The region may not be top of mind when it comes to world leaders in financial technology, startups from Mexico to Chile are driving payments digitization, financial management automation and the emergence of new paradigms in the market, like open banking. Among the most recent investment targets in the region is Clara, a B2B FinTech that officially launched on the market earlier this month with $3.5 million in pre-seed funding to fuel its small business spend management offering. Expense management comes with plenty of friction points. Organizations first need a mechanism through which employees can actually spend company cash, whether it be requiring workers to use their own funds and be reimbursed after the fact, or through arming those professionals with other tools like company credit cards.
Critical to analyzing spend behavior is gaining access to data, and key to accessing that data is digitizing payments. It’s particularly important in Latin America, where cash has historically been king. Even well before the pandemic hit, Latin America’s payments digitization journey had begun, with adoption of card payments accelerating amid the COVID-19 crisis. Clara is using that rising card use as a springboard for its offering, connecting a spend management portal with a corporate card product that automatically integrates transaction data into the system. As card spend volume grows in Clara’s home base of Mexico, as well across LATAM, there are other market trends introducing new opportunities to take advantage of transaction data. For instance, the region’s open banking efforts continue to accelerate in markets including Mexico, Brazil, Chile and Colombia, as PYMNTS’ July 2020 Merchants Guide To Navigating Global Payments Regulation report highlighted. The coronavirus crisis is intensifying efforts in the region to unlock bank data and drive competition by allowing FinTechs to use that information for more value-added innovative products and services.