Open banking – where traditional banks can share data and create new services, via APIs that bring their aging systems into the 21st century – has seen its greatest traction to date in mature economies, where the vast majority of consumers and businesses already have bank accounts? are you au fait with digital transactions; and they are receptive to trying new approaches to everyday problems if it can save them time and money.
But with even the most advanced markets still experiencing very slow adoption — in the UK, for example, only 11% of consumers and 18% of small businesses have ever used open banking — some bet that the real The promise for these new services lies in developing economies.
Prometheus, a Uruguayan startup creating channels to enable open banking across Latin America, announces today that it has raised $13 million in funding to expand its operations. The valuation was not disclosed, but the company says the round is at a “typical” dilution for a Series A, meaning it is now likely valued at just under $100 million.
Since its founding in 2018, Prometeo has grown so far with relatively modest funding. Before this round, it had only raised about $6 million, says co-CEO and co-founder Ximena Aleman, who previously worked as a journalist covering the media and tech industries before turning to fintech.
Perhaps in keeping with its CEO’s unlikely roots, Prometeo is also taking a non-traditional path to growth.
A lot of open banking these days is focused on national facilities — mainly because banking conventions and regulations are often very local. Prometeo takes a different path and treats Latin America and its extensive fragmentation as a single market, and uses a single API to do so.
According to this one API, so far, it has enabled about 350 channels in 283 financial institutions in 10 countries. Brazil and Mexico are its two biggest markets right now, as well as the biggest fintech markets in the region overall. And its most popular services so far mirror those that have also found traction elsewhere: account-to-account payments and account validation and (for businesses) cash management, said Aleman, who shares the CEO position with co-founder Rodrigo Tumaián .
The plan is to attract more users, add more services and expand to further geographies, he added, with revenue growing 10x over the past two years (the startup doesn’t disclose actual revenue numbers).
Still, the challenges companies face in open banking in the region are significant, starting with the fact that Latin America, as a whole, lags far behind more mature markets like Western Europe and the US when it comes to financial services.
Bank account penetration is estimated to be around 70%, and while this shows growth, it still lags behind the high 90+ rates of countries in other regions where open banking has taken off and taken off.
“There are still a lot of improvements to be made on financial inclusion,” admitted Aleman, who describes the daily transactions between most businesses and consumers as “mostly cash-based.”
Looked at differently, though, this could also mean opportunity. In more established markets, one of the biggest competitive barriers is the ubiquity of existing payment rails — especially those operated by major credit networks like Visa. This challenge, at least, is less in Latin America. (It’s not the only company that thinks open banking has a big role to play in financial services in the future: Last year, open banking startup Ivy raised funding specifically to expand into Latin America; and Christine wrote extensively here at Finerio, a ambitious open banking startup from Mexico.
The companies backing Prometeo in this round highlight not only who wants to grow their business in the region, but also who believes open banking could help them get there. Antler Elevate, a firm with roots in Asia Pacific, is leading the round, with PayPal Ventures, Samsung Next, DN Capital, Cometa and Magma Partners participating.
PayPal and Samsung Next, it should be noted, are not yet working with Prometeo on services, but supporting the startup signals their intentions and interests. PayPal has been taking root through investments in local startups for years in the region. One of the biggest was in 2019, when it made a $750 million investment in the MercadoLibre marketplace. Most recently, last year it led to a $14 million round nocnoc, an expert on Latin American cross-border trade. It also owns point-of-sale payments company Zettle, which has been making very big inroads in Latin America for years.
Samsung, meanwhile, is the largest mobile phone vendor in the region by market share more than 40%.
In both of these cases, there’s clear interest in a key partnership and an early seat at the table in an area that could potentially become big, even if it isn’t now. Digital wallets, including mobile wallets – which both companies are betting will play a big role in how people transact in the future – are still a very small part of the commerce pie in the region, representing only 10% of all transactions from 2020.
But the progress the startup has made and the interest it has generated among the biggest banking players in the region – with partners including Citi, Santander, JP Morgan, Vtex and many local players – have investors taking notice.
“Prometeo, with its simple single API, gives banks and financial institutions access to payments and data across Latin America,” Fady Abdel-Nour, partner at Antler Elevate, said in a statement. “We are excited to partner with Ximena and Rodrigo to create a company that not only advances technology, but also enables businesses to reach new heights of success.”
