Latin America Fintech Market

Latin America Fintech Market Size

The Latin American fintech market was valued at USD 67.01 billion in 2023. The market in Latin America is expected to grow at a CAGR of  6.51% from 2024 to 2032 and the Latin American market size is predicted to be valued at USD 118.19 billion by 2032 from USD 71.36 billion in 2024.

In recent years, the Latin American fintech market has witnessed significant growth, with Brazil, Mexico, and Colombia emerging as the top players. The region’s most affluent nations, excluding Argentina, will propel moderately in late 2024 and 2025. This can be due to the estimated weakening of external demand in the coming years, according to the Organization for Economic Co-operation and Development (OECD). Latin American countries are currently suffering from the negative impacts of instability in the financial markets worldwide and global geopolitical tensions. According to Fintech Global, in the first half of 2024, the Latin American fintech industry witnessed a considerable drop in deal activity. The number of funding rounds recorded in the region was 79, a decline of 58 percent from 189 deals concluded in the first half of 2023. Still, despite the decrease in deal numbers, the regional fintech companies secured 1.2 billion dollars in the same period, a 20 percent rise from the 1 billion dollars of funding in H1 2023.

MARKET DRIVERS

The prominence of delivering the proper financial services that help companies make the best utilization of the financial operations and processes is one of the factors that helps the market to grow eventually. Automation technology is everywhere in today’s world. Financial technology is launched in smartphones or web-based applications where the company's financial services are operated automatically without the need for a person to regularly check the finances of the businesses. The demand for the proper management of finance for every company, whether it may be private or public sector companies, is gradually rising in Latin America. The growing scale of corporate companies and others in Latin America is one of the common factors that make the rapid adoption of financial technology stand out among competitors. In earlier days, fintech was quietly adopted by the finance sectors like banks, but with the rising number of IT scale, fintech is being quickly adopted by any industry that focuses on finance services.

The fintech market in Latin America is focusing on the expansion of fintech services for various companies. According to the Inter-American Development Bank, the rising number of startup companies in emerging countries like Brazil, Mexico, and Colombia is greatly influencing the adoption of fintech to promote payment sections. Latin America's fintech collaboration with the Caribbean is strengthening the fintech market. More than 340% of the companies adopted the fintech ecosystem in 2023 only in Latin America and the Caribbean. In this, 57% of companies in Brazil, Mexico, and Colombia have directly adopted these services for proper financial management.

MARKET RESTRAINTS

Lack of complete knowledge over the regulatory compliances in offices is one of the primary factors that may limit the growth rate of the Latin America fintech market. Following confined rules and regulations with standards or laws imposed by the government with respect to the country's policies is a bit difficult for many companies to vary accordingly, which may completely restrain the growth opportunities for the market in this region. The rising number of cyberattacks is constantly degrading the growth rate of the fintech market in Latin America. The incidents of cyberattacks are vigorously growing across the region with the advanced technologies that may completely hamper the company's financial status. As per a 2023-24 report by CloudSEK, the LATAM region remained a key target for digital attacks and cyber warfare from 2023 to now. More than 100 ransomware attacks have been registered. It is led by Lockbit with 59 attacks, Alphv at the second, and then by Clop and others.

In recent years, Latin America has experienced a huge number of cyberattacks, which is a major factor to focus on to curb the impact of these cyberattacks with various technologies in cybersecurity. Latin America’s cybersecurity infrastructure is not completely secure with the technologies, which is the major reason for the high number of cyberattacks. According to the latest report studies in the region, more than 1600 cyberattacks per second happen only in the LATAM region, which is a serious concern in resolving the issue of proper cybersecurity solutions.

MARKET OPPORTUNITIES

The presence of a highly underbanked population is creating huge scope for the fintech market in Latin America in the coming years. Latin American people are characterized by outdated banking systems where the government support to improve the financial infrastructure with huge investments is attributed to leveraging the growth rate of the LATAM fintech market. The trend towards the adoption of innovative fintech services and growing investment in fintech from both public and private sectors are surging the growth rate of the market. According to the sources, the demand for fintech services is growing, with a rising number of consumers seeking the best ecosystem financial technologies for better outcomes. This shall propagate the growth opportunities for the market during the forecast period.

The rising knowledge of digital banking systems is also attributed to leveling up the chances for finance technologies over traditional banking systems. In traditional banking systems, access to digital banking systems is limited, and that was completely shed out with the adoption of finance technologies. Digital transactions in Latin America are gradually growing with the presence of more than 400 digital banks. The rising scale of these banks in this region is solely to promote growth opportunities for the LATAM fintech market.

MARKET CHALLENGES

Though fintech is a boom for many companies, the difficulty of integrating modern techniques with traditional ones may be a challenging factor for key players in the Latin American fintech market. Lack of skilled persons in technical solving the real-time issues due to frequently changing software updates shall negatively influence the growth rate of the market. According to UKG, there is a need for more talent, which is hurting the growth of Latin America. About 69 per cent of employers in Mexico encounter the problem of talent shortage. Other nations are not much behind, with Argentina at 73 percent, Costa Rica at 67 percent, Colombia at 61 percent, Guatemala at 78 percent, Panama with 65 percent, Peru with 67 percent, etc.

REPORT COVERAGE

SEGMENTAL ANALYSIS

By Technology Insights

The blockchain technology segment is leading with the highest share of the Latin America fintech market. Blockchain technology is becoming very common in every fintech application due to its vast advantages. The demand to secure applications from cyberattacks shall promote the use of blockchain technology, which has been the most advanced in recent times in fintech companies. AI technology is upgrading with new innovations in fintech that shall showcase prominent growth opportunities for the market during the forecast period.

