Serving the global majority: How Tala is reshaping financial inclusion in Latin America and beyond with David Lask

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In a world where financial inclusion remains one of our generation’s greatest challenges, emerging markets are becoming the true laboratories of fintech innovation. While developed economies iterate on convenience, companies operating in regions with limited banking infrastructure are fundamentally reimagining what financial services can look like from the ground up.

Today, we’re diving into this fascinating intersection of opportunity and impact with David Lask from Tala. Tala has built a reputation as a pioneer in financial inclusion, providing access to credit and financial services to underbanked populations across multiple continents.

David joins us fresh from the Fintech Americas Miami conference to share his insights on the rapidly evolving Latin American fintech landscape. We’ll explore how the unique challenges and opportunities in this region are fostering innovative approaches to financial services, with a special focus on Mexico as a compelling case study of fintech evolution.

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4 big ideas on Latin American fintech from David Lask of Tala

1. Serving the “global majority” through financial inclusion

The term “global majority” reflects the reality that over 4 billion people worldwide lack adequate access to financial services. Tala addresses this challenge by providing short-term loans designed to help people manage financial volatility in their daily lives, serving as an entry point to the broader financial system.

“Tala was founded in 2014… with this mission of expanding the access of financial services for what we call the global majority, which over 4 billion people around the world that suffer from not enough access to financial products that they need to be able to have a healthier financial life on a day to day basis.”

2. Latin American fintech market consolidation

The fintech landscape in Latin America is entering a consolidation phase where established players with product-market fit are growing rapidly while others exit. While the total number of deals has decreased, the size of individual investments has grown significantly, indicating investor confidence in proven business models.

“Latin America is clearly in a consolidating path in the fintech space… the deal sizes have been much, much bigger, around 73% much bigger. And I think that’s evidence that we’re seeing a growth, but for the companies that are steady and they’re being able to progress and grow in each one of these markets.”

3. Overcoming trust barriers through technology and education

In cash-dominant economies like Mexico, where over 90% of transactions are cash-based, the dual challenge is building digital financial infrastructure while simultaneously fostering trust in financial institutions. Financial literacy remains a crucial component requiring collaboration among multiple stakeholders.

“Mexico is a cash-based economy. Over 90% of transactions are done in cash… The challenge continues to be how to integrate a large portion of the population into these digital channels and the trust that they have with financial institutions that has always been historically quite low. How can technology allow for people to trust the products that they receive and use them in a more healthier way?”

4. Evolving regulatory landscape

As fintech solutions continue to develop in Latin America, regulators are working to keep pace with innovations while balancing consumer protection and market growth. Mexican regulators in particular have maintained close relationships with industry players to better understand emerging technologies and their implications.

“Regulators have continuously stayed very close to the market. They are open to collaborate with institutions like Tala and other players in order to gain that understanding… Mexico, particularly, has done a great job in being able to stay close to the players that are actually developing and executing this technology in order to be on the same page on what direction to drive towards.”

Read the full transcript (for TS Pro subscribers)

The mission and growth of Tala

David Lask: Absolutely. Well, Tala was founded in 2014. Our founder Shivani Siroya, she saw firsthand the issue, the trouble that a lot of people around the world have accessing the financial system for a myriad of reasons, including not having credit history, not having the right documentation and having right access to the right infrastructure to be able to use these kind of products. And she decided, I want to fix this problem.

In 2014 she launched Tala with this mission of expanding the access of financial services for what we call the global majority, which over 4 billion people around the world that suffer from this not enough access to financial products that they need to be able to have a healthier financial life on a day to day basis.

Since then, the company has grown significantly. We started off in Kenya, understanding that we wanted to serve the global majority across the world. We launched in Philippines and Mexico, and are also operating in India. And so far, we have kept that mission true. We have served over 10 million customers across the world, given over $6 billion in lending and loans trying to achieve this mission of giving access to those that have historically been overseen or not seen by the traditional financial infrastructure.

Building financial services from the ground up

Amazing, and with that mandate of the – I like how you call it the global majority, it’s true, because even even in the US, there’s estimated to be, like 100 million people who are at least under banked, if not unbanked. With that mandate, I guess, where do you start with financial services? Is there like sort of a pyramid? There’s some base services, and as you think of them rolling out, like going further up the pyramid as more value added services?

