The Inter-American Development Bank (IDB) has announced that it had identified 1,166 financial technology (fintech) startups in Latin America in 2018, a stunning 66% rise compared with the organization’s findings in the previous year.
The report, prepared in collaboration with a local business accelerator Finnovista, says two out of every three ventures are already in advanced stages of development and the fintech activity is visible in 18 countries across the region.
With 380 startups, Brazil leads the region’s financial technology market, followed by Mexico with 273, Colombia with 148, Argentina with 116, and Chile with 84.
Around 24% of the startups offer payments and remittance services, with barely 18% of them lending loans. In the survey, one of every three companies reported having expanded their operations beyond the borders of their home country.
“Although five countries account for 86% of the fintech companies in the region, initiatives were identified in every country in Latin America. There is also a growing trend toward internationalization,” said Juan Antonio Ketterer, a senior official at the IDB.
The bank says that there has been a rapid growth in the number of digital banks and that many of them provide unique services, including credit scoring and identity and fraud protection.
Around 35% of fintech companies in the region were founded or co-founded by women, far above the global average estimated to be 7%.
The IDB has urged the governments in the region to enact laws to regulate these ventures, saying around 35% of the startups it surveyed favoured regulations.
Governments should talk with the industry players and frame a law that encourages innovation, the bank has suggested.