Gerry Giacomán Colyer worked in a start-up, management consultancy and a family business before he noticed one consistency: controlling company spending was tough.
He and his business partner Diego Iván García saw staff deal with reams of paperwork, spend hours filling in expenses claims and struggle with various IT systems. No process existed that was sophisticated enough for a fast-growing company to work across Latin America’s borders.
“It was clear that it wasn’t just high-growth start-ups,” Giacomán Colyer says, “but companies across the entire spectrum that needed something. We saw this opportunity to be able to, with the proper technology, not have that trade-off between agility and control.”
Fintech groups have cropped up across Latin America, with market leader Brazil setting an example on regulation, leading to success that countries such as Mexico, Colombia and Argentina are seeking to emulate.
Carlos Costa, partner at venture capital firm Valor Capital, which has invested in more than 100 companies, says countries in the region are moving at different speeds but still in the same direction.
The next wave “is going to be a mix of disruption and financial inclusion”, he says. “That’s what gets us very excited. Even Brazil is still in the earliest stages [while] Mexico is one step behind. But that’s how value creation happens.”
Clara, the business payments group Giacomán Colyer and García set up five years ago, issues corporate credit cards and uses a software system that generates invoices and allows managers to see transactions immediately.
In their first year they had 26 employees and $102,000 in revenue. By 2023 the group had generated $28.3mn in revenue with 340 employees across Mexico, Brazil and Colombia, making it the second fastest-growing company in the Americas, according to a list of 300 companies compiled by the Financial Times with data research company Statista. Brazil’s Inter & Co and Sicoob Credip as well as Colombia’s Quantum Loyalty Banking are also on the list.
Clara became the ninth Mexican start-up to raise money with a valuation above $1bn, joining other “unicorns”, companies such as Plata, Stori and Clip.
The businesses’ operating environment though is challenging. A law passed in 2018, seen as groundbreaking at the time because it offered a regulatory framework for fintech start-ups, has failed to live up to the hype it created.
Regulation brought in then has not been updated seven years on while conservative, under-resourced regulators struggle to keep up with the fast-moving sector.
“They understand the challenge,” says Alvaro Vértiz, head of Latin America at Washington-based advisory consultancy DGA Group. “They would like to help make the sector evolve but, at the same time, they’re trying to manage and to drive a car that is at full speed. ”
Many industries in Mexico are highly concentrated, including banking where three institutions hold half the system’s assets. Small and medium-sized groups struggle to get credit while even successful founders often say it is hard to sell their businesses.
Vértiz says the number of unicorns shows that funding is no longer such a limitation on growth, but adds that the country has problems that extend to the “entire economy”. Mexico, for example, has had no significant new listings on its stock exchange in years. National companies such as Aeromexico in fact delisted to move to the US, where discount retailer Tiendas 3B did its initial public offering.
Fintech’s potential to bring people into the financial system has shown sluggish progress over the past decade while, according to government data, more than one-third of Mexicans have no bank account.
Many Mexicans lived through financial crises in the 1980s and 1990s and now distrust their banks, which have historically charged high fees even for basic services. More than half the economy is informal — with one of the biggest retailers saying three-quarters of transactions are in cash.
The founders of Plata, a digital bank, hope to make a difference. The group of former executives from the Russian bank now called T-Bank, who left Moscow after the 2022 invasion of Ukraine, liked Mexico’s potential as an advanced economy with room to grow.
“We felt like we could come in and build something quite different, better, faster and stand out,” says Italian-born co-founder Neri Tollardo.
He believes a recent shift to deposit-taking by fintechs can help solve the problem of low financial inclusion, which some blame on the expensive and slow legal system that makes debt recovery difficult.
“You can start giving everyone a reason to ditch cash, go online and to use their digital banking,” he says, adding that was not the case until two years ago “when all of these players were limited to credit cards or a credit product”.
Many fintech companies are pushing for Mexico to update its 2018 legislation. Any new law though will “need to be more flexible and more open”, says DGA’s Vértiz.
“We really are at this inflection point where we are finally seeing fintech that can offer all the relevant products to make a difference,” says Tollardo.
Meanwhile, Giacomán Colyer says that, at a time of market volatility unleashed by tariff threats from the Trump administration, he is focusing on longer term trends.
“A lot of the pieces have been coming into place over the past decade or so,” he says of Mexico’s fintech sector. “The evolution is happening. It’s a question of how much faster can it happen?”