How big is Fintech Market in Latin America? The fintech market is rapidly growing in Latin America, driven by increased internet and mobile device adoption, regulatory changes, and the adoption of blockchain technology.
As per Market Data Forecast, fintech is the use of technology to improve traditional financial services and processes, including online banking, mobile payments, peer-to-peer lending, digital wallets, and financial management tools.
Fintech companies use advanced technologies such as AI, blockchain, and big data to create new financial products and services that are more efficient, accessible, and user-friendly compared to traditional financial institutions.
In this article, we will provide a comprehensive analysis of the size and growth of the fintech market in Latin America. We will examine:
- current state of the market
- its size and growth
- key players in the industry
- challenges
- future outlook
Latam Fintech Market
Latin America is rapidly emerging as a global leader in the fintech industry.
As per IDB, 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 in 2021.
Brazil leads the region with 31% of the total fintech platforms, followed by Mexico, Colombia, Argentina, and Chile.
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Factors Driving Growth
The fintech market in Latin America is being driven by several factors, including:
- Increasing demand for financial services not provided by the traditional financial sector: The traditional financial sector has been slow to adapt to the changing needs of consumers in Latin America, leaving a gap in the market that fintech companies are eager to fill.
- Digital financial services due to COVID-19 pandemic: The COVID-19 pandemic has accelerated the adoption of digital financial services in Latin America, as consumers seek to limit their exposure to physical contact.
- Regulatory changes: Governments in Latin America are becoming more supportive of fintech companies, recognizing the potential benefits they can bring to the economy.
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Overview of Latam Fintech Products and Services
Fintech companies in Latin America offer a wide range of products and services, including:
- Online banking: Fintech companies are offering online banking services that are more accessible and user-friendly than traditional banks.
- Mobile payments: Mobile payments are becoming increasingly popular in Latin America, with fintech companies leading the way in developing new payment solutions.
- Peer-to-peer lending: Fintech companies are using blockchain technology to facilitate peer-to-peer lending, enabling individuals to lend and borrow money without the need for traditional financial institutions.
- Digital wallets: Digital wallets are becoming more popular in Latin America, providing consumers with a convenient and secure way to manage their money.
- Financial management tools: Fintech companies are developing tools to help consumers manage their finances more effectively, including budgeting apps, investment platforms, and personal finance management software.
The fintech market in Latin America is poised for continued growth in the coming years, with increasing investment and regulatory support. In the next section, we will examine the size and growth of the fintech market in Latin America.
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Fintech Latam Market Size and Growth
The fintech market in Latin America is growing rapidly, driven by increasing demand for online banking solutions, favourable demographics, and an underserved population. As per Mordor Intelligence, payments, loans, personal finance, and insurance have the greatest potential for growth in the region. In this section, we will examine the size and growth of the fintech market in Latin America.
Transaction Values, Revenues, and Assets Under Management
- The Latin American fintech market grew at a compound annual growth rate (CAGR) of 23.8% from 2021 to 2026, reaching a total transaction value of USD 164.3 billion by 2026, according to Statista.
- In 2021, the transaction value of the fintech market in Latin America was estimated to be USD 70.8 billion.
- In terms of revenues, the Latin American fintech market generated USD 43.8 billion in 2021, up from USD 28.4 billion in 2019.
- The market also had assets under management of USD 35.7 billion in 2021.
- The user penetration rate in the fintech market in Latin America reached 17.5% in 2021, up from 13.4% in 2019.
- The number of users in the fintech market in Latin America reached 118.8 million in 2021, up from 95.7 million in 2019.
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Comparison of B2C Revenues and Users for Fintech Startups and Established Financial Companies
As per Statista,
- The B2C revenue of fintech startups in Latin America reached USD 29.7 billion in 2021, up from USD 20.2 billion in 2019.
- The number of B2C fintech users in Latin America reached 77.2 million in 2021, up from 62.3 million in 2019.
VC Investment in Latin American Fintech Startups
VC investment in Latin American fintech startups has been growing rapidly in recent years. As per Mordor Intelligence:
- VC investment in Latin American fintech startups reached USD 2.1 billion in 2019
- A growth of 690% over the past five years
- Brazil accounted for the majority of VC investment in fintech startups in 2019, followed by Mexico and Colombia.
The fintech market in Latin America is expected to continue growing in the coming years, with increasing investment and favourable demographics driving growth. In the next section, we will examine the key players in the Latin American fintech market.
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Key Players in the Latin American Fintech Market
The fintech market in Latin America is highly competitive, with a mix of startups, established financial companies, and other companies using technology to disrupt and innovate in the financial services industry. In this section, we will examine some of the key players in the Latin American fintech market share.
Nubank
Nubank is a Brazilian fintech startup that offers digital bank accounts, credit cards, and personal loans.
