Average LatAm FinTech deal triples YoY & The power of machine-readable regulation

Top Story of the Week

The key challenges for machine-readable and executable regulation - As the age of digitalised regulation comes closer into the view, there is growing discussion around the role of machine-readable and executable regulation in the financial industry.

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Research highlight

Average LATAM FinTech deal size tripled, resulting in funding growth of 15% in H1

Key LATAM FinTech investment stats in H1 2024:

• LATAM FinTech funding increased by 15% YoY
• Average deal value rose by almost 3x as investors focused on higher value opportunities
• Celcoin secured the biggest deal for H1 2024 in LATAM with a $125m funding round

In H1 2024, the Latin American FinTech market saw mixed performance in terms of deal activity and funding. Only 79 deals were recorded in the first half of the year, marking a 58% decline compared to the 189 deals completed in H1 2023. However, despite the sharp drop in deal numbers, Latin American FinTech companies raised $1.17bn in H1 2024, a 15% increase over the $1.02bn raised in the same period the previous year. This suggests that although fewer deals were made, the investments were larger on average. However, H2 2023 was a notably stronger period for funding, with $1.7bn raised, indicating a trend of more robust investment activity in the latter half of the year.

The average deal value in H1 2024 was approximately $14.8m, a significant rise compared to $5.4m in H1 2023, reflecting a near 3x increase. This surge in average deal size suggests that even as deal activity slowed, investors are focusing on fewer but larger, higher-value opportunities, possibly targeting more mature FinTech companies or larger-scale projects in the region. This shift could reflect a growing focus on stability and profitability as Latin America's FinTech sector continues to mature and attract significant funding despite economic challenges.

Celcoin, a leading company in the Banking as a Service (BaaS) financial technology market, secured the largest funding deal in Latin America for the first half of 2024 with a $125m investment led by global growth equity investor Summit Partners. Known for its investments in market-leading FinTech companies like EngageSmart and Corpay, Summit Partners was joined by existing investor Innova Capital and seasoned FinTech executive John Coughlin in this round. Founded in 2016, Celcoin provides financial infrastructure services for banks, FinTechs, and enterprises, focusing on payments, banking, and lending to enable personalized embedded finance solutions. With over 400 financial industry customers and more than 5,000 non-financial companies leveraging its offerings, Celcoin’s robust platform processes over 200m Pix transactions monthly. The new capital will support Celcoin’s expansion plans, further strengthening its leadership position in the BaaS and embedded finance markets, while driving continued innovation. The investment comes as Celcoin experiences strong momentum, recording $63m in annual recurring revenue in Q1 2024—a 140% increase year-over-year—alongside strategic acquisitions like Galax Pay, Flow Finance, Finansystech, and Reg+.

Weekly FinTech deal roundup

FinTech funding surpasses $1bn on strong week for the sector – This week’s overall FinTech funding surpassed $1bn as the sector continued its forward momentum. Read the full story here.

InsurTech news

• FinTech Global’s InsurTech100 celebrates the industry’s leading innovators - Specialist research firm FinTech Global has released its seventh annual InsurTech100 list, outlining some of the industry’s leading incumbents. Read the full story here.
• Akur8 selected by RSM to bolster its insurance pricing process - Akur8, the next-generation insurance pricing and reserving platform, has been selected by RSM to enhance its insurance pricing process. Read the full story here.
• Earnix welcomes Jessica Buss to its Board of Directors to drive growth - Earnix, the leading AI-driven platform for intelligent decisioning SaaS solutions in the insurance and financial services sectors, has announced the appointment of Jessica Buss to its Board of Directors effective October 1st. Read the full story here.

WealthTech news

• How to attract fast-growth customers in banking - Technology has transformed banking into flexible system that can no longer rely on the mantra of one-size-fits all. Banks need to meet the modern demands of customers. While this might seem simple, not all customers have the same expectations and so banks need the flexibility to provide customers with the services and tools they really want. Read the full story here.
• How artificial intelligence is transforming wealth management - Artificial Intelligence (AI) is rapidly reshaping the landscape of wealth and asset management, offering innovative solutions that significantly alter how high-net-worth individuals manage their finances. Read the full story here.
• Exploring loss aversion: A new dimension in investor risk profiling - In a groundbreaking study published in the Journal of Banking & Finance, researchers have introduced a sophisticated method to quantitatively evaluate investor risk preferences, highlighting the importance of loss aversion. Read the full story here.

RegTech news

• How Behavox is leveraging AI to transform its RegTech offering - Founded in 2014, Behavox is a global leader in AI-powered compliance, security, and archiving solutions. Headquartered in London with offices in New York, Montreal, Singapore, the company helps organisations secure their communications data and monitor regulatory, conduct, and insider threat risks. Read the full story here.
• What are the key reporting tactics for boards on AML/CFT and sanctions - Inadequate oversight in AML/CFT and sanctions can lead to substantial regulatory sanctions, reputational damage, and severe financial penalties. Read the full story here.
• Mastering KYC compliance: Strategies for Australian businesses - In today’s digital landscape, the importance of identity verification extends beyond mere procedure; it’s a critical safeguard against escalating fraud risks. Read the full story here.

CyberTech news

• HUMAN raises over $50m to bolster digital safety and combat online fraud - HUMAN, a leading cybersecurity firm, announced today that it has secured over $50m in growth funding. Read the full story here.
• Prime Security raises $6m to pioneer AI-driven design-stage security solutions - Prime Security, a pioneering security firm, has just transitioned from stealth mode. Read the full story here.
• Owl Cyber Defense secures strategic refinancing from Marathon Asset Management - Marathon Asset Management has successfully closed a senior-secured credit facility aimed at refinancing Owl Cyber Defense, a firm recognized for its leadership in Cross Domain Solutions (CDS) and Data Diode technology. Read the full story here.

ESG FinTech news

• Morningstar unveils product suite aimed at boosting EU sustainable finance initiatives - Morningstar has unveiled a new suite of products designed to bolster compliance with the EU’s Sustainable Finance Action Plan. Read the full story here.
• The rising influence of double materiality in ESG reporting - ESG reporting is undergoing a transformation, evolving from a regulatory necessity to a significant driver of business innovation and competitiveness. Read the full story here.
• Cogo and Tandem Bank enhance app to track and reduce carbon footprints - Green FinTech Cogo and Tandem Bank collaborate to integrate a carbon management solution into Tandem’s banking app, enabling customers to effectively measure, understand, and reduce their carbon emissions. Read the full story here.

Other FinTech news

• How Earnix is transforming consumer lending - Rising delinquencies across all consumer lending lines have become a significant concern, as highlighted by the Q2 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion. This uptick in defaults, alongside intensifying competition, shrinking profit margins, and increasing financial pressures, is pushing lenders to reassess their pricing and credit risk strategies. Read the full story here.
• How ACA’s ComplianceAlpha RegTech platform ensures total communication oversight - As the regulatory landscape tightens its grip on digital communications, the imperative for exhaustive capture and archival of electronic dialogues grows increasingly critical. Read the full story here.
• Embracing AI and hybrid work for competitive advantage - The global health crisis has significantly altered our work environments, propelling a rapid shift towards more remote and hybrid work arrangements. This shift has highlighted the critical need to keep pace with technological advances to maintain competitiveness in a rapidly evolving landscape. Read the full story here.