The Rise and Impact of Fintech in Latin America (IMF Fintech)

Summary

• In 2021, there were more than 300 million users of digital payments and more than 30 million users of digital banks across Latin America.p.9
• Digital payments transaction volume grew from $89 billion in 2017 to $215 billion in 2021.p.11
• The transaction volume of fully online digital banks in LA6 grew from $17 billion in 2017 to $123 billion in 2021.p.11
• Alternative finance lending expanded from $0.7 billion in 2017 to $6 billion in 2020.p.11
• The number of insurtech companies operating in Latin America reached 352 in 2021.p.11
• In 2021, there was $6.1 billion in external investments in Latin American fintech across 258 transactions.p.23

Key insights

1. About three-quarters of digital banks' customers are previously unbanked and underbanked consumers and small and medium enterprises.p.9
2. Business-to-business fintech startups providing technological solutions to existing financial institutions grew annually by almost 50 percent on average between 2017 and 2021.p.12
3. Brazil's Pix payment system started operating in 2020 and reached about 145 million users and 2,890 million transactions per month by December 2022.p.14
4. Nubank serves 70 million customers in Brazil, Mexico, and Colombia, including more than 5 million first-time credit card or bank account owners.p.17
5. Brazil accounts for about two-thirds of the alternative finance volume in Latin America, followed by Chile and Mexico.p.17
6. An increase in digital banks' transaction activity is associated with a reduction in traditional bank interest rate margins.p.23
7. A higher level of fintech adoption in the region is associated with lower income inequality and higher female employment.p.23
8. Monthly venture capital and private equity funding for fintech peaked at $257 million in January 2022.p.29