IDC Marketplace: Asia/Pacific Low-Code/No-Code Development Platforms 2024 Vendor Assessment

Smardaten is officially presented in the first IDC Marketscape Asia Pacific Lowcode NoCode report 2024, which is due to be published on 12^th September.

As IDC Marketscape Vendor summary stated:“Smardaten has been positioned as a major player in the 2024 AP Lowcode Nocode Development platform vendor assessment”

The report is based on extensive research and benchmarking, through exhaustive vendor survey, users interviews and client survey. In this report IDC has scored highly on Smardaten’s R&D and Innovation, customer service level, market condition, marketing strategy.

IDC has commented: “Smardaten’s platform provides intelligent data-empowered auto-modeling to reduce the software development lead time. The fourth generation of data-driven NoCode auto-models data without much human interaction, allowing for quick adjustment and rebuilding in response to front-end changes or needs.

Smardaten’s all-in-one no-code platform offers visual suites, including full-stack data management, drag-and-drop application design, and analysis without conventional coding, to greatly expedite software development while improving agility, lowering costs, and increasing quality. Smardaten technology eliminates data silos and bridges the gap between business users and IT, minimizing failure rates in digitalization projects. There are eight view types for information display and over 100 module modules for various aspects of business operations. It also has AI capabilities such as OCR and NLP operations. Smardaten’s OneBuilder enables autonomous component production and industry integration, resulting in a more adaptable business ecosystem. ”

Based on Smardaten’s advanced roadmap on GenAI functionalities enabled functionalities in the platform, we expect to see leading position on the vendor mapping from this report and in the subsequent IDC Marketscape LCNC reports.

Why UK fintechs should consider expanding into Latin America

For many UK companies Latin America is most likely not the first port of call for international expansion. Yet this booming sector has shaken up local markets and boosted competition and inclusion.[1] Whilst many FinTechs in Europe and North America have focused on decentralising protocols and Web 3. FinTechs in Latin America (LATAM) have focused on three basic areas: digital payments, fintech as a service such as broadening banking options for the unbanked and access to credit.[2] Furthermore, the GSMA asserts that in 2023 80% of people in LATAM have a smartphone with 65% having access to mobile internet[3] and The World Bank data states that 68% of the population in Latin America and The Caribbean (442 million) is between 15-64 years old, growing from 62% in 2000.[4]  This significant and young segment of the population can be characterised as having an openness to changing tech and with a proficiency for using apps.  Together these factors make the principal markets of Brazil, Mexico, Colombia, Argentina and Chile ripe for Scottish FinTech development and growth.

At the Department for Business and Trade (DBT), complementing the work of Scottish Development International (SDI), we are keen to highlight to FinTech Scotland members the landscape and possibilities in three markets: Brazil, Mexico and Argentina.

Brazil

In Brazil, the Fintech industry experienced rapid growth in recent years, driven by a large unbanked population, a complex traditional banking system and a strong entrepreneurial spirit. Payment solutions played a significant role in the early stages of the Brazilian FinTech landscape. Companies like PagSeguro offered digital payment alternatives, enabling small business and individuals to accept payments efficiently. Brazilian FinTechs expended their offerings to include digital banking, lending platforms and investment solutions. Nubank, one of Brazil’s most successful FinTechs revolutionised the banking industry with its mobile-centric approach and user-friendly experience. The company is now the fourth largest bank in Brazil with 85million customers.[5]

The Brazilian government has taken steps to foster FinTech growth. Initiatives like PIX, an instant payment system, has created a more favourable environment for FinTech innovation and competition. The Central Bank of Brazil has also introduced regulations to facilitate FinTech operations while maintaining consumer protection and financial stability.

Open Banking/Finance in Brazil:

The successful adoption of Open Banking in UK led to other jurisdictions around the world to examine its potential and possibilities for localisation. In Brazil, the Central Bank opened a public consultation in 2019 to hear proposals from associations, financial institutions and other entities on the regulation of Brazilian Open Banking.  After receiving more than 500 suggestions, in 2020, the Central Bank published Joint Resolution No. 1. In 2021, the implementation of Open Banking in Brazil, now called Open Finance for its broader approach, began in four phases. They are:

• Phase 1: sharing public data from participating institutions;
• Phase 2: sharing of information by customers, such as transactional and registration data;
• Phase 3: sharing services, such as offering credit and initiating payments;
• Phase 4: sharing other data, such as insurance, pensions, and investments.

