According to the data, when it comes to possible barriers to fintech achieving its potential in Latin America, 61.0% of respondents in 2022 consider ‘a supportive regulatory environment’ as the primary one (up from 54.2% in 2021), followed by 29.7% who cite ‘the absence of funding’ as the key barrier (up from 27.1% in 2021).

Looking beyond banking and finance, while retail continues to represent the sector most likely to benefit from fintech (cited by 42.6% respondents), this percentage compares to 59.7% who cited it last year.  Notable increases include agriculture (fishing, farming, food processing) indicated by 14.0% up from (12.5% in 2021), and services (consulting, advertising and marketing) indicated by 10.8% respondents (compared to 7.8% in 2021).  Also notable were the sectors of healthcare (6.8%) and education (6.4%) which were cited by a negligible proportion of respondents last year.

Joy Schwartz, President, Fintech Nexus, said that this year’s findings also revealed the resilience of the fintech sector in Latin America. “This year was defined by economic slowdown and inflation in many countries across the region.  The subsequent reduction in fintech deal volumes and values across the region appears to have had little effect on market outlook.  46.4% fintech professionals across the region appear resilient to the dip, describing it as ‘a natural part of the business cycle and to be expected’.”

“Another finding of particular relevance was the issue of trust: 39.8% of survey respondents consider a lack of trust in online banking and fintech services as the biggest barrier to further adoption. When we consider the importance and opportunity represented by financial inclusion (ie. many people’s first experience of formal banking), it’s crucial for the fintech sector to establish and maintain a close rapport with those communities who could benefit most,” she concluded.

According to the data, 31.6% of respondents also believe that the biggest positive impact in the region will come from government regulation to reduce bank fees and charges for under-represented consumer segments, while 30.4% expressed that fiscal and commercial incentives (i.e. discounts) to encourage online transactions would play a role in financial inclusion.

“The role and importance of Government support as a means to drive financial inclusion through the fintech sector was clearly revealed in this year’s findings. For example, due to government subsidies during the pandemic, it is estimated that in Brazil 17% of the region’s unbanked became banked and in Argentina the government program led to an estimated three million new bank accounts[2],” said Roger Darashah, Founder Partner of LatAm Intersect PR.

He went onto highlight one warning – or potential opportunity – emerging from the findings. “While the emergence of next generation technologies such as Web3 and the Metaverse is acknowledged, its mainstream adoption is likely to be slower according to our research, with only 11.1% respondents currently investing and developing Web3 services. Remarkably, 33.3% describe the technologies as currently ‘irrelevant for the present’ and have no plans to invest,” he states.

“And where there is an interest – according to our data – it’s actually respondents working in B2C organizations and client-facing roles that stand out with 10.5% and 12.9%, respectively, describing the Metaverse as ‘absolutely fundamental’ and are already investing and developing Web3 services. I believe that this reality is linked to the importance of Government support and regulation highlighted earlier.  As legislation regarding Web3 is clarified and implemented in Latin America, deployment will follow,” he concluded.

About Fintech Nexus: Fintech Nexus (formerly LendIt Fintech) is a diversified media company providing essential knowledge, connections and inspiration to the entire financial services industry, creating a link between traditional finance and the future of finance. Popular offerings include: News, Events, Podcasts, Webinars, Whitepapers and credentialed educational courses. Our annual Latin American Fintech Conference, Fintech Nexus LatAm will take place December 12-14, 2022 in Miami, FL.

1 – Research was conducted in October ’22 amongst 250 fintech professionals operating in or serving Latin American markets (including lenders, financial service companies/platforms, technology providers and professional support (legal, consulting etc)

2 – https://www.weforum.org/agenda/2022/05/brazilians-are-adopting-digital-payments-faster-than-anyone-else-what-lessons-can-we-learn/