By Service Insights

The payment segment is leading with the dominant share of the Latin America fintech market. The rising number of payments, especially through the Internet banking system, is ascribed to bolster the growth rate of the Latin America fintech market. The fund transfer segment is likely to have a prominent CAGR by the end of 2032. People in Latin America are generally aware of transferring money through Internet banking or any digital payment applications simply through smartphones, which is attributed to showcasing positive growth opportunities for the market.

By Application Insights

The banking segment holds a prominent share of the fintech market. The rising number of people holding bank accounts and the demand to secure the financial status of the companies with the most advanced technologies in Latin America by featuring the financial operations to run smoothly is ascribed to bolstering the growth rate of the Latin America fintech market.

By Deployment Mode Insights

The cloud-based deployment mode segment is attributed to having a prominent growth rate in the Latin American fintech market. Cloud-based deployment mode has many advanced features with huge storage capacity and works quickly. The on-premises segment is likely to grow steadily during 2024-2029. Small-scale industries mostly rely on the on-premises deployment mode due to its cost-effectiveness.

GEOGRAPHICAL ANALYSIS

Brazil is the biggest Latin America fintech market in the region and is expected to grow at a steady pace during the forecast period. It continued to be the most active region in terms of deals, with organizations in the nation concluding 35 deals (i.e., 44 percent share) in the first half of 2024. Despite being the leading regional market, its performance dropped compared to 85 deals registered in the same period in 2023. The country also remained the front-runner in the investment landscape. Moreover, the nation has seen the swift growth of new financial technology and payment organizations. This rapid emergence, to a certain degree, is because of the bright future that companies displayed in liberalizing access to superior financial services securely, transparently, and efficiently, coupled with being less administrative or governmental. According to a survey by Febrabran-Ipespe, about 57 percent of participants expressed confidence in Brazilian fintech companies in 2023.

Mexico is leading with the largest share of the Latin America fintech market. Fintech has great opportunities in Mexico, with the rising number of startup companies in the past few years. The trend towards the adoption of new technologies like the fintech ecosystem, especially in the banking sector, shall leverage the growth rate of the market. According to the International Trade Administration, more than 500 companies are currently operating with fintech services in Mexico. 20% of the total funding in Mexico directly goes to the fintech companies. Mexico is also one of the top leaders in fintech companies, with more than 650 startup companies in 2023. 

Fintech has been gaining huge traction recently, ascribed to boosting Argentina's fintech market share. Collaborations with other companies in the country and gaining prestigious projects are prompting the market growth rate in Argentina. Changing people’s mindset towards the payments likely towards online payments is merely to level up the market’s growth rate. In Argentina, the number of payments increased by 38% in 2023, which is a great factor that can influence the market's growth rate positively. In 2024, the country’s fintech market shows up as a strong and creative force connecting domestic and economic problems worldwide. Despite suffering from uncontrolled local inflation and global geopolitical uncertainty, its market displayed significant development during 2023, proving its increasing maturity. As rising inflation decreases the purchasing power of cash holdings, fintech companies in the country have provided an attractive choice for customers to safeguard their income. These online platforms enable its citizens to yield interest on funds that could potentially stagnate in zero-yield savings accounts by making investment accounts easily available through consumer-friendly phone usage.

Colombia became one of the key markets for fintech in Latin America in 2023. Its financial industry has traditionally been among the most heavily regulated globally. However, in the last ten years, the nation has rapidly emerged as the 3rd biggest fintech center in this region, housing more or less 300 fintech organizations. It is only behind Brazil and Mexico. According to a report, around 67 percent of Colombian people use financial technology services. It also has the utmost adaptation rate of fintech in the entire region. Moreover, till 2022, 90 percent of Colombian adults have a banking product, which surged from 55 percent in 2008.

KEY MARKET PLAYERS

Some of the major players in the Latin America fintech market include Addi, Afluenta, Aliatu, Aspiria, Banco Inter, BBVA, ClearScore, CompareOnline, ContaAzul, Contabilizei, Credijusto, Cumplo, Finaktiva, Jooycar, Klar, Konfio, Kubo.financiero, Kueski, Lineru, Mercado Credito, Mercado Nubank, Moni Omie, OmniBnk, RapiCredit, Rebanking, RedCapital, Sempli, Starling, Ualá, Uber, and Wilobank.

RECENT HAPPENINGS IN THE MARKET

• In August 2024, Mercado Pago, a financial technology arm of an e-commerce giant in Latin America, MercadoLibre, reported that it had commenced making its own “Stablecoin.” It is backed by the U.S. dollar and is available to its customers in Brazil at a one-to-one value.
• In 2024, Columbian-based company Addi secured USD 86 million in equity and debt funding that encourages the fintech ecosystem. Bogota-based Buy Now Pay Later firm Addi secured this deal from Goldman Sachs. This funding has initiated Venture Capital Investments in fintech companies that are likely to promote the fintech ecosystem across the Latin America region.
• In 2024, ClearScore and FairFall Finance partnered together to launch an innovative debt consolidation proposition. This initiative will boost access to affordable credit that helps many of the customers in Latin America.

MARKET SEGMENTATION

The Latin America Fintech market can be categorized on the basis of service, applications, technology, deployment and regional analysis.

By Technology

• API
• AI
• Blockchain
• Distributed Computing
• Others

By Service

• Payment
• Fund Transfer
• Personal Finance
• Loans
• Insurance
• Wealth Management

By Application

• Banking
• Insurance
• Securities
• Others

By Deployment Mode

• Cloud
• On-Premises

By Country

• Mexico
• Brazil
• Argentina
• Chile
• Rest of Latin America