The fintech industry has been on a steady rise globally, and Latin America is no exception. As of 2021, the fintech industry in Latin America and the Caribbean has doubled in size over the past three years, with the number of fintech platforms reaching 2,482, according to a study by the Inter-American Development Bank (IDB).
This growth has been driven by an increasing demand for financial services not provided by the traditional financial sector, an increased demand for digital financial services due to the COVID-19 pandemic, and regulatory changes.
In this article, we will explore the market share of fintech in Latin America and discuss why it is important for investors and businesses to understand this growing market.
Fintech in Latin America: Exploring the Market Share
Latam Fintech Market 2023
Latin America is a region with a large population of unbanked or underbanked individuals. According to the IDB, around 70% of the population in the region does not have access to formal financial services.
This presents a significant opportunity for fintech companies to provide financial solutions to this underserved population
The fintech industry is also important for the region’s economic growth as it provides access to capital for small and medium-sized enterprises (SMEs), which are the backbone of most Latin American economies.
Growth of Fintech Market Share in Latin America
Current Size of the Industry
According to a report by Mordor Intelligence,
- Fintech activity is expanding in the region, driven by increasing demand for online banking solutions, favorable demographics, and a significant underserved population.
- FinTech funding has grown from USD 44 million in 2013 to USD 2.1 billion in 2019.
- In the first half of 2020, Latin American Fintech raised approximately USD 525 million.
The number of FinTech startups identified in the 18 countries of the Latin America region increased by 66% in 2018, reaching a total of 1,166.
According to investment banks Goldman Sachs and Morgan Stanley,
- The sectors with the greatest potential in Latin America are payments, loans, personal finance, and insurance.
- In terms of investments, the Americas accounted for the largest share, with USD 12.9 billion, followed by the Asia Pacific region with USD 8.1 billion, and the EMEA region with USD 4.6 billion.
- VC investment in Latin American FinTech startups reached USD 2.1 billion in 2019, representing a growth of 690% over the past five years.
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Factors Contributing to the Growth
The growth of the fintech industry in Latin America can be attributed to several factors.
- There is an increasing demand for financial services that are not provided by the traditional financial sector. Fintech companies are filling this gap by providing innovative financial solutions that cater to the needs of the unbanked and underbanked population in the region.
- COVID-19 pandemic has accelerated the adoption of digital financial services in the region. With lockdowns and social distancing measures in place, consumers have been forced to turn to digital channels for their financial transactions. This has created a surge in demand for digital financial products, such as mobile payments and online banking.
- Regulatory changes have also contributed to the growth of the fintech industry in Latin America. Governments in the region have recognized the potential of fintech to drive financial inclusion and have implemented policies that are favorable to the industry.
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Comparison of the Leading Countries in the Industry
How many fintechs are there in Latam? Brazil leads the region with 31% of the total fintech platforms, according to the Inter-American Development Bank (IDB) study. Mexico, Colombia, Argentina, and Chile follow closely behind.
- Brazil’s dominance can be attributed to its large population and its well-established financial sector.
- Mexico, on the other hand, has a large underbanked population, which presents a significant opportunity for fintech companies to provide financial solutions.
- Colombia, Argentina, and Chile are also experiencing rapid growth in the fintech industry, with several startups emerging in these countries in recent years.
Potential of Fintech in Latin America
The fintech industry has the potential to transform the financial landscape in Latin America. In this section, we will discuss the potential of fintech in the region, the areas of fintech with the greatest potential, and the impact of fintech on SMEs.
Potential of Fintech in Latin America
Latin America is a region with a large population of unbanked or underbanked individuals. According to the Inter-American Development Bank (IDB), around 70% of the population in the region does not have access to formal financial services.
This presents a significant opportunity for fintech companies to provide financial solutions to this underserved population.
Fintech also has the potential to drive financial inclusion and boost economic growth in the region.
By providing innovative financial solutions, fintech companies can help SMEs access capital, which is crucial for their growth and development. This can have a ripple effect on the economy as a whole, as SMEs are the backbone of most Latin American economies.
Areas of Fintech with the Greatest Potential
Payments, loans, personal finance, and insurance are the areas of fintech with the greatest potential in Latin America, according to the Mordor Intelligence report.
Mobile payments, in particular, have seen significant growth in the region, with several mobile payment startups emerging in recent years. This growth can be attributed to the increasing use of mobile devices and the high penetration of social media in the region.
