Latin America Fintech Market Size

Latin America Fintech Market Analysis

Latin America has always faced economic and political challenges. Rapid expansion was hampered by a large hilly area and many natural calamities. Neoliberal policies enhanced the economic climate in the region, resulting in a surge in international investment. The situation improved in the last ten years with the introduction of mobile communications, which created a fertile ground for the region's financial and technical development. The banking system in Latin America is heavily regulated, with hefty transaction fees and lengthy account opening procedures. With five institutions controlling 90% of total assets, market competitors are not required to improve their services, introduce new products, or compete for clients. This demonstrates the region's market potential for Fintech projects. 

The epidemic has had a significant influence on global financial services. However, in Latin America, the COVID -19 crisis has been a major engine for fintech, pushing innovation out of necessity. Instead of visiting physical bank branches, many consumers checked out innovative financial products and apps. Many businesses that used to rely on foot traffic have begun to provide online shopping, accept credit card payments, and integrate with digital platforms. COVID - 19 has boosted demand for digital financial products and fintech in Latin America.

Fintech activity is expanding in the region, spurred by rising demand for online banking solutions, favourable demographics, and a substantial underserved population. From USD 44 million in 2013, FinTech funding has increased to USD 2.1 billion in 2019. In the first half of 2020, Latin American Fintech raised approximately USD 525 million. Around 1166 FinTech start-ups were identified in the 18 countries of the Latin America region in the year 2018. There was an increase of 66% from the last year when the number was only 703.

According to the investment bank Goldman Sachs, the sector of payments, loans, personal finance, and insurance have the greatest potential. Goldman Sachs and Morgan Stanley, another major investment bank, invested in Brazilian Fintech startups to secure higher profit margins. In the middle of 2020, North and South Americas accounted for the largest share of total Fintech investments (USD 12.9 billion) while the Asia Pacific region and the EMEA accounted for USD 8.1 billion and USD 4.6 billion accordingly.

At last count, at least 1,166 fintech initiatives were operating, spread across 18 countries. In 2019 alone, VC investment in FinTech startups in Latin America totalled USD 2.1 billion. That number represented a growth of 690% over the past five years.