Show Me the Dinero

Long perceived as a sleepy business backwater, Latin America is fast becoming the hottest global market for Web-based financial services.

Consider the flurry of moves in recent weeks: Patagon.com, a financial site for Latin Americans, last month announced it had received $53 million in a second round of financing. Meanwhile, two of Latin America's largest banks, Banco Bradesco of Brazil and Grupo Financiero BanimexAccival, or Banacci, stormed the Internet, with one offering free access to its 8 million customers and the other building a business-to-business e-marketplace. And earlier this month, Spain's Banco Bilbao Vizcaya unveiled plans to launch an independent Internet bank in Southern Europe and Latin America.

Que pasa?

"Opportunity," says Patagon Chairman Wences Cisares. "There's a market just being born and everyone wants to be there."

The growth of the Internet in Latin America over the next few years is expected to outpace that of the U.S., Europe and Asia. Jupiter Communications estimates Latin America's online population will swell from 9.3 million users in 1999 to 37.6 million in 2003.

While that's still a small part of the region's population -- less than 2 percent in 1999 -- it's also the demographic with the cash. "And because of the incredible division of wealth in Latin America," says Lucas Graves, Jupiter's Latin America analyst, "that means financial companies have a natural target."

This appears to be the case at Zona Financiera, a financial information site.

More than 36 percent of its clients in Latin America make more than $75,000 a year, according to CEO Greg Keough, who calls the region "an ideal market" for financial sites.

In terms of content, the sites offer the typical arsenal of financial bells and whistles. Zona Financiera offers banking, brokerage, insurance, auto and real estate listings. Patagon is primarily an online trading site. LatinStocks, a financial Web site based in Buenos Aires, Argentina, offers market price quotes, analysis, news and online trading in English, Spanish and Portuguese.

LatinStocks recently formed an alliance with AOL, giving it essential exposure on AOL's finance channels in an increasingly competitive market.

But don't expect these sites to become the Latin American version of E-Trade or Charles Schwab anytime soon. As Patagon CEO Daniel Canel points out, less than 1 percent of Latin Americans own stocks.

Accordingly, Patagon is now placing a big emphasis on financial information and services, and says it wants to educate viewers about the markets. "That way," says Canel, "we offer the most value and will be in place when trading levels rise."

Stiff competition is on the way. Banks based in Latin America and Spain are quickly moving onto the same turf. And unlike in the U.S. -- where traditional banks and brokerages were latecomers to the Net and are still playing catch-up -- the big banks in Latin America are making their presence known before the Net-based companies can make their first-mover advantage take hold.

In fact, the recent announcement by Banco Bradesco that it will offer free Web access has thrown Brazil's Internet industry -- the region's largest -- into a frenzy. A group representing several hundred of the country's Net access providers is protesting the move, saying it will inhibit competition since the bank's ability to draw on the providers' existing customer base is so huge.

Still, the online companies wave off the threat of the behemoth banks. "They have resources and potential, but they still don't understand the medium of the Web," says Patagon's Cisares. "Things are moving fast, and I've never yet seen an elephant try to dance."

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