Currently, there are already possibilities to initiate payments through PIX, since Phase 3 started in October 2021. The challenge for 2023 is Phase 4. Specialists expect that Brazil can overtake the UK in its implementation, as the largest Latin American country it has a much bigger scope for data than the British counterpart. The approach of Open Finance, instead of the original Open Banking that started in the UK, brings more possibilities such as credit card data and other services that can place Brazil as a world leader for this technology.

Brazil’s political and regulatory context:

Since starting his presidency in January 2023; Lula has made climate a major focus and understands that serious action on climate can increase Brazil’s influence on the world stage and bring international investment. This is well aligned with some of the UK’s regulators priorities, such as the LSEG initiative to fund innovative projects related to carbon, and the FCA starting a sandbox related to Green Finance. It is also worth mentioning that FCA is yet to decide about carbon assets, but the Brazilian FCA equivalent (CVM- Comissão de Valores Mobilíarios) has already regulated for the trade of carbon tokens when used in a security market. Altogether, this makes Brazil a sophisticated and receptive market for Scottish FinTechs.

Mexico

The second largest country in LATAM with one of the world’s largest populations and a high urban density. According to the IDB[6], 21% of LATAM FinTechs are based in Mexico, and unlike Brazil where most FinTechs are concentrated in São Paulo, Mexico has the benefit of three main tech hubs- Mexico City; Guadalajara and Monterrey. These hubs offer a closer proximity to the North American market, as well as a base for a huge domestic market, a talented, well educated, young (and often cheaper) workforce than its northern neighbour or other LATAM countries. The same IDB report counts 27 digital banks in Mexico, demonstrating appetite for FinTechs- primarily with a consumer audience (often with payment or remittances requirements). Furthermore, Mexico is one of the largest LATAM markets of under and unbanked populations such as women or those in rural areas. Initiatives like Jefa: a Mexican start-up aiming to empower women by creating banking solutions for women by women have great potential. If Scottish companies can contribute to closing these financial gaps they stand an advantage within the regulatory environment as well as competitively.

Mexican FinTech Law and a Sandbox Model

Back in 2018, the Mexican Congress was one of the first LATAM countries to enact legislation to regulate FinTechs (Ley para Regular las Instituciones de Tecnología Financiera). This law is known informally as the “Fintech Law”. To summarise, the Fintech Law regulates: crowdfunding; e-wallets; cryptocurrencies; Open Banking. However, five years in tech terms is an age and the Law requires some updates. In particular, regulations regarding cybersecurity and Open Banking are expected to be published in the mid-term. Interestingly, the current legislation allows for a regulatory sandbox.

Chambers and Partners in their online guide deftly describes the sandbox model as,

“The Fintech Law provides for an authorisation process under a “sandbox model” for companies seeking to engage in new and innovative technological activities or otherwise rendering services that differ from the ones that are already regulated. In particular, the Fintech Law defines an “innovative model” as a model which uses tools or technological means to provide financial services and which has different modalities to those of others in the existing market. In this context, companies ”“ or other financial or regulated entities ”“ may request temporary authorisation to carry out, through an innovative model, an activity otherwise requiring fully fledged authorisation under the FinTech Law. This works as an exemption that allows companies to test out new models and alternatives to provide financial services in a controlled environment.”[7]

Two sandbox challenges have previously taken place, both of which The British Embassy in Mexico City has supported and sponsored. DBT in Mexico works closely with the Mexican regulator to facilitate dialogue and to represent UK interest – including supporting UK companies to secure licences and to better understand policy changes and how these will affect them. Mexico’s regulatory environment as well as the country’s demographic and geographic position make it an excellent market to consider for novel and experimental products and services.

Argentina

Argentina on the surface appears to be closed market: notoriously protectionist and with sensational headlines of over 100% inflation in recent times. This seems like a hostile environment for disruptive tech yet in reality this is where solutions are needed and the basis of why FinTech has been one of the main sectors of economic growth. According to a recent Argentinian press article 60% of the money circulating in the formal economy uses a FinTech account as the origin or destination of the financial transaction. [8] The same article states that credit awarded by FinTech platforms grew 62% in 2022 with a total number of 4.5million of approved credit transactions illustrating the proclivity and demand for this service.

Globally, Argentina is one of the leaders in Crypto Assets in their usage and in the number of accounts.  As the country has a restrictive FX system, people and companies use cryptocurrencies as an alternative means to acquire foreign currency and transfer it abroad.

