Fintech Ecosystem in Latin America and Caribbean Grows 340% in Six Years

The report, titled “A Consolidated Ecosystem with the Potential to Contribute to Regional Financial Inclusion,” demonstrates the sector's progress toward stability and resilience.

The fintech sector in Latin America and the Caribbean has surged over 340% in the past six years, with the number of technological finance startups skyrocketing from 703 in 18 countries in 2017 to 3,069 in 26 countries by 2023. This growth is highlighted in the latest report from the Inter-American Development Bank (IDB) and Finnovista, presented at the fifth annual FintechLAC meeting in Bogotá, Colombia, with support from Luxembourg.

The report, titled “A Consolidated Ecosystem with the Potential to Contribute to Regional Financial Inclusion,” demonstrates the sector's progress toward stability and resilience. Over half of the fintech companies are focused on serving the underbanked or unbanked populations, reflecting a significant shift towards enhancing financial inclusion. The sector has also seen dynamic regulatory developments, including an increase in frameworks for open finance and the establishment of innovation hubs and regulatory sandboxes.

Brazil remains the leader in fintech startups in the region, accounting for 24% of the total, followed by Mexico (20%), Colombia (13%), and Argentina and Chile (10% each). Recent notable growth has been observed in Peru, Ecuador, and the Dominican Republic. Emerging markets such as Peru, Ecuador, and Costa Rica have experienced an average annual growth rate of 44% from 2017 to 2023.

The most prevalent fintech segments include payments and remittances (21%), loans (19%), and corporate finance management (13%). These segments have seen annual growth rates of 24%, 31%, and 28%, respectively.

The increasing focus on underbanked and unbanked populations is notable, with 57% of fintech firms now targeting these groups, up from 36% in 2021. The loan segment is particularly active in serving unbanked individuals, while payments and remittances are focused on underbanked small and medium-sized businesses.

Regulatory developments are closely tied to the sector's growth. Countries with specific fintech regulations, such as Chile's Fintech Law and Colombia's regulations for instant payments and open finance, have seen notable advancements in their fintech ecosystems.

IDB’s Connectivity, Markets and Finance Division chief, Anderson Caputo, emphasized that the report’s findings are crucial for shaping public policies that attract investment and foster fintech growth. Finnovista’s co-founder, Fermín Bueno, praised the sector’s role in driving innovation, economic growth, and financial inclusion, and committed to supporting continued development and collaboration.

Despite challenges such as scalability and access to financing—faced by 41% and 19% of firms respectively—the fintech sector remains a major focus for venture capital and foreign direct investment. Though venture capital investment halved between 2021 and 2022, fintech continues to lead with significant participation, representing 43% of the total investment in the region.

The report includes data from 26 countries, incorporating new entries like the Bahamas, Barbados, and others. It provides a comprehensive overview based on surveys of fintech companies, regulators, and investors, with a margin of error of 4.54% and a 95% confidence level.