David Lask: Yeah. So in the case of Tala, we understand the volatility of people’s financial lives. That’s why the focus has been on being able to provide day to day loans that they can use to complement their income in order to solve those emerging issues that happen all the time. “Hey, I need to buy medicine for a family member. I need to cover this bill, and given that I’m not being paid until a couple of weeks later, or given that my income this week wasn’t the same as the past week” – those kinds of volatility is something that we try to solve. And that’s the purpose of the loans that we give out.

They are short term loans up to 61 days in Mexico for between $25 to $500, and the purpose of them is precisely for them to get a start on these products to be able to power and enhance their financial life and grow with that. Once they enter the financial system, our objective, or our mission, is to help them continue to have a healthier financial life moving forward.

The role of financial education

Is education a part of that, like understanding what these products are and how they work?

David Lask: Of course, and that’s one of the biggest challenges. In the past decades in Mexico and Latin America, the infrastructure needed to be able to reach this population has grown significantly. The access of mobile phones, the penetration of mobile phones, internet access, has continued to grow, and that has served as a great channel for more people to be able to have this kind of access in cities in rural areas. The penetration of internet is a great channel for this. But paired with that, education is key.

Financial literacy is very important for people to be able to understand how to best use this product. In the end, your credit product can be a great mechanism for you to continue to build this financial health, but at the same time, it could turn into a problem. All of our customers are trying to solve a situation even if it’s positive or negative. Positive meaning, “Hey, I want to grow my business.” Negative being, “Hey, I need to solve this issue that I have.”

But nonetheless, that education piece is very important. It’s one of the challenges that continues to be present in Mexico or Latin America – how, given the infrastructure that we are building continues to grow, can we complement that with the right financial education? And it’s not easy. It’s not something that one single company can do. It’s a multi-actor issue that needs to be addressed in the same way. Also as lenders, regulators and other financial institutions need to be part of this. And that’s the talk in Mexico. That’s the topic on how can we together continue to promote financial education for people to be able to already have access to these products, but use them in a way that helps them at the end of the day.

Tala’s new debt facility

Awesome. Before we step away from Tala, which will be coming back to throughout the course of this conversation, I did want to make sure you get the news in. So you raised a debt facility recently, correct?

David Lask: Absolutely, yes. We recently closed $150 million debt facility with Newberger Berman. And this is the biggest debt facility that we have closed in Mexico so far. We’re very happy about this. It’s a testament of the opportunity that we continue to see in Mexico. It will be a mechanism for us to continue to evolve our lending capabilities, reach more people in the country, and continue with our mission.

In the end, that’s what I love about Tala, is that we are very mission driven, and we want to be able to serve more people and serve them in the right way. So we’re very happy. A huge shout out to the team. Very thankful to Neuberger Berman for giving us this opportunity to continue to grow in Mexico.

Insights from Fintech Americas conference

Amazing. And I know you just came back from the Fintech Americas Conference. I myself was trying to get there. I was hoping to meet you as well on the ground. I wasn’t able to get there. But I’m kind of curious, given the fact that it felt like an important conference this year. It may always be an important conference, but it felt like there was something different this year. I’m kind of curious, what your takeaways were, maybe some of the big themes that you saw at the conference. Where are we, in terms of fintech in Latin America?

David Lask: Absolutely. There’s a couple of interesting themes, and I would like to focus on two of them. One is that Latin America is clearly in a consolidating path in the fintech space. In the past 10 years or so, we have seen a lot of new fintech companies come up, either Latin American or international, but operating in Latin America. And through time, as in any other evolution of a sector, we’ve seen some of them grow. Some of them, unfortunately, have to leave the market. But what’s true right now is that a consolidation is happening.

This means that the players that are being able to get the product market fit and grow on the market are growing at a faster pace, while other companies that are not serving the needs or not make successfully step back. And those companies that are not being able to find that product market fits are exiting.

Investment trends in Latin American fintech

Some of the financing has dried up for fintech companies in the space?

