Fintech
bne IntelliNews – Yuno Rides Latin America’s Fintech Wave to Global Expansion
Over the past decade, Latin America has emerged as a hotbed of startup innovation, attracting over $16 billion in investment in 2021 alone. Fintech and insurtech have particularly captured the attention of global investors and VC funds, drawn to the region’s highly connected but largely unbanked or underbanked customer base.
Traditional banking in the region has historically been inaccessible to the lower segments of the population, deterred by red tape and high fees. Until recently, cash was king of everyday transactions, with many small and medium-sized enterprises (SMEs) avoiding formal lenders. However, the onset of COVID-19 has prompted a shift towards digital payments, online retailing and mobile-based services, acting as a catalyst for financial inclusion.
Central banks have also cut interest rates during the pandemic, boosting VC funding and prompting investors to seek higher returns over the medium term — a perfect storm for a fintech wave. By 2021, Latin American digital banks had amassed more than 30 million customers, mostly in Brazil and Mexico, and about 300 million users used digital payment services for transactions totaling $215 billion, according to the IMF.
Today, those numbers are likely to be higher, as Nubank, the renowned Brazilian neobank now valued at $44 billion, recently reached the milestone of 100 million customers across Brazil, Mexico, and Colombia.
The shift to contactless payments and e-commerce, fueled by high smartphone penetration and a large pool of ambitious STEM graduates, has created a fertile environment for fintech in the region.
In this context, Juan Pablo Ortega, a young Colombian entrepreneur, began his journey in 2015. After studying in New York and pursuing a career in civil aviation, he co-founded Rappi, a food delivery service that evolved into a multifunctional app offering payment solutions. By 2019, Rappi had achieved unicorn status and was expected to reach a valuation of $5.2 billion by the end of 2023.
He later launched Yuno, a leading payments orchestrator that enables companies including McDonald’s, inDrive, and Avianca to facilitate seamless payments across borders. Last month, bne IntelliNews sat down with Juan Pablo at London Tech Week, where he discussed his journey to Yuno and shared insights into the challenges and opportunities facing the rapidly growing fintech ecosystem in Central and South America.
“One of Rappi’s biggest pain points was payments,” he says. “When we launched in Mexico, we faced a lot of chargebacks, declined transactions, and significant fraud. Many users were uncomfortable entering their credit card numbers.” That led him to found Yuno, a payments orchestrator that integrates multiple payment providers, acquirers, and banks into a single platform.
Launched in 2022, Yuno recently completed a $25 million funding round and is looking to expand into Asia and the Middle East, positioning itself as one of the few truly global tech companies in Latin America.
“There was an urgent need to simplify this fragmented and complex payment ecosystem. It became clear that there was a large untapped market for simplifying payment flows. We needed to simplify transactions, improve efficiency and enhance security by offering a single interface for all payment processes and integrating fraud detection capabilities.”
Fragmentation is a sore point in the region, as domestic banks tend to promote their own payment systems, which enjoy high loyalty rates among domestic customers. However, this does not always translate into success, due to local specificities and different cultural contexts. Furthermore, these indigenous methods offer little interoperability, posing challenges for companies operating across borders.
“Photo [an instant payment platform launched by Brazil’s central bank in 2019] is a huge success. 70% of Brazilians today prefer to pay with it. Mexico has tried to replicate the model with Codi [a similar system promoted by Banco de Mexico]but it was a total failure, because there for small purchases cash is still the rule”, underlines Juan Pablo.
“And if you start looking at the differences, over 90% of Brazilians have a bank account, while in Mexico about 65% of adults do not have a bank account,” he adds, emphasizing the correlation between levels of banking penetration and the success of digital payment systems.
However, in Latin America “we can’t really talk about a regional trend,” he cautions, noting the highly uneven success rate and regulatory frameworks of digital payments in the region, a common problem in emerging markets around the world.
“That’s why Yuno sees greater opportunities in Africa, Asia and Latin America, and why we are primarily focusing on expansion in these areas.”
But how does this affect retailers and merchants trying to enter these markets? “When you enter a country, if you can’t offer local payment methods, you can’t really compete. For example, Uber Eats is having a tough time in Latin America; they [have] They left mostly because they didn’t have local payment methods. They didn’t feel “local,” he explains, emphasizing the importance of offering the myriad national payment platforms that customers trust.
“We are creating a technology that will be the future of the payment infrastructure to offer services to banks, payment processors and different players in the ecosystem. I don’t see Yuno as a competitor to traditional banks, but in some ways we work together with them to help them evolve. And we are a technological enabler for all the different players in the ecosystem,” adds Juan Pablo.
Yuno now connects merchants with over 300 payment methods worldwide. The company also helps merchants maximize their payment transaction approval rates—the percentage of payments that go through successfully—and save costs by redirecting transactions to faster, more efficient, and less expensive providers.
“In Latin America, the average approval rate is 70%, so essentially 30% of revenue is lost due to inefficiencies in payment systems,” he notes.
But Yuno’s ambitions go far beyond the region, as the company is expanding its presence in Southeast Asia, particularly in Malaysia, Indonesia, Singapore and Thailand.
Speaking about regulatory environments, Juan Pablo reveals that despite important differences within countries, the region has become relatively favorable to fintech. Overall, Brazil and Mexico, the region’s first and second largest economies, are now best positioned to support the growth of fintech, he argues.
Strong regulatory frameworks allow new business models to thrive, fostering a healthy type of fintech ecosystem. However, some challenges remain.
“In Mexico, if you apply for a fintech license, it takes four or five years, which is not ideal if you’re starting a business. So there’s a lot of work to do, but we’re moving in the right direction,” he says.
Mexico today embodies what Juan Pablo describes as a “healthy ecosystem,” bringing together local investors and venture capital funds willing to invest in a business-friendly regulatory landscape.
Chile, Peru and Colombia are a bit behind in terms of legislation, but they are steadily catching up, he says. Meanwhile, Argentina, despite its long-standing economic problems, is home to a large pool of highly skilled computer engineers, making it a favorite source of local talent.
Latin America is no stranger to political and financial instability, but Juan Pablo is optimistic about the resilience of local entrepreneurs. Citing the case of his native Colombia, he notes that “even with these [political] Despite the headwinds, we have built a thriving technology company that can compete on the global stage, and we are moving forward from there.”
Leveraging the region’s competitive advantages, Yuno is poised to play a pivotal role in establishing Latin America as a leading incubator for financial innovation.
“We want to transform Latin America into a major development hub, a technology hub, and today we are doing just that, shaping the way global companies operate,” he concludes.