Latin America has been a hotbed for fintech innovation in recent years. Fintech, or financial technology, is the application of technology to improve financial services, and it has had a significant impact on the region’s economy. In this blog, we will explore the rise and impact of fintech in Latin America.
The fintech industry in Latin America has experienced significant growth in recent years. According to a report by the Inter-American Development Bank, the number of fintech startups in Latin America grew from 703 in 2017 to 1,166 in 2019, representing a growth rate of 66%.
One of the main drivers of fintech growth in Latin America has been the region’s large unbanked and underbanked population. According to the World Bank, around 45% of adults in Latin America do not have a bank account, and many who do have limited access to traditional financial services. This has created a significant opportunity for fintech companies to provide financial services to underserved populations.
Another factor driving fintech growth in Latin America is the region’s high mobile penetration rate. According to the GSMA, there were 442 million unique mobile subscribers in Latin America in 2020, representing a penetration rate of 67%. This has created a fertile ground for mobile-based fintech solutions.
Fintech has had a significant impact on the Latin American economy, particularly in the following areas:
Financial Inclusion: Fintech has helped to increase financial inclusion in the region by providing access to financial services to underserved populations. For example, companies such as Nubank in Brazil and Mercado Pago in Argentina offer mobile-based banking services to people who previously did not have access to traditional financial services.
Digital Payments: Fintech has also driven the adoption of digital payments in the region. Companies such as Mercado Libre in Argentina and Rappi in Colombia offer digital payment solutions that have gained widespread adoption, particularly among younger generations.
Investment: Fintech has also had a significant impact on the investment landscape in Latin America. Crowdfunding platforms such as Idea.me in Argentina and Catarse in Brazil have enabled entrepreneurs to access capital more easily, while robo-advisors such as Warren in Brazil and Alkanza in Chile have made it easier for people to invest their money.
Fintech has had a significant impact on the Latin American economy, particularly in increasing financial inclusion, driving the adoption of digital payments, and changing the investment landscape. As the region’s fintech industry continues to grow, it is likely to have an even more significant impact on the region’s economy in the years to come.