Fintech Companies Have Made Banking Accessible to 74% of People in Latin America

Fintech companies are becoming the new vehicles that are taking over Colombia with more financial inclusion. This is confirmed by a report presented by Mastercad, which also states that this behavior is being seen in strategic areas of the region such as Brazil and Mexico. The report also highlights that the panorama of these ‘neo companies’ has grown 340% since almost a decade ago.

At the same time, access to financial services in the region has improved significantly, and a clear example is how in 2017, only 55% of the population had a bank or digital account, while in 2021 this figure increased to 74%, today exceeding 80% in several countries.

This progress is largely due to fintech companies, which have facilitated the opening of accounts and access to credit for millions of people, not only in Latin America, but worldwide, allowing many to generate banking knowledge through the web.

Despite the growth of fintech, cash continues to dominate

However, as digital payments continue to expand, cash usage remains dominant. Mastercard said 40% of low-income respondents say they pay more than half of their monthly expenses in cash, compared to 25% of high-income individuals.

This is why digital banks currently empower underserved populations, as low-income account holders (35%) are more likely to own accounts at digital banks.

There are more digital transactions

The use of digital payments is constantly increasing, while 63% of respondents still use cash for daily or weekly transactions, 61% already use debit cards and 45% credit cards. In addition, the popularity of mobile transfers has grown as around 88% of users use their phones to make financial transactions, from apps.

Furthermore, more than half of respondents in Brazil (58%), Colombia (52%) and Peru (55%) say that fintech companies have provided them with access to financial products that were previously unavailable to them.

Fintech companies have been a key driver of financial inclusion in Latin America

As the financial ecosystem matures, fintech companies must adapt to continue growing. Currently, many have begun to diversify their services, exploring areas such as insurance, investments, and “buy now, pay later” models, which are currently handled by multiple digital and physical banks.

Fintech companies have been a key driver of financial inclusion in Latin America, allowing millions to access bank accounts, credit and digital payments for the first time. However, access to the Internet and mobile devices remains limited in certain communities, preventing a portion of the population from truly taking advantage of all these digital tools.

In addition, mistrust and lack of financial education make the transition from cash to electronic payments difficult, especially among young people and low-income people. A useful strategy for this would be to expand internet coverage, develop accessible solutions for those without smartphones and reinforce digital education in a large part of the country.

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(Featured image by rupixen via Unsplash)

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First published in LR. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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