Fintech - Industry - South America Market, Share and Trends 2023-2028

Summary of Fintech

South America’s fintech sector is accelerating disruption across payments, banking, capital markets and insurance. Funding hit records in 2021 before dipping to $4.8 billion in 2022 – still the second highest annual total ever.

Based on our estimates, we can say that the South America’s regional Fintech industry is forecasted to be a $226.38 billion industry in 2029 from $96.25 billion in 2023 with a CAGR of 14.97 %.

Adoption nears 75% in Brazil as digital banks like Nubank reshape competitive dynamics. Challenger neobanks now serve over 60 million regional customers. Cryptocurrency usage also grows quickly.

Trends reflect embedded finance, blockchain modernization, sustainability action and platform convergence. Superapps bring together daily services from messaging to finance.

Despite economic uncertainty, recovery continues post-pandemic. Other industry insights lead us to believe that this industry is poised to grow at a forecasted 2.5% GDP growth in 2023. Expanding smartphone access and ecommerce in underserved segments create opportunities.

Recent Trends and Insights

Embedded finance and superapps have led to the growth of ‘Fintech’ market in this region. Retailers like— MercadoLibre integrate payments, banking, credit and wealth offerings along the shopping journey.

Uber also embeds financial services for workers. Neobanks like Uala and Belvo target underserved segments with digital acquisition and data analytics for credit decisions. Incumbents acquire to augment capabilities.

Brazil established open banking standards for data sharing to stimulate competition. Similar policy emerges across Colombia, Mexico and Peru. Standards emerge for green taxonomy definitions, disclosures and reporting. Banca Etica pioneers ethical banking services in Argentina. Climate tracking tools also develop.

Crypto asset adoption accelerates, though under an evolving regulatory approach. Enterprise blockchain projects aim to modernize cumbersome trade finance and cross-border settlement processes.

The adoption of online and mobile banking increased rapidly in Latin America in recent years. The total number of fintech users in the region grew gradually and exceeded 415 million in 2022— representing a considerable shift towards digital banking services.

Product Insights

Incumbents like Itaú Unibanco and Bradesco augment mobile apps with financial planning tools, account aggregators and embedded payment options. Marketplaces also integrate third-party apps.

One of the major players in mobile banking in the region is Nubank— which was among the largest fintech companies worldwide in 2022. The number of customers of the Brazilian neobank grew sharply in current years— exceeding 74 million in 2022.

Uber works with partners to introduce working capital loans, bank accounts and insurance to drivers via its app. MercadoLibre, Shopify and other platforms follow suit. Startups like Marco Polo and TradeIX build enterprise blockchain solutions to automate trade finance processes, supply chain tracking and B2B payments.

Startups like Jeeves extend credit to consumers and business owners using alternative data like cash flow patterns. Others underwrite based on mobile usage history. Carbon tracking insights begin appearing in credit card summaries to show consumers their spending impacts. MoCaFi aggregates underbanked data for financial inclusion.

Key Companies

Some major players within this vast domain of industry are

• Nubank
• MercadoLibre
• StoneCo
• Creditas
• Tapi
• Yuno
• Wibond
• Kashin
• Z1
• Botin

Regional Analysis

South America is experiencing rapid advancement in its fintech sector as increasing digital connectivity and mobile phone access reaches underserved and rural populations. Major fintech hubs and epicenters anchoring talent and investment are located in urban centers like São Paulo, Bogotá, Santiago, Buenos Aires and Mexico City.

Brazil currently leads the region in fintech adoption rates, funding, and overall market scale – with over $8 billion in fintech assets in the country so far. Regulation across South American countries aims to strike a balance between enabling innovation in the sector while also ensuring financial stability and inclusion of wider segments.

Brazil has been at the forefront of implementing open banking frameworks ahead of other countries in the region. This is now being followed by the likes of Colombia which introduced a progressive ‘FinTech Law’ enabling open APIs and data sharing to spur more competition. Countries are also beginning to enable regulatory sandboxes for testing new models.

There remains ample room for exponential growth in fintech across South America as smartphone and mobile internet access continues to rise. Trends in embedded finance, blockchain, sustainability solutions and superapps convergence can significantly expand financial participation across underbanked groups when regulatory environments adapt to enable innovation at scale.

Market Segmentation

By Type:

• Ecommerce platforms and mobile apps
• AI-powered product recommendations and personalized shopping
• AR/VR for virtual try-ons and interactive displays
• IoT solutions for supply chain and inventory management

By End User:

• Retail chains, franchise brands
• Grocery stores and supermarkets
• Direct-to-consumer brands
• Online marketplace

By Enterprise Size:

• Large retailers
• Small and mid-sized stores
• D2C startups

By Countries:

• Brazil
• Argentina
• Columbia

Our Methodology

We have offered a well-founded review of South America’s regional fintech industry along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.