Furthermore, Argentina has a strong history of talent and innovation. It is the home of LATAM’s first unicorn MercadoLibre, followed by ten other companies: Globant, Despegar, OLX, Uala, Tiendanube, Bitfarms, AuthO, Vercel, Mural and Satellogic. According to the Argentinian FinTech Association https://camarafintech.org/ [in Spanish only] the industry has created more than 30,000 jobs domestically (up to 2023) and the Association prides itself on facilitating a robust trading environment of which DBT Argentina is a key contributor. Working closely with 240 of 330 FinTechs established locally as well as the country’s main regulators: Central Bank (BCRA), National Stock Exchange (CNV) and Financial Information Entity (UIF).

Take your next step

These three different and dynamic markets provide opportunities for ambitious and aligned Scottish FinTechs. Hopefully these snapshots have whetted your appetite for learning more and enabled you to appreciate the vast opportunity in LATAM. Local DBT support can help better understand local nuances, keep updated on regulation changes as well as making vital introductions to regional associations and partners. Reach out to the DBT Latin America and The Caribbean, International Market Team: exportsupport.latac@fcdo.gov.uk to help support your company’s next step into LATAM.

[1] The Rise and Impact of Fintech in Latin America, IMF, Published March 2023. Accessed 21/08/2023 https://www.imf.org/en/Publications/fintech-notes/Issues/2023/03/28/The-Rise-and-Impact-of-Fintech-in-Latin-America-531055

[2] Latin America FinTechs: We Have Lift Off. Findexable. Published May 2022. Accessed 21/08/23. https://findexable.com/2022-latin-america-fintech-rankings-report/

[3] GSMA The Mobile Economy Latin America 2022. Published 29 November 2022. Accessed 21/08/23 https://www.gsma.com/latinamerica/resources/the-mobile-economy-latin-america-2021-2/

[4] https://data.worldbank.org/indicator/SP.POP.1564.TO.ZS?end=2022&locations=ZJ&start=1960&view=chart accessed 21/08/2023

[5] https://blog.nubank.com.br/resultados-nubank-2o-trimestre-2023/ Published August 2023. Accessed 21/08/2023

[6] FinTech in Latin America and The Caribbean: A Consolidated Ecosystem for Recovery, IDB & Finnovista, Published July 2022. Accessed 18/07/23

[7] Fintech 2023: Mexico. Chambers and Partners. Published March 2023 https://practiceguides.chambers.com/practice-guides/fintech-2023/mexico/trends-and-developments Accessed 21/08/23

[8] https://www.ambito.com/finanzas/oficial-el-60-las-transferencias-son-realizadas-traves-una-cuenta-fintech-n5783377 ámbito. Published July 2023.  Accessed 21/08/2023

Photo by Pixabay: https://www.pexels.com/photo/map-atlas-south-america-52502/

Going global? 3 MUST DO’s when assessing new markets for expansion and growth

Blog written by Greg Watts, CEO at Findr

You’ve established yourself in your first market, and now looking to expand to new ones.

When assessing new markets, what characteristics should companies look for and how should they prioritise them? 

What makes a good’ market and what makes for a risky one?

In this article, we’ll look at three key considerations for any business looking to enter new markets.

1) Assess the landscape

Do you know how many fintechs actively operate in the UK vs other markets across Europe?

In 2019, Demand Creation Partners undertook an assessment of the fintech landscape in Western Europe. It found that out of a pool of 7,200 companies, nearly 3,000 ”“ or 41% of the total ”“ are active in the UK.

Further, the data shows that 81% of all fintechs in Western Europe actively operate in just eight countries. This is illustrated in the breakdown below.

You can now start to get a picture of how the region is constructed, allowing you to make an initial assessment of the suitability of different markets.

It may make sense to target a market with less competition and potentially lower barriers to entry to create a compelling use case for future growth.

2) Identify your launch criteria

When considering options for expansion, it can be tempting to start with larger, more mature markets such as the UK or US.

Despite leaving the EU, the UK remains the leading fintech market in Europe, accounting for half the region’s VC deals ”” for example, the $80 million funding of BitFury and $110 million funding of Monzo.

However, even with significant investment, the UK can be a hard market to crack.

It’s mature, with just over half of all payments made via card. And even though the US and UK share the same language, there are subtle cultural differences which must be understood before engaging potential partners or signing up users.

