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The fintech sector in Latin America has undergone a significant transformation over the past decade, and its momentum shows no signs of slowing. This evolution has been propelled by multiple factors, including increased internet and mobile device adoption, regulatory changes, and the region's distinct demographics. Latin America, characterized by its vast underbanked population and outdated banking systems, has risen as a dominant force in fintech investments in recent years. Innovations spanning lending, payments, insurance, and other financial services have disrupted the traditional financial sector in the region.
Data underscores the region's fintech growth trajectory. The number of fintech startups in the 18 countries of Latin America surged by 66% in 2018. By April 2023, there were approximately 1,000 active fintechs in the region, with around 70% specializing in lending, payment acceptance, and related services. In 2021, fintech companies in Latin America raised a record $14 billion, with 187 startups leveraging technology to offer innovative financial products. Furthermore, in 2022, venture capital investors deployed $7.8 billion across 1,114 deals in the region.
After a subdued 2023 in terms of significant investments, there is optimism for greater venture capital investment in fintech in 2024. This optimism is based on recent data showing that Latin American companies received nearly $2 billion in equity funding in the five months leading up to November 2023, an increase from the $1.3 billion received in the first half of the year. The trend suggests an upward trajectory for investment in fintech, although it might still be below the sector's peak in 2021.
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Despite facing challenges, such as a decline in investment in 2022, the outlook for fintech startups in Latin America remains promising in 2023. The region's fintech ecosystem continues to lure record capital and foreign investors, solidifying its position as a global leader in the fintech arena. The future of fintech in Latin America is bright, driven by a remarkable surge in entrepreneurial activity and technological advancements over the past decade.
In recent years, Latin America has emerged as a spot for fintech startups, with several countries experiencing significant growth in this sector.
Yet, Brazil is clearly leading, as the fintech industry in Brazil has experienced significant evolution, with a notable shift in business models. After a period of accelerated growth since 2013, many fintechs are recalibrating their business purposes, transitioning from B2C to B2B models, which offer more consistent and predictable revenue streams. A 2021 study by ComScore highlighted that 73% of Brazilians had access to internet banking, placing Brazil at the forefront of banking digitalization in Latin America. Furthermore, the 2021 Global Fintechs Rankings positioned Brazil as the 14th major global fintech ecosystem. This prominence is further emphasized by the substantial increase in investments in Brazilian fintechs since 2019, with 2021 seeing a doubling of funds directed towards these startups compared to the previous year.
