Fintech Ecosystem in Latam: Over 3000 Active Startups
The fintech ecosystem in Latin America and the Caribbean (LAC) has shown remarkable growth and evolution in recent years. Between 2017 and 2023, the number of fintech companies increased from 703 to 3,069, representing a 340% rise. This growth was initially driven by rapid adoption of financial technologies, with a 66% increase from 2017 to 2018. Although the growth rate moderated to 35% in 2021 and 23% from 2021 to 2023, this reflects a transition to the sector's maturation phase.
Competition in the Fintech Ecosystem
Government agencies are not seen as direct competitors, with 33.6% of startups placing them in the lowest competition level. Startups view governmental entities more as regulators or potential partners. Conversely, consulting agencies and consumer goods companies are perceived as low to moderate competitors. Specifically, 28.87% of startups classify consulting agencies at level 4 of competition, while 34.91% classify consumer goods companies at level 5.
The fintech sector has consolidated as a favorite among investors within the technology sector, capturing 46% of capital in 2023. There has been growing interest from investors in expanding investments within existing portfolios before committing capital to early-stage financing rounds. Surveys reflect a shift towards more institutional and corporate financing sources, with 29.63% of companies receiving funding from angel investors and 20.58% from foreign venture capital funds. However, access to funds remains a significant challenge, although 63.26% of companies maintain overall optimism about investor interest in innovative and high-risk models.
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Women's Participation in the Fintech Sector
Women's participation in the fintech sector presents barriers and promising trends. In 2023, 28% of funds reported that between 11% and 20% of their portfolio was invested in women-led companies. Although the majority of startups (79.70%) have less than 40% female participation in their founding teams, the representation of women among employees tends to be more equitable, with 44.4% of companies reporting over 40% female representation in their workforce.
The technology for financial institutions segment has shown the highest relative growth, increasing by 484% from 2017 to 2023. This segment encompasses technological solutions designed to modernize and optimize financial processes, including online customer identification (eKYC), risk engines, compliance, and regulation (Regtech), and alternative credit scoring. These solutions leverage advanced technologies such as Big Data, Artificial Intelligence (AI), and Machine Learning (ML) to enhance solvency assessment and risk management.
Distribution of Fintech Companies in the Region
In 2023, Brazil and Mexico remain leaders in the LAC fintech ecosystem, hosting 23.53% and 20.14% of total companies, respectively. They are followed by Colombia, Argentina, and Chile, collectively representing 33.44% of the total fintech companies in the region. Other countries such as Peru, Ecuador, Dominican Republic, and Guatemala show emerging growth, totaling 14.8% of the total.
In Latin America and the Caribbean, the fintech sector has experienced rapid growth and maturation, evolving from a nascent industry to a thriving ecosystem. The region has witnessed a significant increase in fintech companies, driven by technological advancements and a diversification of financial services.
Despite challenges such as access to funding and gender diversity, the sector remains resilient, buoyed by robust investor interest and strategic regulatory frameworks. Government agencies are increasingly seen as collaborators rather than competitors, fostering an environment conducive to innovation. With Brazil and Mexico leading the way in fintech adoption, the future holds promise for continued expansion and the delivery of inclusive financial solutions across the region.