BOGOTA – The number of “fintech” companies, technology firms that offer financial services, in Latin America is growing but these companies are continuing to find it difficult to raise capital.
“Raising money for fintech development in Latin America is still low,” Allen Cuelli, the senior director of Product Solutions and New Payment Enablers for Visa Latin America and the Caribbean, told EFE.
“There are between $23 billion and $26 billion on the global level destined for investment in fintech, but the region is participating with just $600 million of investment,” he said.
On the sub-regional level, Central America and the Caribbean have the lowest participation in the sector because the access to capital and the community focusing on the creation of those tools “is less mature,” Cuelli said, although he added that the future looks bright.
According to recent figures compiled by the Inter-American Development Bank, in 15 countries in the region, 703 companies dealing with financial solutions have been identified and 60 percent of those firms have been created just between 2014-2016.
A recent report prepared by the IDB and Finnovista says that in just 7.7 percent of the current fintech firms were in existence in 2012.
By country, those who have experienced the most growth in the fintech sector have been Brazil with 230 firms, Mexico (180), Colombia (84), Argentina (72), Chile (65), Peru (16), Ecuador (13) and Uruguay (12).
Despite the growth, Latin America is still moving forward at a slower pace than Europe, Asia and the Middle East.
“On the macro level, Latin America is underdeveloped regarding investment, but investors are seeing that there are big opportunities here and more money is arriving. Many of the global players are saying that it’s Latin America’s turn now,” Cuelli said.
The regional disadvantage is also due to the fact that local banks had viewed fintech companies as a threat to their business, but that is changing, he said.
Fintech firms have diversified their service offerings and are becoming the platforms for alternative financing, payment services, business finance management, stock market trading services and many others.