WASHINGTON, United States (CMC) — The Fintech ecosystem in Latin America and the Caribbean has experienced rapid growth and established itself as a key factor to meet the demands and needs of financial consumers in the region, according to a new study released here.

The third edition of the study “Fintech in Latin America and the Caribbean: A Consolidated Ecosystem for Recovery,” notes that the number of Fintech platforms reached 2,482 last year, a growth of 112 per cent from 2018 to 2021.

The study also found that nearly a quarter of Fintech platforms globally, estimated at 22.6 per cent, are in Latin American and Caribbean.

The study published by the Inter-American Development Bank (IDB), IDB Invest and the innovation and venture capital company, Finnovista, noted that the growth was fuelled by increasing demand for financial services not provided by the traditional financial sector, increased demand for digital financial services because of the coronavirus (COVID-19) pandemic, and regulatory changes that enhanced transparency and security for investors using these platforms.

“The study shows that the Fintech ecosystem is becoming a key tool for promoting greater financial inclusion,” said Juan Antonio Ketterer, head of the Connectivity, Markets and Finance Division at the IDB.

“At the IDB, we are committed to supporting the development of this sector because we believe Fintech platforms hold great potential for expanding credit in sectors such as micro-, small- and medium-sized enterprises and segments of the population that are commonly excluded, such as women.

“We hope that this study serves as an input to promote an ecosystem where Fintech platforms continue to grow and become stronger so they can support Latin America and the Caribbean’s sustainable development,” Ketterer said.

The study also provides an analysis of the largest Fintech sectors in the region over the past three years, noting that the digital loans (19 per cent) and crowdfunding (5.5 per cent) sectors are registering important growth in the region. These are followed by business technology platforms for financial institutions (15 per cent) and business finance management (11 per cent), among others.

The number of Fintech platforms offering digital banking services, mainly through mobile apps, rose from 28 in 2018 to 60 last year and 36 per cent of Fintech startups polled offer solutions involving segments of the population that are totally or partially excluded from the formal financial system.

Results of the poll carried out by the IDB and Finnovista show an increase in the average of fintech initiatives where a woman is a founder or co-founder.

The IDB said that since the last report came out, the average number of Fintech firms with a woman as founder or cofounder in the region rose from 35 per cent in 2018 to 40 per cent in 2020.

“The rise in the adoption of mobile technology led to the emergence of insurtech platforms directly offering insurance products in line with users’ needs,” according to the study.

The study also lists the public policy challenges overcome in the region and for the first time features a summary of Fintech regulations in the region and highlights the adoption of regulatory innovations, such as the creation of regulatory sandboxes and innovation hubs that have opened up testing or dialogue spaces.