Fintech "grow more than 340%" in AL in six years; experts see room to continue

According to the study by the Inter-American Development Bank (IDB) and the innovation and venture capital company Finnovista, the number of technological finance startups created in the last six years went from 703 companies in 18 countries in 2017 to 3,069 in 26 countries in 2023.

Of the total fintech companies in Latin America, 57% have underbanked or unbanked people and companies as their target population, while, in 2021, that percentage was 36%.

“Consumers are demanding more and there is a very clear focus of fintechs on following sectors that do not have much financial inclusion, and it is a priority that we have,” Anderson Caputo, head of the connectivity, markets and division, told Reuters. IDB finances.

In the case of people who are not banked, the segment of fintechs that leads their arrival is loans, while in the case of underbanked small and medium-sized companies the leading segment is payments and remittances.

According to the report, Brazil is the country with the most startups, with 24% of the total; then comes Mexico, with 20%; Colombia, with 13%; and Argentina and Chile, with 10% each.

“One of the things that is clear in the reports is the positive relationship that exists between regulatory advances and the capacity that countries have,” Caputo said during an interview to comment on the results of the report from Bogotá.

The report marks as notable events for the 2021-2023 period the publication and implementation of laws in Chile, Ecuador and Peru, as well as the publication of specific regulations for “interoperable low-value instant payments and open finances in Colombia.”

“A second time”

Among the challenges mentioned by fintech are scalability and access to financing. According to the study, companies are oriented towards institutional financing sources along with risk capital, both local and international.

And although between 2021 and 2022, investment in venture capital “reduced by half, to 7.8 billion dollars, fintech continues to be the sector with the largest participation, representing 43%” of the total, and “an important line for the foreign direct investment in the region,” the study noted.