Major financial technology firms in Latin America have reported at least $8 billion in funding up to this point, according to the inaugural 2020 Latam Fintech Report from KoreFusion.
The recent report done by the San Francisco-based consulting firm on the state of Latin America fintech firms showed the immense growth of the fintech sector in key markets throughout the region.
The report looked at 1,075 fintech companies in the five major markets of Argentina, Brazil, Chile, Colombia and Mexico.
The categories of fintech firms in the analysis included crowdfunding, digital banks, lending and payment operations, among others. B2B financial service fintechs were also included in the study. The estimate of $8 billion in funding to these firms is a remarkable increase in a short amount of time, considering that the region attracted just $45 million in fintech funding in 2014, according to the firm Fintech Global.
The majority of the companies included in the study have been in business for less than 10 years, as fintech represent a relatively new trend in Latin American business.
KoreFusion reported that one of the major challenges – and a lingering concern for investors – is the lack of a centralized information hub that gives reliable data on the fintech industry in Latin America, especially when it comes to funding.
KoreFusion senior consultant Marine Huang warned that more established fintech operations need to keep evolving or else risk being made obsolete by the rapid societal and economic changes coming from this pandemic.
“The crisis will also be a powerful level-setter for all players regardless of their age, including banks,” Huang wrote in the report. “Payment habits, merchant solutions, and lending capabilities (to name but three) will be upended by COVID-19, and older fintechs with business models anchored on pre-crises axioms may find themselves outdated or slow to adapt.”