David Lask: That’s interesting, because it’s gone a little bit the other way around. In the past couple of years, we did see a drop in financing in Latin America, but we’re starting to see a trend that is beginning to grow again. There’s some evidence of that, and you can see it from the investment side. Last year, in 2023, we saw less deals in Mexico, less investments in Mexico and Latin America, but those, even though it’s less in volume, the deal sizes have been much, much bigger, around 73% much bigger. And I think that’s evidence that we’re seeing a growth, but for the companies that are steady and they’re being able to progress and grow in each one of these markets.

AI’s impact on the fintech sector

One of the big themes, and the other one is AI. I think that’s no surprise to anyone.

We have not had a guest in your chair over the past 14 months probably that hasn’t mentioned AI.

David Lask: And it’s true. I mean, there’s a reason for that. I think AI and the amount of things that it can do for the fintech sector and the amount of challenges that it can unblock, it’s still nascent. There’s still business models evolving. What kind of use cases they’re still evolving? There’s many out there, but that’s still the main topic. And that was clear during FinTech Americas.

The evolution of AI in Mexico, even though it’s still starting, is at a very accelerated pace. And throughout Latin America as well, more than 40% of fintech companies are already using some sort of AI internally, and 65% are using AI that already exists in the market. So different use cases, some of them for more customer service, some of them for underwriting capabilities. But AI is all over the place.

I’m very excited to see where that is heading, as a nascent concept in terms of fintech and how we can use it. It’s going to be very interesting to see how the use cases evolve, and where do we see that value moving forward in the next couple of years. But nonetheless, I do think that AI is here to stay, and it will continue to be the hot topic in the next couple of years. At the very least.

Latin America as a market: unity and diversity

As I’m asking this as an outsider, I realize it’s probably an unfair question: Like every country in Latin America is a separate market, right? Is it fair to look at Latin America as a single market, or everything’s so nuanced that, you know, Mexico is nothing like Brazil?

David Lask: Absolutely. I think you need to take a little bit of both. Brazil being most likely an exception, given they’re a Portuguese speaking country, given the size, they’re a little bit separate from the rest of Latin American countries, from my view. But nonetheless, Latin America shares strong cultural similarities in terms, and that makes it seem like there are services or approaches that can serve multiple markets, not only one.

But even having said that, there is significant differences in how you need to operate in each one of the markets. And it comes down to even the way you say something, the way that you say something in Argentina can be very different on how you say it in Mexico. Or the customer preferences in terms of cash use, for example, can be very different in each market.

So, it is a little bit both. In Latin America, yes, there are a lot of similarities that help us. And a lot of companies in Latin America are expanding to other countries in the region because of that. But at the same time, it is very important to be able to localize the product that you are offering. You cannot use the same exact product in each one of the markets. And that is why a lot of the expansion, the regional expansion we see, is driven by payments and these kind of infrastructure players that can replicate their model much faster with less localization.

Unique challenges in the Mexican market

I’m kind of picturing you, David, sitting around a table with other MDs at Tala, and you’ve got these other countries. I’m kind of curious what’s unique to Latin America, as you look at your colleagues, what are some of the unique challenges and opportunities that you have in Mexico compared to what your colleague in Kenya might face?

David Lask: Well, in Mexico, it’s still a matter of financial inclusion and financial literacy. Mexico is a cash-based economy. Over 90% of transactions are done in cash. So that is a difference, for example, from Kenya, where M-PESA and these technologies that have allowed people to transact through their mobile phones have existed for quite some time.

In Mexico and Latin America, that challenge continues to be how to integrate a large portion of the population into these digital channels and the trust that they have with financial institutions that has always been historically quite low. How can technology allow for people to trust the products that they receive and use them in a more healthier way? So it’s very much about that. It’s very much about the design.

Building trust in financial institutions

The switch institutions – it’s getting them, convincing them and getting them to trust that working with an institution is worth their time?

David Lask: Exactly. And that’s the nature of this, what we call the global majority. Them having been overseen or not attended has caused this friction between those population and financial institutions, and that is one of the bigger challenges in Latin America. How can we serve more people, not because they don’t need this, or not because they don’t want a product that can help them, but help them understand how to use it, what channels to use, and how to grow in that sense. So that is the challenge in Latin America, and it’s progressing, but there’s still a long way to go.

