The fintech sector will continue to grow in Latin America

The fintech sector will continue to grow in Latin America

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Investors behind venture capital are looking to inject close to US$16 billion in new projects and especially in the fintech sector. 

The fintech sector in Latin America will continue to grow, because the traditional financial sector does not meet the needs of the unbanked population, considers José Luis Vargas, Executive Vice President of Provenir, a global leader in AI-powered risk decisioning software for Latin America.

A sign of this growth is that the number of fintech platforms in Latin America reached 2,482 in 2021, representing a 112 percent growth between 2018 and 2021, according to the study Fintech Industry Doubles in Size in Latin America and the Caribbean by IDB and Finnovista.

The concentration in the number of platforms changed little compared to the previous publication and continues to be led by Brazil (31% of the total), followed by Mexico (21%), Colombia (11%), Argentina (11%), and Chile (7%), shows the data from the study. 

“In the financial area, Latin America is experiencing a moment called “leapfrog”, as it is avoiding painful processes such as mature markets that have a delegated system for many years and it costs them that transformation through fintech," explains the executive of Provenir.

Vargas considers that Latin America has an important growth in fintech since when looking at the analysis of investments in the region through Venture Capital in the last 24 months, it is observed that they are investing close to 16 billion dollars and, above all, they are looking to do so in this sector.

Fintech investment in Latin America, in 2021, led the number of venture capital investments and cornered 39% of the amount invested in the region in 2021, according to the IDB study.

“Even though the prospects for recovery in Latin America are not yet very clear, the fintech sector is currently experiencing a stage that could be categorized as exuberant,” says Andrés Fontao, managing partner at Finnovista, an innovation and venture development firm.

The great opportunity for fintechs in Latin America is that the population is unbanked and does not have access to credit, says Vargas. An example of this is that one out of every three Latin Americans has access to credit, according to the World Bank. This makes them look for sources of credit in the informal sector.

“The population is accessing credit, the problem is the type of credit it accesses, which is through the informal economy and loan sharks,” said the director of Provenir.

When you see that technology, the availability of data, and the appetite to covering that unattended segment is a combination where Fintechs in Latin America are going to be covering that space in the market that is not done through the traditional financial system, Vargas points out.


Source: Israel Pantaleón (2022, August 26). Sector Fintech seguirá creciendo en América Latina: Provenir. Forbes Centroamérica. Retrieved September 09, 2022 from https://forbescentroamerica.com/2022/08/26/sector-fintech-seguira-creciendo-en-america-latina-provenir  

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