In recent years, the fintech sector had a remarkable growth, between 2018 and 2022 the number of financial technology grew 112% in Latin America and the Caribbean, with a count of 2,482 platforms, according to a report by the Inter-American Bank of Development (IDB).
However, different industry experts predict a slowdown in investment.
“At a time like the present, it is when the best startups are born, we have a market where there is less money and we are going to define issues of financial economics, but it is not the first time that something like this has happened, it has been seen in the United States and in Brazil a lot of times, maybe it feels like something new in Mexico,” said Vilash Poovala, co-founder and CEO of Oyster Financial.
Mexico in the lead
According to Statista, Mexico occupies the second place with the highest investment in fintech companies in Latin America with 567 million dollars, behind Brazil, which concentrates an investment of 2,000 million dollars.
As mentioned by Poovala, fintechs must strive to become more creative in order to have higher monetization. “The ecosystem is healthy and good businesses can connect with good customers,” she said.
In recent years, investment in financial technology platforms has grown in investor circles around the world, with great appetite for the Latin American region.
According to Finnovista, in 2019 there were around 115 investment firms outside Latin America that are committed to the fintech sector in the region.
Experts such as Antonia Rojas, a partner at ALLVP, point to a decrease in the capital that funds financial technology companies due to the fact that it is concentrated in a smaller number of better quality fintech companies. “There is a movement, throughout the world, towards quality rather than quantity, investors in general are more demanding, this is good for the ecosystem,” explained Rojas.
Others involved in the sector such as Pablo Cuarón, vice president of business development at Mastercard, agree that higher quality companies are better prepared for a difficult scenario, “the ecosystem is in a more solid moment and in a good position to face what is coming “, said.
Opportunities
Regarding the opportunities that fintechs must address so as not to be left out of quality services, Poovala explained that companies must target underserved segments with specific needs, as is the case of SMEs in Mexico.
“Specifically SMEs have a need to know who paid them and when, it is very important to understand the part of how the structure of a financial technology company can help with reconciliation and solve this pain point”, added the manager.
In addition, he highlighted that in the country the commitment to finfech is maintained, due to the area of opportunity in inclusion and digitalization of businesses.