The regulatory environment

One of the things that we’ve at Tear Sheet seen in our reporting of US-based financial services companies versus, say, Europe, is a different relationship with regulation. I’m curious, we could start with Mexico and maybe expand out to all of Latin America. As a FinTech company looking to expand and looking to grow, how does regulation impact you, whether helping or hindering you? Where’s regulation, I guess, in terms of its maturity curve?

David Lask: So as fintech products and fintech institutions have evolved in Latin America, so has regulation. It has been a must for local authorities and regional authorities to be able to keep up with these new technologies that keep on emerging. And that they could be very helpful for the people in their country, but at the same time, they can be very risky. And that comes with these channels also giving way to a lot of fraudsters, a lot of bad players that are not helping the cause.

Those guys are everywhere.

David Lask: And they are so quickly in everything. So that is a need that each one of the markets has now, including Mexico, for regulators to be on top of these issues and not close opportunities for the good players, that can help this segment, but at the same time, put in the locks or close the doors for those that are not looking to do the right thing.

And we’ve seen that throughout the past couple of years in Mexico and Latin America has followed the same trend in terms of data privacy laws, in terms of being able to have access to open banking solutions that are safe. And people, if you trust that, they can share their information, giving information to customers on what platforms are safe, which ones are registered, which ones are not.

So that kind of regulations continue to evolve. Yes, there’s still much more regulation needed. There’s much more rules that need to be applied. But always they need to consider that in the best interest of the customer or the citizen of each one of these markets, how can you provide, or continue to provide, that access to them while instructing or giving them the information or the rules for them to not fall into one of these bad players’ hands?

And that continues to evolve. We work very closely with Mexican authorities, CONDUSEF, which is the Mexican financial consumer protection agency, in order to continue to inform them about what we are seeing in the market in terms of opportunities or risks, and hand in hand, be able to drive this regulation that is needed to protect the customers more than anything.

Regulator engagement with the market

Obviously, with the new US administration, I don’t know what’s going to happen, but one of the changes I’ve seen over the past few years is the regulators – they come to our conferences, and they went from being sort of like in an ivory tower somewhere in Washington to actually participating in industry events, for better or for worse. I’m kind of curious how far away the regulators are from the market in Mexico?

David Lask: I would say in Mexico, it’s the other way around. Regulators have continuously stayed very close to the market. They are open to collaborate with institutions like Tala and other players in order to gain that understanding. In the end, I think the gap that they are trying to close is the quick advancement of the technology that we use and that is already being executed in Mexico and Latin America, versus their understanding of what that means or those risks.

So I think Mexico, particularly, has done a great job in being able to stay close to the players that are actually developing and executing this technology in order to be on the same page on what direction to drive towards. So I think that’s quite positive. Of course, historically, regulation and technology don’t move at the same speed, and that’s continued to be a challenge. But I think as we move forward, some of the key issues or the key challenges or risks are being attended one way or another.

The investment environment in Mexico

I want to go back to that consolidation question that I had before and maybe just look as a spin off question. Can you give us a view of what the investment environment looks like in Mexico, like, who invests the risk capital in companies like Tala? How that’s grown. Are there local players combined with international players that are also participating? You mentioned Newberger Berman coming in to invest, to create this debt facility. Can you just talk about how that works on the ground?

David Lask: Absolutely. So it’s interesting, because that is also like a regional topic. We see multiple local investors in Mexico now that are looking for opportunities in market, but most of them are not limited to Mexico only. Most of the local investors in Mexico or any other market are looking at the region as a whole. They understand the similarities that I spoke about as an opportunity for FinTech companies to be able to expand in a very effective manner throughout Latin America. And that’s something that keeps them with the eyes open throughout the region.

And it’s a similar case for US investors. I think the proximity, the relationship that there is between US investors and Latin American countries has shown, and the understanding of this huge opportunity has led to many of them being open to investing in Latin America. Several of them even entirely focused on the region.

I think what is clear is that the opportunity throughout the region is huge. How do you tackle that opportunity? How do you or where do you invest? That’s where it can change a lot. Is it more on the infrastructure side? Is it more on the payments and remittances side, which has been growing quite a lot? Is it more on the lending side or these consolidating companies that are offering multiple products?

But nonetheless, I think the chain that they create is valuable, not only in the market, but throughout the region. And it’s shown there’s a lot of success cases that continue to happen. And this grows, as I mentioned, the 73% increase in investment amount per transaction versus a number of deals also shows that as we move forward, there’s going to be less companies, but stronger ones with higher revenues, with higher growth, that will continue to follow that path.