Furthermore, blockchain technology has the potential to revolutionize the financial sector in Latin America. It can provide secure and transparent financial transactions, which is crucial in a region where there is a lack of trust in traditional financial institutions.
Impact of Fintech on SMEs
Fintech has had a significant impact on SMEs in Latin America. By providing access to capital and innovative financial solutions, fintech companies have helped SMEs grow and expand.
This is crucial for the economic development of the region, as SMEs are responsible for a significant portion of job creation and economic growth.
Furthermore, fintech has made it easier for SMEs to access financial services, such as loans and insurance, which were previously only available to large corporations.
This has leveled the playing field for SMEs and has allowed them to compete with larger companies on a more equal footing.
Challenges Facing Fintech in Latin America
Despite the potential for growth in the fintech industry in Latin America, there are still several challenges that the industry must overcome. In this section, we will discuss some of the challenges facing fintech in the region.
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Regulatory Environment
The regulatory environment in Latin America can be challenging for fintech companies.
The regulations in the region are often outdated and not conducive to innovation.
Furthermore, the regulatory landscape is fragmented, with different countries having different regulations. This can make it difficult for fintech companies to operate across different countries in the region.
However, there are signs that the regulatory environment is starting to change.
Governments in the region are recognizing the potential of fintech to drive financial inclusion and are implementing policies that are favorable to the industry.
According to the Market Data Forecast report, regulatory changes have been one of the drivers of fintech growth in the region.
Access to Capital
Access to capital is another challenge facing fintech companies in Latin America. While there has been a significant increase in venture capital investment in the region in recent years, access to capital remains a challenge for many fintech startups.
According to the Mordor Intelligence report, one of the biggest challenges facing startups in the region is a lack of access to capital.
Furthermore, traditional financial institutions in the region are often resistant to working with fintech companies, which can make it difficult for them to access the capital they need to grow and expand.
Consumer Trust
Consumer trust is another challenge facing the fintech industry in Latin America.
Many consumers in the region are wary of using digital financial services, as they are concerned about the security of their personal and financial information.
Fintech companies must work to build trust with consumers by implementing robust security measures and being transparent about how they use consumer data.
According to Statista, consumer trust is crucial for the success of fintech companies in the region.
Infrastructure
Fintech Infrastructure is another challenge facing the fintech industry in Latin America.
While there has been significant growth in mobile and internet penetration in the region, there are still large parts of the population that do not have access to these technologies.
This can make it difficult for fintech companies to reach these underserved populations. Furthermore, there are often challenges with the existing infrastructure, such as slow internet speeds and unreliable electricity.
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Fintech companies must work to overcome these challenges if they are to expand their reach and provide financial services to the underserved population in the region.
According to SVB, infrastructure is one of the challenges facing fintech companies in the region.
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Talent
Finally, there is a shortage of talent in the fintech industry in Latin America.
While the talent pool is expanding, there are still challenges with finding and retaining skilled workers.
This can make it difficult for fintech companies to innovate and grow.
However, there are signs that this is changing, with more universities in the region offering courses in fintech and more workers being trained in the industry.
According to Mordor Intelligence, the talent pool is expanding in the region, which is a positive sign for the future of the industry.
Despite these challenges, the fintech industry in Latin America is poised for significant growth in the coming years. By addressing these challenges, fintech companies can unlock the full potential of the industry and drive financial inclusion and economic growth in the region.
Emerging Trends in the Fintech Industry in Latin America
The fintech industry in Latin America is constantly evolving, with new Fintech trends in Latin America and emerging technologies shaping the industry. In this section, we will discuss some of the emerging trends in the fintech industry in the region.
Digital Wallets
Digital wallets are becoming increasingly popular in Latin America, with several startups emerging in recent years. Digital wallets allow users to store and manage their funds digitally, making it easier to make transactions and manage their finances.
According to the Mordor Intelligence report, digital wallets are one of the areas of fintech with the greatest potential in the region. The report notes that the increasing use of mobile devices and the high penetration of social media in the region are driving the growth of digital wallets.
Artificial Intelligence
Artificial intelligence (AI) is also becoming increasingly important in the fintech industry in Latin America. AI can be used to analyze large amounts of data, identify patterns, and make predictions. This can help fintech companies to provide more personalized services to their customers and make better investment decisions.
According to the Market Data Forecast report, AI is one of the dominant technologies in the fintech industry in Latin America. The report notes that AI is being used in areas such as fraud detection, risk management, and customer service.
Blockchain
Blockchain technology has the potential to revolutionize the financial sector in Latin America. Blockchain can provide secure and transparent financial transactions, which is crucial in a region where there is a lack of trust in traditional financial institutions.
