The New Movement of Niche Fintech Banking in Latin America

April 29, 2021
Hub Leader - Business Development and Account Manager at Mastercard
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Since the beginning of the fintech times, we have seen that these financial technology companies emerged with the main purpose of disrupting the financial system ecosystem by providing a different value proposition and way to access financial services.

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As fintech continues to evolve and become the “norm” in some markets, we have seen a big push on new fintechs focusing on niche segments of the population. These niche players are emerging around the globe especially in more developed markets in terms of the fintech ecosystem such as the UK, US, and some other parts of Europe. They are, once again, disrupting the fintech ecosystem and evolving from a “one fits all” type of solution to a customized specialized experience. 

Niche fintech banking has become quite popular among the fintech ecosystem. These fintech have emerged with the mare purpose and mission to provide a specialized, unique, and customized experience that focuses on a specific segment of the population based on their preference, demographics, sexual orientation, current life situation, profession, and many others. These fintechs focus on building their value proposition with specific benefits and perks that are relevant to their specific segment, which make them stand out against all other traditional fintech. The way these fintechs communicate, engage, and serve their customers is their key differentiation strategy and what generates high-user engagement and retention. 

The truth is that niche banking is not something new, traditional banks have been doing niche banking without really marking it or calling it as such. All traditional banks have segmented their customer base in a variety of different factors- mainly the amount of funds they have with the bank- premium/personal banking, private banking, etc., or the type of activity they have with them if they are a business, person, etc or if they have any sort of investment product with them and so forth. The main difference here is that traditional banks have based their segmentation of customers based on simple superficial criteria - wealth or activity and sometimes age. However, as the financial services ecosystem has been challenged with the entrance of fintech into the industry, the need for more customization has been completely transformed. These fintechs are now going to an additional layer of segmentation outside their customers wealth or activity with more focus on their wants, needs, and more social emotional factors in order to create compelling value propositions.  

Niche fintech banking is quite popular among well developed and mature fintech markets where we have players like Daylight in the US offering a compelling value prop for LGBTQ+ community, or First Boulevard “built for Black America'' community. There are some other players such as Brex who is focusing on Startups, or Greenlight Financials who is focusing on teenagers. These are just some of the most relevant and well-known global niche fintech players, but we have now started seen a big push on this trend as well in  Latin America: 

  • Z1 in Brazil, which focuses on Gen Z, to give them access to their first digital bank account, made especially for teenagers. It is connected to a Mastercard card
  • Mono in Colombia, which offers a simple bank account focusing on Startups and PYMES by providing a quick simple onboarding process all through WhatsApp to help business grow and expand quickly.
  • Pride Bank in Brazil, which focuses on the LGBTQ+ community. They are actually the first fintech in Latin America focusing in this segment. They aim on providing not only financial services but also give opportunities and empowerment to the community. 
  • Lana which targets gig economy workers and provides them with the tools they need to manage their finances. Lana is currently present in several markets including Mexico soon Chile, Peru and, eventually, Colombia and Argentina. 
  • Lidh in Mexico provides financial services specific for women and empower them through education and financial independence.

These are only a few examples of the several fintech players that are emerging in Latin America that aim to provide different value propositions to their niche focused customers. The majority of those are mainly focused on the top fintech markets like Brazil, Mexico and Colombia, but sooner than later we will start seeing niche fintech banks popping up in smaller emerging markets such as Ecuador or Central America. 

The reality is that consumers are looking for those services and products that speak to them and their lifestyle.  Now more than ever it is becoming a key decision factor for consumers to buy or use a service. If the brands don’t meet their values and beliefs they will most likely not use them. Therefore, if fintech wants to continue to be relevant, they need to focus on continuing to get the job done by providing easy access to financial services for their customers, but also to offer compelling value propositions that will meet their users expectations, values, and desires. 

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

As fintech continues to evolve and become the “norm” in some markets, we have seen a big push on new fintechs focusing on niche segments of the population. These niche players are emerging around the globe especially in more developed markets in terms of the fintech ecosystem such as the UK, US, and some other parts of Europe. They are, once again, disrupting the fintech ecosystem and evolving from a “one fits all” type of solution to a customized specialized experience. 

Niche fintech banking has become quite popular among the fintech ecosystem. These fintech have emerged with the mare purpose and mission to provide a specialized, unique, and customized experience that focuses on a specific segment of the population based on their preference, demographics, sexual orientation, current life situation, profession, and many others. These fintechs focus on building their value proposition with specific benefits and perks that are relevant to their specific segment, which make them stand out against all other traditional fintech. The way these fintechs communicate, engage, and serve their customers is their key differentiation strategy and what generates high-user engagement and retention. 

The truth is that niche banking is not something new, traditional banks have been doing niche banking without really marking it or calling it as such. All traditional banks have segmented their customer base in a variety of different factors- mainly the amount of funds they have with the bank- premium/personal banking, private banking, etc., or the type of activity they have with them if they are a business, person, etc or if they have any sort of investment product with them and so forth. The main difference here is that traditional banks have based their segmentation of customers based on simple superficial criteria - wealth or activity and sometimes age. However, as the financial services ecosystem has been challenged with the entrance of fintech into the industry, the need for more customization has been completely transformed. These fintechs are now going to an additional layer of segmentation outside their customers wealth or activity with more focus on their wants, needs, and more social emotional factors in order to create compelling value propositions.  

Niche fintech banking is quite popular among well developed and mature fintech markets where we have players like Daylight in the US offering a compelling value prop for LGBTQ+ community, or First Boulevard “built for Black America'' community. There are some other players such as Brex who is focusing on Startups, or Greenlight Financials who is focusing on teenagers. These are just some of the most relevant and well-known global niche fintech players, but we have now started seen a big push on this trend as well in  Latin America: 

  • Z1 in Brazil, which focuses on Gen Z, to give them access to their first digital bank account, made especially for teenagers. It is connected to a Mastercard card
  • Mono in Colombia, which offers a simple bank account focusing on Startups and PYMES by providing a quick simple onboarding process all through WhatsApp to help business grow and expand quickly.
  • Pride Bank in Brazil, which focuses on the LGBTQ+ community. They are actually the first fintech in Latin America focusing in this segment. They aim on providing not only financial services but also give opportunities and empowerment to the community. 
  • Lana which targets gig economy workers and provides them with the tools they need to manage their finances. Lana is currently present in several markets including Mexico soon Chile, Peru and, eventually, Colombia and Argentina. 
  • Lidh in Mexico provides financial services specific for women and empower them through education and financial independence.

These are only a few examples of the several fintech players that are emerging in Latin America that aim to provide different value propositions to their niche focused customers. The majority of those are mainly focused on the top fintech markets like Brazil, Mexico and Colombia, but sooner than later we will start seeing niche fintech banks popping up in smaller emerging markets such as Ecuador or Central America. 

The reality is that consumers are looking for those services and products that speak to them and their lifestyle.  Now more than ever it is becoming a key decision factor for consumers to buy or use a service. If the brands don’t meet their values and beliefs they will most likely not use them. Therefore, if fintech wants to continue to be relevant, they need to focus on continuing to get the job done by providing easy access to financial services for their customers, but also to offer compelling value propositions that will meet their users expectations, values, and desires. 

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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