Business models in Mexican fintech

Awesome. I want to shift back to Tala, I guess, as illustrative of a broader theme. One of the themes that we’ve seen in the US market—and I’ve been at this a long time—was, you know, a lot of the early fintech 1.0 companies decided to go direct to consumer like Tala does, and over time, saw that that was very challenging, at least in the US market. So we’ve seen this sort of companies begin as D2C, and then eventually shift to B2B model, or a B2B2C model. I’m kind of curious in Mexico, and I guess we can also ask about the larger region. Is the fintech opportunity to go to sell to existing institutions or to create new institutions?

David Lask: I mean, that has shifted through time. When these new technologies started to appear in Mexico, financial institutions, traditional banks, were a bit wary about how they could incorporate these new kinds of technologies. There has been in Mexico in particular, quite a disconnect between the collaboration that a fintech company and a large traditional bank could have or how they can collaborate, or what can they do together.

Of course, there are many players that are focused on solutions for enterprise banking, and there has been some success cases, but in terms of being able to reach that final customer, either if it’s a business or a consumer, there has been several friction in terms of how to cooperate, but that has changed.

Given the power that we see in fintech solutions, the collaboration between bank financial institutions and fintech companies has continued to grow stronger. And there’s a lot of use cases like, “Hey, let’s graduate customers into a larger institution.” Or, “I can help you with this underwriting model for those that you are rejecting.” Or, “I will provide you with this kind of information on fraudsters or other lists I have.”

Those kinds of cases have continued to evolve, and they are serving across the board, other fintech, financial institutions or both at the same time. So given that the what I would say was this, “Hey, I’m not sure if this technology is going to work. I already have my infrastructure.” And you know, as we all know, changing something in a large institution can be difficult. So moving at the same pace as these new fintechs that are at full speed can be maybe quite challenging, but through time, as this sector has consolidated, as there has been more visibility on what’s working and what’s not, this collaboration has grown much stronger in the last couple of years.

Institutional readiness for partnerships

And having done so, does that mean institutionally, at the larger banks, that they’ve gotten better at knowing what it looks like to partner with a company like a Tala?

David Lask: Yeah, that’s it. What does it mean for the bank? You know what it means to a financial institution, that perception has changed, and it all comes back to that opportunity. I mean, seeing that these new technologies that are emerging or already existing, but are evolving in the market, can help the financial institution serve their customers in a better way, or reach more customers that is showing up.

And we’re seeing that across the board, and they themselves are also trying to open up these new branches, digital spin-offs of their bank using these technologies, so there’s a mix of both. It is a competitive market, so the collaboration has been quite important, but in the end, there is still each one of these institutions looking to see how they can also reach that same objective by their own.

Future outlook for Latin American fintech

Awesome. David, time goes so fast I feel like we could talk for another half hour. I want to end on another question I have for you that’s in two parts. What is your view, say a three to five year perspective on what fintech in Latin America looks like? And then I’d love you to apply to Tala. Where do you see Tala in the next few years?

David Lask: The trend that I mentioned will continue. We will see continued consolidation. I expect for this consolidation to show up as not only individual growth, I mean growth that each one of these players are having, reaching more people launching new product, but also more M&A transactions that start to happen where smaller companies are absorbed by one of these fintech institutions that are leading the market. I think that is the trend that I see in the market.

As well as this continuous regional expansion. It has already been seen—if I’m not mistaken, over 50% of fintech companies in Mexico already operate beyond Mexico in another Latin American market. So that’s a pretty interesting number, and that means that that trend will continue.

And for Tala, back to square one, right? The same mission. How can we serve the global majority? How can we continue to evolve our lending products, to be able to reach more people and in a more personalized in a more dynamic way, understanding the volatile life, and that means looking at these opportunities, not only in Mexico but across the region, to understand how we can continue to get closer to our mission.

Expansion plans

And so does that mean—and feel free to not answer it if you don’t want to give too much away—but does that mean more product expansion, more geographic expansion, more education you talked about before?

David Lask: I mean, I’m happy to share more news on the expansion coming later this year. But we are trying to reach more people that need these kind of solutions.