According to the Mordor Intelligence report, blockchain is one of the technologies with the greatest potential in the fintech industry in Latin America. The report notes that blockchain can be used in areas such as identity verification, supply chain management, and cross-border payments.
Open Banking
Open banking is also becoming increasingly important in the fintech industry in Latin America. Open banking allows consumers to share their financial data with third-party providers, which can help them to access a wider range of financial services.
According to SVB, open banking is one of the emerging trends in the fintech industry. The report notes that open banking can help to drive financial inclusion in Latin America and provide consumers with more choice and control over their finances.
Despite the challenges facing the fintech industry in Latin America, the emergence of new trends and technologies is helping to drive growth and innovation in the industry. By staying up-to-date with these trends, fintech companies can position themselves for success in the rapidly evolving industry.
Future of the Fintech Industry in Latin America
The fintech industry in Latin America is expected to grow considerably in the coming years with new technologies and emerging trends driving innovation in the sector. In this section, we will discuss the future of the fintech industry in Latin America.
Increased Investment
One of the main drivers of growth in the fintech industry in Latin America is increased investment. According to the Mordor Intelligence report, venture capital investment in fintech startups in Latin America totalled $2.1 billion in 2019, representing a growth of 690% over the past five years.
As the fintech industry in Latin America continues to grow, we can expect to see more investment in the sector. This investment will help to drive innovation and support the development of new technologies and services.
Expansion of Services
Another trend shaping the future of the fintech industry in Latin America is the expansion of services. According to the Market Data Forecast report, the Latin America fintech market is segmented by technology, service, application, and deployment mode, with artificial intelligence dominating.
Fintech companies in Latin America are expanding their services to include a wider range of financial products, such as insurance, investment, and wealth management. This expansion of services will help to drive growth in the industry and provide consumers with more choice and flexibility.
Increased Collaboration
Collaboration is also expected to play a key role in the future of the fintech industry in Latin America. As the industry grows and becomes more complex, fintech companies will need to work together to share knowledge and expertise.
According to SVB, collaboration is one of the emerging trends in the fintech industry in Latin America. The report notes that collaboration between fintech companies, traditional financial institutions, and regulators will be crucial to driving innovation and supporting the growth of the industry.
Focus on Financial Inclusion
Finally, the future of the fintech industry in Latin America will be shaped by a continued focus on financial inclusion. According to the Inter-American Development Bank, fintech has the potential to drive financial inclusion by providing affordable and accessible financial services to underserved populations.
Fintech companies in Latin America will need to continue to focus on providing financial services to the unbanked population in order to drive financial inclusion and support economic growth in the region.
Overall, the future of the fintech industry in Latin America looks bright. With increased investment, expansion of services, collaboration, and a continued focus on financial inclusion, the industry is poised for continued growth and innovation.
Fintech Market Share in Latin America Key Takeways
In this article, we have explored the fintech industry in Latin America, including its current state, challenges, and future prospects. Here are some key takeaways from our discussion:
- The fintech industry in Latin America is rapidly growing and has doubled in size over the past three years according to the Inter-American Development Bank.
- Regulatory challenges and financial exclusion are two of the main obstacles facing the industry in the region. According to the Inter-American Development Bank, regulatory frameworks need to be updated to ensure that they are fit for purpose and do not stifle innovation. Meanwhile, the Statista report highlights the need for fintech companies to provide affordable and accessible financial services to the unbanked population in order to drive financial inclusion.
- Increased investment, expansion of services, collaboration, and a continued focus on financial inclusion will shape the future of the fintech industry in Latin America. As reported by Mordor Intelligence, VC investment in fintech startups in Latin America has grown by 690% over the past five years, representing a total of USD 2.1 billion in 2019.
We hope that this article has provided you with valuable insights into the fintech industry in Latin America. If you want to learn more about fintech, be sure to check out our other great content on the subject.
Fintech Companies Latam
UbankU
Defi bank focus on improving the financial inclusion for the GenZ. Financial industry doesn’t know anything about Genz and there´s a 2.5B billion market worldwide.
Ubanku, starts being the first step of the financial life for them, with a frictionless marketplace that can save money with a cashback of products and services of the university life, access to micro loans, all this, while they learn about finance, this allow us to create an innovating score system to connect GenZ with other financial products.
Creditop
Creditop is a loan aggregator that processes any credit request by centralizing lenders and connecting customers with their ideal loan.
