Fintechs in Latin America: there is no one-size-fits-all model

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Depending on which headlines you read, the overall outlook for fintechs in Latin America and the Caribbean remains mixed, driven by market slowdowns and erratic funding rounds and deals that closed in 2022. But beyond the rumors, there is no denying that fintechs, facilitators and other payment innovators have been game-changers – simplifying the way people pay and move money, reimagining the way businesses manage their finances and influencing virtually every aspect of the global economy. Fintechs have also impacted consumer behavior, raising expectations and establishing preferences for digital payments in almost every facet of daily life.

This is particularly true in Latin America and the Caribbean, a region that remains fertile ground for innovation. The digital revolution we have experienced in recent years has taken the region by storm how to get spain number for whatsapp widespread internet adoption – in some cases, more than the global average – and increased penetration of mobile and smartphone access. However, populations remain largely unbanked, and cash remains king, as they say. Yet this juxtaposition is precisely the opportunity that fintechs and other payment innovators are seizing (and will continue to do so) to reach the masses, facilitate and expand access, and ultimately achieve greater financial inclusion.


Opportunities for Fintech in the region

These not-so-encouraging prospects can still be seen as opportunities, and that's because this is not a one-size-fits-all model. Take last year for example: we saw funding drop by more than 70%, but 2022 is still shaping up to be the second-biggest year of investment on record for fintechs. Latin America gained seven new fintech unicorns in the areas of insurance, payments, and banking, and more fintechs launched products and formed alliances to increase offerings to one of the most important economic segments, SMEs.¹

However, subregions performed differently in response to the nuances and different circumstances of local markets. For example, in Brazil, which is quickly becoming the most advanced country in Latin America in terms of technological know-how and with more digital accounts than inhabitants, we saw a significant slowdown in funding and overall settlements for most of 2022. Mexico, which arguably ranked second as the leading market for the rise of fintech companies in the region, showed a significant lag last year in terms of financial inclusion, with almost all transactions under 500 pesos still being made in cash, according to a recent study by CB Insights and Visa. Despite this, its remittance market remained robust and expense management and SME solutions fintechs continued to gain popularity. In the case of the Andean region, there was a significant increase in activity levels while funding remained strong, driven by new startups based in Colombia focused primarily on SME banking and payments. Central America and the Caribbean, in turn, showed a lot of momentum around blockchain fintechs as it positions itself as a global blockchain hub.

We can’t know for sure what this year holds, but forecasts point to a slow stabilization after the volatility seen last year. On top of this, there are other factors that also point upwards, such as integrated finance. We increasingly expect to see an increase in the integration of financial products and services within platforms, enabling financial features to be fast, convenient and secure, and ultimately driving long-term growth in this category. It’s definitely an exciting time to be in the game and we at Visa feel energized and remain committed to continuing to explore and bring to life ideas and solutions that can help our fintech and other innovative partners grow, helping more people in more places thrive.

Source [1] CB Insights report on Fintechs in Latin America, commissioned by Visa for the second half of 2022