Founded in 2013, it has become one of the largest fintech companies in Latin America, with over 30 million customers. In 2021, Nubank raised USD 750 million in a funding round led by Berkshire Hathaway, valuing the company at USD 30 billion.
MercadoLibre
MercadoLibre is an Argentine e-commerce company that has expanded into fintech services, including digital payments, loans, and insurance.
It is the largest e-commerce and fintech company in Latin America, with operations in 18 countries. In 2020, MercadoLibre’s fintech division, Mercado Pago, processed over 1.1 billion transactions, with a total payment volume of USD 66.5 billion.
StoneCo
StoneCo is a Brazilian fintech company that provides payment processing, online banking, and financial management services to small and medium-sized businesses.
It is one of the largest payment processors in Brazil, with a market share of over 6%. In 2018, StoneCo went public on the NASDAQ, raising USD 1.5 billion.
Creditas
Creditas is a Brazilian fintech startup that provides secured loans to consumers using their homes and cars as collateral. It also offers home equity loans, auto financing, and payroll loans.
In 2021, Creditas raised USD 255 million in a funding round led by the Japanese conglomerate SoftBank, valuing the company at USD 1.75 billion.
Konfio
Konfio is a Mexican fintech startup that provides loans and financial services to small and medium-sized businesses. It uses machine learning algorithms to analyze credit risk and provide loans quickly and efficiently.
In 2020, Konfio raised USD 100 million in a funding round led by SoftBank.
These are just a few examples of the many innovative fintech companies operating in Latin America. The region’s fintech market is highly competitive, with new players entering the market every year.
Challenges Facing the Latin American Fintech Market
While the fintech market in Latin America is growing rapidly, there are still several challenges that fintech companies must overcome to achieve sustainable growth. In this section, we will examine some of the key challenges facing the Latin American fintech market.
Consumer Data Security Concerns
One of the biggest challenges facing the Latin American fintech market is consumer data security concerns. As per Market Data Forecast, many consumers in Latin America are hesitant to use digital financial services due to concerns about identity theft, fraud, and data breaches.
Fintech companies must invest in robust cybersecurity measures to build trust with consumers and secure their personal and financial information.
Limited Access to Capital
Access to capital is a major challenge for many fintech startups in Latin America. As per Mordor Intelligence, many fintech startups in the region are struggling to raise the capital they need to grow and expand their operations.
This is due in part to a lack of venture capital firms and angel investors with experience in the fintech sector.
Regulatory Barriers
Regulatory barriers are another challenge facing the Latin American fintech market.
As per IDB, regulatory frameworks for fintech companies vary widely across Latin American countries, with some countries being more supportive of fintech than others.
Fintech companies must navigate complex and often unclear regulations to operate in the region.
Limited Financial Inclusion
Limited financial inclusion is a major challenge in Latin America, with millions of people in the region lacking access to basic financial services.
As per SVB, fintech companies have the potential to address this issue by providing innovative and accessible financial services to underserved populations.
However, they must overcome regulatory and fintech infrastructure barriers to reach these consumers.
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Talent Shortages
Finally, talent shortages are a challenge facing the Latin American fintech market. As per SVB, fintech companies in the region are struggling to recruit and retain top talent, particularly in areas such as data science, cybersecurity, and software engineering.
How big is Fintech Market in Latin America: Key Takeways
The fintech market in Latin America is growing rapidly, driven by increasing demand for digital financial services, favourable demographics, and an underserved population. In this article, we have examined the size and growth of the fintech market in Latin America, as well as some of the key players and challenges facing the industry.
Despite the challenges, the Latin American fintech market presents many opportunities for growth and innovation. Fintech companies that can navigate the regulatory landscape, build trust with consumers, and recruit top talent have the potential to transform the financial services industry in the region.
If you found this article informative, be sure to check out our other great content on fintech and related topics. Thank you for reading!
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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.
How big is Fintech Market in Latin America FAQs
Who are the key players in the Latin American fintech market?
Some of the key players include Nubank, MercadoLibre, StoneCo, Creditas, and Konfio.
What are some of the challenges facing the Latin American fintech market?
Challenges include limited access to capital, complex regulations, talent shortages, and data security concerns.
How has the COVID-19 pandemic affected the Latin American fintech market?
The pandemic has increased demand for digital financial services, driving growth in the fintech market.
Who is leading the Latin American fintech market?
Brazil leads the region with 31% of the total fintech platforms, followed by Mexico, Colombia, Argentina, and Chile.
What are some of the innovative products and services offered by Latin American fintech companies?
Fintech infrastructure market map in the region offer a range of innovative services, including digital bank accounts, credit cards, loans, and insurance.
How can fintech companies in Latin America address limited financial inclusion?
Fintech companies can provide innovative and accessible financial services to underserved populations, but must overcome regulatory and infrastructure barriers to do so