To assess your chances of success in a particular market, it’s important to research and weigh up your launch criteria, such as:

• Macroeconomic factors including GDP, economic performance and availability of government incentives.
• Competitive landscape ”“ How many other fintechs operate locally? How do they differ from you? Do you offer a compelling advantage?
• Barriers to entry ”“ Are these high or low? How will local legislation or regulation impact your launch?
• Structure of the local retail and payments market ”“ Is it comprised of home-grown players you’ll need to establish partnerships with or global organisations with which you already have relationships?
• Consumer behaviours and indicators, such as penetration of mobile phones and percentage of cash versus digital payments.

Knowing where you stand vis-à-vis these criteria will help you to realistically gauge and prioritize which markets to invest in.

3) Undertake a detailed market assessment

Now that you’ve prioritised your launch market(s), the next step is to undertake detailed assessments of each.

A market assessment is a comprehensive analysis of market trends, entry barriers, regulatory requirements, competition, risks, opportunities and available company resources. Whether you’re thinking of venturing into a new market or launching a new product, conducting a marketing assessment is a critical step in determining if there is a need or customer base for your product.

A well-executed market assessment will enable you to decide where to apply resources for the best return.

4) Develop a go-to-market plan

Now that you’ve prepared your market assessment, the next step is to develop a go-to-market plan to ensure successful entry. Some key considerations include:

• Access to local talent is crucial. Recruit leaders and sales and marketing personnel with a thorough understanding of the market. Be aware, however, that securing the best people can be difficult for a lesser-known brand, so think carefully about your resourcing strategy. In the short term ”“ while momentum is being built and resources are constrained ”“ you can support functions such as product, legal, operations and technology from HQ.

• Identify local partners who can help you raise awareness and introduce you to prospects ”“ for example, chambers of commerce, payment associations or retail consortiums. Who are the banks, acquirers, PSPs and retailers you need to cultivate relationships with? Can you leverage existing relationships? Choosing partners with a presence in your target markets will save you a lot of time.

• Differentiate yourself from local players. Understand local issues and market nuances and develop a proposition that resonates. Ask local experts to review your collateral to ensure your messages are relevant and cannot be misinterpreted through subtleties of language.

• Create an integrated demand generation plan to qualify opportunities for the sales team such as must-attend events where you can build relationships with target clients and partners.

• Identify a local PR agency to support your launch and develop a map of local influencers to form relationships with ”“ for example, journalists, bankers and retailers.

Bringing it all together

When assessing markets for expansion, it can be tempting to prioritise more mature countries such as the UK or the US ”“ particularly when you’re under pressure from investors.

However, these markets often have higher barriers to entry, making them harder to crack.

The goal for any fintech must be to create one or more use cases that prove a solution works; that there’s genuine demand for it; and ultimately, that customers will use it. In order to create these success stories it may make sense to prioritise markets with lower barriers to entry, where the chances of success are higher.

Taking the time to identify criteria for market entry will allow you to focus your resources more effectively and accelerate your plans for growth.

Photo by fauxels: https://www.pexels.com/photo/photo-of-person-using-laptop-3183174/

Strong potential for FinTech in the Japanese Market

How does one get Big in Japan? Throughout the years this has puzzled the companies of the west and continues to be relevant in the FinTech space. As a  market it presents both a challenge and a great opportunity to FinTechs looking to expand (Deloitte¹). In this blog we’ll explore the key features of the Japanese FinTech market.

The Opportunity

First and foremost, Japanese market represents a wealth of potential customers with large cash holdings to be mobilised. According to a recent Reuters article² Japanese households currently hold over $17 trillion, more than half of which is highly liquid cash or deposits. Japanese corporations are also known for unusually large cash holdings.

In addition, Japan is the third largest economy in the world by GDP and is a stable and highly convenient society. As the outlook for VC and growth capital turns uncertain in western markets, rather than seeking a quick market share and easy profits, a convincing long-term investment into a large and relatively untouched domestic market may look more and more attractive.

Furthermore, Japan is open as an innovation hub³. It is ranked No.1 among G7 countries in R&D expenditure as a percentage of GDP and No.1 in the world in patent applications per million of population. There’s lot going on to facilitate innovation in Japan, such as supporting start-up ecosystems in several cities by the government. The Japanese Government is also keen to promote Japan as an international finance hub⁴ by assisting asset managers and FinTechs to enter the market. Japan holds incredible excitement and expectation for a world in which technology is highly integrated; the Society 5.0’⁵ plan is a great example of this.

Challenges

However, to unlock the great potential of the Japanese market there are several barriers that must be surpassed. Most obviously, entry to such a market could be a daunting prospect due to language and cultural barriers. Also, as the Deloitte article highlights the Japanese customer puts great value on quality. To meet high expectations deep market research prior to entry or partnerships with Japanese corporations are highly desirable.

