By 2019, at least 1,166 fintech initiatives were already operating across 18 countries in the region. In 2020, venture capital investment in Latin American financial technology startups totaled over $1.6 billion USD, down from the $2.118 billion USD reported the previous year. However, in the five years preceding the pandemic, venture capital investments in fintech had grown by approximately 690%.
Brazil, Mexico, Colombia, and Argentina are seeing significant growth in new startups providing novel ways to acquire products and services. While reliance on cash remains very high in the region and an average of 40% of the population is unbanked, high mobile penetration (75%) and a large youth demographic point toward accelerated adoption of digital financial initiatives.
These market conditions set the stage for a new era of digital payments. For instance, contactless and QR code payments are expected to continue rising. Furthermore, peer-to-peer (P2P) payments—transactions that enable funds transfers directly between two individuals' bank accounts via a mobile app or cellular line—are anticipated to see increased adoption.
Virtual prepaid cards (the digital version of a physical bank card) will also emerge as a key alternative, while digital wallets continue to drive a cashless society by enabling seamless, immediate payments both online and in physical stores.
Expanding the Portfolio
While fintechs initially focused on customer acquisition, their current priority is driving profitability by offering services that increase transaction frequency and screen time. Although many began by offering a digital account and a card, they are now broadening their portfolios to include personal loans, insurance, investments, loyalty programs, and even integrated marketplaces for products and services.
Concurrently, traditional banks are seeking new revenue streams, primarily through the monetization of customer data. Significant commercial and technical work remains to fully leverage banking data. Consumers can expect optimized digital experiences powered by a more flexible, transparent, and accessible suite of banking services. Beyond offering strong financial products, institutions must deliver user experiences that build loyalty among increasingly demanding, tech-savvy customers.
Open Banking
Another emerging trend is open banking, which promotes "better access to financial products, optimized interactions, and lower process costs, while boosting sector competitiveness." This model advocates for open access to data, algorithms, and processes, with a focus on bank accounts and payment processing. While still in its early stages across the region, open banking is gaining traction in Mexico, Brazil, Chile, and Colombia.
From an infrastructure perspective, many banks are replacing legacy platforms and modernizing workloads in the Cloud to increase efficiency and agility—a movement expected to accelerate in 2022.
Simultaneously, financial super-apps are projected to gain prominence. These mobile applications consolidate various digital services, allowing users to meet multiple needs within a single ecosystem. These platforms will offer features such as sending or receiving money, making payments, managing social contacts, accessing financial news and educational content, buying gifts, or playing online games—all without leaving the application. Through this integrated approach, brands aim to build deeper, more meaningful relationships with consumers.