Stimulus programs across Latin America have boosted the region’s challenger banks last year. According to a Mastercard study, over 100m people transitioned from cash to digital banking.
Distributions in Brazil, Colombia, and Argentina were particularly impactful. According to EY, all three countries offered some form of cash disbursement to their poorest citizens who, in many cases, received these proceeds via digital upstart banks (as opposed to state-owned financial institutions), as this entailed higher convenience and fewer restrictions on withdrawals.
Latin America’s most notable unicorn - Nubank - increased its customer base by 65% to 33m. Furthermore, 500k Brazilians received government stimulus money directly via its platform. In Colombia, 3m people, or 6% of the population, opened bank accounts for the first time. Colombian digital payments provider Movii increased its user base by 600%, as many opened accounts to put their government stimulus to work.
The massive adoption of digital banking products foreshadows a broader shift to digital insurance, Buy Now Pay Later, and consumer lending. Consumers are excited by the prospect of access to financial services under fairer (and faster) terms than those of legacy providers.
But maybe not as excited as Nubank itself. As if a Warren Buffet investment and rumored US IPO weren’t enough, the digital behemoth upped the tempo this week by adding Brazilian pop star Anitta to its board. With or without Carnaval, Brazilians surely know how to spice things up!
COVID-prompted government stimulus drove millions to open new bank accounts in Latin America - COVID-19 related government stimulus in Latin America drove digital banking adoption as millions put their government aid checks to use. Nubank, LATAM''s most valuable FinTech, increased its number of users in 2020 by 65% and enabled 500k users to access emergency cash. Read more
Nubank names Rio pop star Anitta to board, sparking controversy - Brazilian pop star Anitta joined the board of Latin American financial start-up Nubank to help market its credit cards, loans and checking accounts, but the choice of a critic of President Jair Bolsonaro angered his supporters. Read more
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