Additionally, Japanese financial institutions and customer habits have historically been somewhat rigid. One of the most prominent examples of this for FinTech companies is the strong reliance on cash. Companies have opted for QR code systems rather than the more convenient contactless NFC solutions. Japan is not a market that simply follows global trends immediately. Winning over the Japanese business community and customers will take time and effort but will be well worth it.

Support for breaking into the market

While these hurdles may seem high the Japanese government has several organisations ready, willing, and able to assist. The first step is to talk to JETRO (Japanese External Trade Organisation). As a government organisation we can provide initial market research, introductions to funding or partner corporations and from there continue to assist should you wish to setup up an entity in Japan, all completely free of charge. There are also incentives from organisations like the Tokyo Metropolitan Government which has been featured on this blog previously⁶. Once again in 2022 they are holding financial awards competitions in both the Financial Innovation and ESG⁷ categories.

Beyond the capital

Tokyo, while an attractive hub, is by no means the only option. Focus on regions beyond the capital is an issue that JETRO keeps at the forefront. Two cities to watch in this space are Osaka and Fukuoka, both of which are vying to become financial hubs. Similarly, while JETRO’s UK office is London-based we understand there is so much more to the UK than just London. We look forward to cooperating with Scottish FinTechs that are interested in the Japanese market so don’t hesitate to reach out!

JETRO London Contact:

https://www.jetro.go.jp/uk/

Author: Roderic Robertson roderic_robertson@jetro.go.jp

Reference List

¹https://www2.deloitte.com/jp/en/pages/financial-services/articles/bk/jp-fi-fintech-in-japan.html

²https://www.reuters.com/world/asia-pacific/japan-households-accumulate-record-financial-assets-covid-curbs-spending-2022-03-17/

³https://www.jetro.go.jp/en/invest/investment_environment/whyjapan/ch2.html

⁴https://www.fsa.go.jp/en/financialcenter/financialcenter.html

⁵https://www8.cao.go.jp/cstp/english/society5_0/index.html

⁶https://www.fintechscotland.com/next-stop-japan-apply-for-the-tokyo-financial-award-2020/

⁷https://www.finaward.metro.tokyo.lg.jp/en/

Photo by Aleksandar Pasaric: https://www.pexels.com/photo/people-walking-on-the-streets-surrounded-by-buildings-1510595/

Growing International Diversity of Fintech SMEs in Scotland

Fintech has accelerated as a global innovation movement during the pandemic and Scotland is making a positive contribution to this force of change in the digital economy

FinTech Scotland has confirmed that the number of international fintech SMEs in the SME community has grown by over 40% over the past twelve months, complementing the growth of local start-up and growth enterprises.

In recent months companies such as YayPay and Pace AP  from the USA,  WeFund from Australia and Pulse Market from Ireland have become part of the growing Fintech Scotland community.

The diverse origination of the international SMEs in Scotland’s Fintech community is highlighted by the visual below.

This growing global influence in the Scotland fintech community was a key theme of this year’s Fintech Festival which concluded last Thursday its four-week programme of sixty plus events, innovation meet-ups and conferences.

The Festival included FinTech Scotland’s collaboration with Scottish Development International and UK Department for International Trade Festival to host events with enterprises in Australian, USA and Asia to highlight inward investment and export opportunities.

The global fintech opportunities was also one of the themes discussed at the Accelerating UK FinTech Conference’ hosted by FinTech Scotland last week, with presentations from Fintech leaders across the UK including Ron Kalifa, Regional bodies and Government Ministers.

FinTech Scotland used the conference to release a “Building a Global Fintech Cluster” prospectus (brochure) to further build on the momentum driving fintech innovation and collaboration.

Commenting, the Executive Chair of Fintech Scotland, Stephen Ingledew said

“The ongoing collaboration of inspiring FinTech leaders will enable us grasp the global innovation opportunities and the UK wide conference in Glasgow was an ideal opportunity to demonstrate this with colleagues and friends from all corners of our country”

Commenting on the FinTech Scotland Festival, CEO of FinTech Scotland Nicola Anderson said,

This year’s festival has reinforced the dynamism, breadth, and capability of fintech innovation in Scotland. We were privileged to be joined by so many fintech and industry leaders sharing experiences, knowledge and opportunities. We’re looking to more collaboration and to supporting the digital and green economy through continued fintech innovation.”