Latin America is experiencing a moment of transformation in terms of financial services, proof of this is that from 2018 to the end of 2021 the financial technology sector (fintech) in the region grew 102%, going from 1,166 platforms to 2,482, according to the most recent study by the Inter-American Development Bank (IDB) on the matter.
Within the analysis “Fintech Latin America and the Caribbean, a consolidated ecosystem for recovery”, it is detailed that the pandemic of coronavirus supported greater adoption and consolidation of fintech models in the region, where Brazil and Mexico account for 52% of the total startups in the region, with 771 and 512, respectively.
Here the number of platforms in the countries with the most platforms:
- Brazil 771
- Mexico 512
- Colombia 279
- Argentinian 279
- Chile 179
According to the study, with these figures it can be deduced that Latin America concentrates 22.6% of all fintechs in the world.
“With our support, the number of platforms and the opportunities for inclusion that are generated in different sectors can increase in different countries of the region,” said Benigno López Benítez, vice president of the IDB during the presentation of the report.
López highlighted that the payment segment continues to be the dominant segment within the fintech market offer in Latin Americawith a 25% share of the total, followed by the loan segment (18%).
“The most important segment in terms of the number of platforms continues to be payments, driven by growing regulatory developments in Brazil and Mexico, reaching more than a quarter of all platforms,” López stressed.
Covid-19 effect
The report details that the pandemic had a positive effect on the fintech sector in Latin Americasince business models such as digital payments have been consolidated, in line with the progress made by digitization in people’s daily lives, in a region where it is estimated that about half of the population has access to services formal finance.
“The Covid-19 caused a disruption of the economic and social status quo in the world that, without a doubt, is having a profound impact on the way in which the inhabitants of Latin America relate to money and finances,” the report reads.
The study highlights that although few of the fintech start-up manage to reach a sufficient market volume to be significant and compete with the traditional financial sector, there are signs of the consolidation of the sector to grow and increase its impact.
Within the analysis, a recount is made of the main challenges that fintech in the region have in the current context, based on a survey of market participants, which indicated, in their majority (56%), that scaling their businesses is their main challenge, followed by access to financing (16%), launching a product or service (11%), regulation (8%), attracting and retaining talent (3%), among others.
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