The number of companies operating in the Mexico fintech industry has jumped from 441 to 512 since last year, according to a new study highlighting how the financial technology sector grew significantly among all four members of the Pacific Alliance, which also includes Chile, Colombia, and Peru.
According to the newly released Finnovista Fintech Radar 2021, the Pacific Alliance is home to 1,102 financial technology startups — representing 47% of the total in Latin America. That is considerably more than the 771 fintech companies currently based in Brazil, which is widely recognized as the regional leader in financial technology development.
While the number of Mexico fintech companies grew 16% since last year, and now represents almost half of the financial technology startups found throughout the Pacific Alliance, other countries in the bloc also registered significant growth since the onset of the global pandemic in early-2020.
According to the report, Colombia has witnessed a 39% growth in the number of fintechs, which jumped from 200 to 279 since last year, while Chile saw fintechs numbers increase by 38%, from 130 to 179. Peru, meanwhile, has reportedly seen its fintech industry more than triple in size in the past four years, and now has 132 startups dedicated to the sector.
The fintech industry is broadly divided into three focus areas, including loans and lending, payments, and remittances — with many economies in Latin America buoyed by funds sent home by citizens working overseas.
According to Andrés Fontao, the director of Finnovista, the growth in fintech seen since 2020 comes amid a general uptick in interest for and usage of digital channels as a result of the pandemic, and has seen traditional financial institutions demonstrate increasing understanding for the need to develop their product offerings in the digital space, either independently or in collaboration with fintechs.
“Banks have to understand how much they can do on their own and how much they need to depend on alliances with fintechs in order to continue being relevant in a new environment, where digital prevails; Fintech companies have to understand well whether banks are potential partners in order to continue fostering the sustained growth of their companies,” Fontao told Forbes Mexico.
Mexico fintech a regional leader amidst boom
The report highlighting the growth of fintech within the Pacific Alliance has been released at a time when Mexico fintech Clara has become the region’s latest unicorn, after a series B financing round saw it raise $70 million to take its valuation beyond $1 billion — just eight months after the launch of the company, which provides company credit cards and payment solutions.
Notably, Latin America’s youngest unicorn has also just announced its official launch in Brazil, the region’s largest economy and biggest fintech market. That means Clara is now officially active in seven countries around Latin America, including all of the Pacific Alliance members, Argentina, Panama, and Uruguay.
While Argentina and Panama are also well-known for their significant and growing fintech sectors, Uruguay is one of the rising stars of financial technology in the region, having moved into the global top 20 in the 2021 edition of the Global Fintech Index just months after fintech dLocal became the country’s first unicorn.
Mexico fintech, meanwhile, dominated a recently released list of “most promising startups” in Mexico, published by professional networking platform LinkedIn, in a sign of the clout the industry enjoys within the overall startup ecosystem.
All of that comes at a time when financial technology is attracting record levels of investment, while Latin America is increasingly being recognized as a leading region in the development and promotion of fintech.
With the Pacific Alliance recently demonstrating its ambitions to expand beyond the region, after announcing the acceptance of Singapore as its first associate member, the bloc’s rapidly expanding fintech industries could also soon have even more opportunities to expand globally.
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