We have disbursed +$7.5M in mortgages, car and personal loans with a profitable pricing model in each transaction.
Our mission is to improve life quality through credit efficiency in LatAm. Founders:
INI
Ini, a SaaS and white label fintech platform that allows any -wannabe fintech-company to scale their own payment network and expand their ecosystem into new markets and territories without losing the core focus of their businesses even when there is no connectivity access.
Inipay ́s IP tech (POS terminals + alternative connectivity) is also an enabler to reach new markets and niches such as events, concerts, stadiums, national parks, tourism and hospitality.
Aviva
Aviva is an AI startup following a unique approach to unsecured and productive credit for the underserved communities in Mexico.
Now imagine you are an unbanked person and all that you need to do for getting your first loan is having a face-time call. They have a great experience building Konfio (Mexican Unicorn). Founders:
Koban
A digital financial services platform for Bolivia, Paraguay, Ecuador and Peru; where the vast majority don’t have access to financial services or are drastically underserved by traditional banks.
Koban allows users to perform an array of financial services including online and offline payments, money transfers, budgeting tools and credit solutions, among other services for consumers and SMBs in the region.
Zenpli is an infrastructure focused SaaS working on putting a stop to the KYC and fraud challenge in LatAm.
Through 1-single integration, LatAm fintechs and other digital innovators seamlessly onboard more good customers by accessing best-in-class data across all domains and running accurate end-to-end identity decisions supported by advanced models that are hard to spoof.
We’re rolling our product with Mastercard in Mexico in Q4 2022 with the potential to generate ~500k in ARR over the next 12-months.
We’re backed by The Fintech Fund, Ralicap, Amador, Newtopia and world-class angels and advisors from C-level and VPs at Socure, EPAM, Konfío, R2 and Bureau.id.
Kashin
Kashin (YC S22) is Square with working capital for micro-merchants in LATAM.
We control risk with collaborative credit scoring and our vision is to become the primary financial platform for the masses.
Before Kashin, the founders led Cabify, the largest regional Uber competitor, and grew it from 0 to $50m in annual revenue.
Wibond
Buy now, pay later without credit cards.
WIBOND is a digital payment method to pay in small installments and without the need of a credit card.
It shows the best payment options according to each customer’s possibilities so they can enjoy their favorite products.
Tapi
Tapi is a Fintech B2B. Next-generation API-first network for billers, partners and their clients to re-envision the way bills get paid in LATAM.
Z1
Z1 is the Brazilian Gen Z neobank, where teenagers and young adults can begin their journey to financial independence.
Through Z1’s banking app, users can send and receive money from parents, employers or clients from their side gigs, as well as spend the money through a physical and virtual card.
Botin
BOTIN is an investment super app and a one stop shop to trade traditional and non-traditional assets; its vision is to make the wealth generation tools of the 1% available to all.
Through its Neo broker stock trading app gives users a simple and direct access to invest in different assets across multiple industries and territories (e.g., ETFs and stocks from USA, real estate, crypto, tokens, and others).
BOTIN is focused in helping 300 million people in Spanish speaking Latin America to protect their savings and have an option for retirement.
Yuno
YUNO wants to bring to Latin American companies an easy online checkout solution that solves the pain point of managing multiple payment methods, as well as fraud detection tools, which can be costly and painful to manage.
What is the Fintech Market Share in Latin America FAQ
Who is leading the fintech market share in Latin America?
Brazil leads the region with 31% of the total fintech platforms.
What is driving the growth of the fintech industry in Latin America?
The growth of the fintech industry in Latin America is driven by an increasing demand for financial services not provided by the traditional financial sector, an increased demand for digital financial services due to the COVID-19 pandemic, and regulatory changes.
How has the COVID-19 pandemic affected the fintech industry in Latin America?
The COVID-19 pandemic has boosted demand for digital financial products in the region, according to Mordor Intelligence.
What are the main challenges facing the fintech industry in Latin America?
Regulatory challenges and financial exclusion are two of the main obstacles facing the industry in the region. However, increased investment, expansion of services, collaboration, and a continued focus on financial inclusion will shape the future of the fintech industry in Latin America.
How much has VC investment in fintech startups in Latin America grown in the past five years?
VC investment in fintech startups in Latin America has grown by 690% over the past five years, representing a total of USD 2.1 billion in 2019, according to Mordor Intelligence.
What is the potential for fintech companies in Latin America?
According to Statista, the high internet penetration and financial exclusion present opportunities for new businesses to provide financial solutions to the unbanked population in the region.
