digitisation to further develop them. The result of this is testing and trying new tech, almost acting as a guinea pig, to see what works and what doesn’t.
An example of this is El Salvador’s recent legislation that made Bitcoin legal tender: in an attempt to help bring a largely unbanked population into the digital world. The Salvadoran government has taken what many would view as a risk to the economy, however, should the ‘experiment be a success, not only will Western countries likely follow suit, but LatAm will further establish itself as an innovative financial technology hub.
Looking to further explain why LatAm is becoming such a hotspot for fintech and what can be done in the future to continue its growth, The Fintech Times sat down with David Brown, Chief Operating Officer at IPC. Connectivity is key for the successful implementation of innovative ideas. Discussing IPC offerings and how it is used in LatAm Brown said:
What differentiates IPC from its competitors? What are some of IPC’s unique features?
For nearly five decades, IPC has provided industry-leading trading communications solutions and managed network services focused exclusively on the global financial markets. The company has distinguished itself through superior service delivery, world-class customer support, constant innovation in cutting-edge technologies like artificial intelligence, natural language processing, and building a community that offers near-universal access to every type of financial firm, asset class and trading protocol.
IPC sits at the hub of the worldwide financial markets through the Connexus Cloud ecosystem, an unparalleled trading network connected to more than 7,000 capital market participants across 750 cities in 60 countries worldwide. And, IPC’s award-winning Unigy platform is a unified communications based platform designed specifically to make the entire trading environment more productive, intelligent and efficient.
Most recently, IPC has entered into strategic growth partnerships with some of the most well-known firms across the globe, innovatively working to enhance IPC’s world-class cloud platform. Through these relationships, IPC’s partners and customers have the opportunity to gain access to an extensive portfolio of cutting-edge technologies and solutions.
How have customers responded to these unique features?
Customer interest has been extremely strong. IPC’s vision is ultimately about access, community and intelligence, which is why it has made significant investments that have acted as “multipliers” for the firm and its solutions in the areas of most interest to the financial markets, such as artificial intelligence, machine learning, deep learning, and natural language processing technologies. Through the digital transformation enabled by these investments, as well as IPC’s full embrace of the “subscription economy,” the firm has provided customers and partners with a frictionless trading and communications experience.
How is LATAM’s financial development different from the rest of the world’s? How is the company specialised for this region?
Within the last year, IPC has made major inroads in the Latin America market due to the region’s explosive growth, and related need for financial services technology. For example, IPC continues to expand Connexus Cloud’s reach geographically, such as a major Connexus expansion in Latin America in Q4’21; Connexus Cloud is now directly connected to some of the region’s largest exchanges and regulatory bodies, such as B3, Bolsa Mexicana de Valores, Bolsa de Valores de Colombia, Bolsa de Santiago, Bolsa de Valores de Lima, BYMA, Bolsas y Mercados Argentinos, Matba Rofex.
The pandemic has been a mixed blessing for companies in the financial sector. Some have been able to digitise and prosper whereas some have failed miserably. How has the pandemic affected IPC?
We are living through a largely unimaginable black swan event in the coronavirus pandemic. But, IPC is one of the few providers to offer remote-work solutions tailored for financial institutions, which were in great demand over the last year. These include the Unigy Soft Client, which ensures working remotely is no longer a disadvantage by providing functionality, consistency and flexibility for trading communications needs regardless of location, device or application. Also, right before the coronavirus outbreak, IPC launched Disaster Recovery as a Service, which is a voice SaaS (Software as a Service) solution that is integrated with Connexus Voice and allows traders to access a virtual trading desk from any location.
Crypto is one of the biggest commodities in LatAm at the moment. Can crypto be traded via IPC? If not, is this something that is being planned?
Absolutely. Connexus Cloud enables the seamless trading of digital assets, allowing financial institutions that use Connexus Cloud to instantly connect to, and trade through, cryptocurrency exchanges around the world. Furthermore, ICE Data Services’ Cryptocurrency Data Feed, which streams real-time and historical data for the most actively traded digital currencies globally, is part of Connexus Cloud, along with the Cboe Cryptocurrency Feed Summary and Feed Premium from Cboe Futures Exchange, as well as CME CF Cryptocurrency Pricing. This allows Connexus users to access the latest information on digital asset trends and pricing.
What have been the greatest innovations in the investing space/wealthtech that you have seen in the last few years in LatAm and where does IPC fit in here?
Latin America is an extremely large region, home to north of 600 million people, and it’s per capita economic growth has generally been strong. So, the need for financial services is accelerating, but significant investments in the technological infrastructure underpinning those services is needed to meet the demand. This is where IPC has been able to help by providing the connectivity between market participants in the region to each other, and the rest of the world, for trading, communications, and more.
What problems have these innovations solved?
To give one example, IPC recently worked with a couple of banks in Colombia. One of them, Banco de Occidente, was looking for a new system to improve customer service response times. In addition, the bank wanted to develop their voice recording capabilities with state-of-the art tools that could mitigate some of the risks of executing high-value transactions during times of high volatility. And, business continuity had to be maintained across the newly integrated technology solution through the use of robust back-up systems that would offer protection against failures and reduce the risk of data loss. IPC was able to assist them with accomplishing all of these goals.
Brown concluded by discussing the future of LatAm fintech, “The state of Latin America’s financial-services infrastructure varies significantly country-by-country, so it’s difficult to draw overarching conclusions. But, it is worth noting that the continent was among the hardest hit by the coronavirus pandemic; investing in financial technology infrastructure now will certainly help the economy bounce back quicker.”