FINTECH: Innovations You May Not Know were from Latin America and the Caribbean
Banco Interamericano de Desarrollo (BID); Finnovista
Pombo, Cristina; Morelos, Eduardo; Pleguezelos, Jessica; Andrade, Gabriela; Fontao, Andrés; Goulart, Janaina
This report represents an initial effort to systematically describe the commercial activities of Fintech in Latin America. In the first part, we offer an overview of the sector and its main trends in terms of emergence, magnitude, and location of the main startup hubs, as well as of the forces that drive the businesses, their potential clients, deployed technologies, and the development of a collaborative system. In the second part, different types of innovation observed throughout the region are analyzed in further detail, dividing them in 10 large segments among which platforms of alternative financing and payment solutions stand out. Startup hubs in Mexico and Brazil are the focus of the third part, being these the two leading countries in this activity. Part four discusses the creation of public policies and specific sector regulations such as mechanisms to achieve financial inclusion goals and boost consumers’ trust in the services offered by these young enterprises. In the fifth part, we analyze the industry’s scaling potential, its internationalization, and its growth given that increasingly more and more Fintech firms are expanding their services outside of their home countries, seeking to operate sustainably and create jobs throughout the entire region. In part six, we estimate the amount of venture capital investment in the sector stemming from angel investors, startup accelerators, private capital funds –from Latin America as well as from the United States and Europe–, and from financial and non-financial corporate entities. Finally, the seventh and last part provides a series of conclusions regarding the evolution and future development of Fintech firms in the region.