This week we had a chance to pick the brain of João Bezerra Leite about the Open Finance revolution taking place in Latin America.
Please tell us a bit about your background and how you ended up in Fintech?
I worked for 36 years for Banco Itau, the largest financial bank in Latin America, where I held several executive positions as Chief Technology Officer, Chief Security Officer and Chief Information Officer for several business divisions such as Credit Cards, Payment Services and Insurance. I also served in several advisory boards in the largest Tech and Payment Companies around the world.
In 2019, 2 years before I reached the executive board of directors age limit, I decided to embrace a life of a “professional learner”, left the bank (despite still being full of life and energy), and decided to learn more about entrepreneurship around the world. So I spent some time at Singularity University in Silicon Valley, studying “how to impact a billion people”, I went to Israel, to better understand their startups “how to achieve the unachievable”, and of course… enjoyed some tech and wine in Portugal (our front door to Europe). I connected with tech and payment companies in Estonia, the most advanced digital government in the world, and ended up in China, to figure out “how online meets offline” and to learn about their financial revolution. When I came back to Brazil, there was no other thing I my mind, other than Open Finance, ie, Fintechs. In short, I love learning and FinTech!
You spent over 35 years at Itau, what did that teach you about FinTech, and what are some lessons you can share with us from your time there (both personal and professional)?
I joined Itau as a trainee, as soon as I left the graduated as an Electronic Engineer, and built my career supporting the growth of the bank. The organization gave me the opportunity to enhance my knowledge in several domestic and international challenges we faced during the early years, one challenge being the integration of 30 financial institutions that were acquired. I learned a lot leading the continuous Tech and Ops modernization process. Besides that, the bank invested in my career with extension courses in Columbia Business School, Wharton School, Swiss Finance Institute among others.
So, lesson number one. I lived during the glorious time when large banks had the opportunity to build a massive infrastructure that led us to today’s digital world. However, past performance does not guarantee future success. Banks have grew up through consolidations. And tech and Ops worked to make this integration process as fast as possible in order to achieve efficiency. And the lack of an organized tech design led us to today’s monolithic “spaghetti banks”, organizations that are very difficult to transform. The Neobanks coming up nowadays, have already born as “lego banks”, organized in modules and API oriented. They need to stop simply digitalizing their secular processes and start designing from scratch, to make a real digital transformation, although this could impact their short-term revenues.
Lesson number 2. Large banks should be “the Financial API Marketplace”. They should connect and make real partnerships with fintechs that have specialized in doing something spectacularly well. It’s impossible to compete. They must join the fintech world.
What made you choose a career in Fintech out of all the other sub verticals in technology or finance?
Well, first of all, I spent my entire career in the Tech and Payments Industry, although… inside a large bank. But now with all the autonomy and proximity to new technologies I have, I feel like a free bird, discovering many possibilities that my rich bubble did not give me the opportunity to see. And the fintech world will become the Open Finance world, that will become the Open Everything world. I understand that the fintech arena will give me the opportunity to watch this move from a very interesting position.
How have you seen the FinTech market develop over the past 2-5 years? What are the key learnings you’ve gotten out of it?
I have observed the fintech movement for the last 20 years. And I like Chris Skinner’s view that Phase 1 started with Paypal in 1999. It was the Disruption moment. “Let’s kill banks and I don’t care about regulators!!!”. A kind of naïve vision because banks and regulators are there for a reason. Financial systems must be highly regulated to work properly. But many interesting fintechs came up in the market and by 2013-14 they figured out that it could also be interesting to have banks as friends and partners, instead of enemies. That was phase 2, “the discussion moment”, when banks and fintechs got closer, but with very few results. Today, we are experiencing phase 3, partnerships! plenty of opportunities for both sides, given that banks have the money and fintechs have the creative solutions to offer. So the key word is really “smart partnerships”, that will leverage phases 4 and 5, coming from 2023/24 to a frictionless Open Finance world.
How would you say the evolution of the LatAm Fintech market is different to the broader developed world?
I could say that the Brazilian Fintech Market will lead LatAm due to the proactive and modern approach of our regulator (Central Bank of Brazil). They have properly pushed initiatives such as Open Banking, Fast Payments and Digital Currency, that will really leverage the market. We already observe that with the almost 1.000 Fintechs operating in Brasil. I see Sao Paulo as a very strong Fintech Hub, not just due to the vivid entrepreneurship community and investors. The regulator plays a very important role in this move and Brazil is really ahead in that matters.
What are your views on Open Banking and open finance in general? Anything specific to LatAM?
I predict that the number of Fintechs in Brazil will double in the next 2-3 years following the Open Banking and Fast Payments regulations that have been implemented during 2020 and 2021. New digital players are now taking advantage of the regulations to innovate. In Brazil, digital banking startups, like Nubank, Neon, C6, and Guia Bolso are challenging incumbents with their mobile offerings. And the same happens in Argentina (Ualá and Brubank), Colombia (Rappi and Omnibank), Mexico (Flink and Albo) and in Peru (B89).
What sectors of FinTech are you most excited for in 2021 and beyond? Any local companies that really stand out to you?
I would reinforce that, specifically in Brazil, Open Banking and Fast Payments are the biggest opportunities for 2021. SPACs are now being created to explore the growth of this domestic market. To have further details about the potential of the Brazilian fintech market and its stars, I would suggest to explore the reports of “Distrito” (a very important startup Hub)
Any parting words of advice for any aspiring Fintech entrepreneur out there?
Resilience is the word. In Israel, I learned from a startup founder, two very inspiring pieces of advice: “Fail your way to success” and “Pray to have the strength to achieve the unachievable”. That would be my advice! "HUTZPA!!!"
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The Banq team