The financial technology (fintech, for short) sector in Latin America is rapidly growing: 60 percent of startups in the sector on the continent were established between 2014 and 2016. The upward trend continues, fueled by growing interest among venture investors, and international expansion across the continent.
The amount of Venture Capital(VC) investments in the financial services industry doubled between 2016 and 2017, surpassing USD 1 billion, and leading to a 55.3 percent growth in the sector. This trend, however, is not homogenous across Latin America and the Caribbean. Almost 90 percent of all fintech activity is concentrated in Brazil, Mexico, Colombia, Argentina, and Chile.
VC interest in the Latin American fintech startups may be growing, but for fintech entrepreneurs, access to funding remains a major challenge, especially in the later stages of scaling up. They principally obtain funding from sponsoring investors (47.9 percent) and accelerators (30 percent). Another challenge founders face is finding talented people with “expertise in financial services and digital technologies”.
When it comes to fintech companies to be properly equipped to face the industry’s challenges, it is key that financial regulations and public policies adapt to the fintech entrepreneurs’ needs in order to further spur their development and therefore create a more inclusive financial system and stimulate economic growth in Latin America and the Caribbean.
Contributed by Maria Enriquez.
Fin-Tech Innovations you may not know were from Latin America and the Caribbean by the Inter-American Development Bank and Finnovista.
Inside Latin America’s breakout year in Tech by LAVCA (Latin America Private Equity & Venture Capital Association)
Latin America: Opportunity for International Fintech by Finnovista
Financial inclusion in Latin America: Regulatory trends and market opportunities by Brookins
Global Findex 2014 Unveils World’s Most Comprehensive Set of Data on Financial Inclusion by the World Bank