The WEALTHTECH Book

WealthTech in Latin America

By Juan Manuel Vega Bellés

Chief Digital Officer, Principal Chile MANAGEMENT

As a member of Principal’s international team, I have had an amazing and unique opportunity to follow the FinTech phenomenon very closely in various countries around the world. Working at head office in the USA, where FinTech has exploded, and visiting and researching countries like India, Brazil, Chile, Mexico, Malaysia, Hong Kong and China, has given me a unique first-hand view of the state of evolution on financial technology. For the purposes of this chapter, I will concentrate my comments on Latin America (Latam), and more specifically on Brazil, Mexico and Chile, which are the countries where we have operations.

What We Expect for the Evolution of FinTech and WealthTech in Latam

The big banks have fallen asleep. In Latam, the banks own most of the distribution of financial products, especially investment. Accounting for an average of 70% of mutual fund sales, they offer “closed architecture” (they sell only their proprietary funds, normally managed by their own asset management company). They offer poor customer experience and proprietary-only funds often not in the customer’s best interest. When you look to the way FinTech has evolved around the world, especially in the USA and Europe, you see big banks and incumbents applying an approach like that described in Figure 1, clearly trying to maximize their profit-creation products.

Figure 1: Evolution of FinTech solutions ...