Main Challenges in the Latam Fintech Industry in 2025

While the number of investment deals in Latin American fintech companies has decreased in 2024, the amounts have increased and the average value of the rounds has almost tripled: according to data from Pitchbook, $2.6 billion has been invested in 174 deals so far this year, compared to $1.5 billion invested in 241 deals in 2023, reflecting a 73% increase in total funding volume compared to the previous year.

“There has been a shift towards more selective investments, prioritizing quality over quantity. Investors’ appetite has focused on cost-efficient teams, less capital-intensive models, and B2B solutions, especially in payments and financial infrastructure,” explained Andrés Cano, co-founder and managing partner of Pygma, a US-based accelerator that provides mentoring and support to Latin American entrepreneurs to help them scale their startups globally.

Along with the good investment outlook for the Latam fintech sector, there was also progress in regulatory matters

In Chile, the implementation of the Fintech Law this year marked a milestone, promoting interoperable payments and open finance. In Colombia, there are already regulations focused on instant payments and regulatory sandboxes – a controlled testing environment – that have allowed fintechs to experiment and innovate in a controlled environment.

“Fintech companies have played a key role in closing financial gaps in the region, which has a large unbanked or underbanked population. Countries like Colombia, with more than 300 active fintechs, are offering quick access to formal credit,” said Daniel Ospina, co-founder of the accelerator.

While both co-founders celebrate the progress, they emphasize that for 2025 and beyond it is important to make progress on the gaps that still exist. One of the recommendations is to create more uniform regulatory frameworks in the region that facilitate the expansion of fintech and reduce legal barriers between countries.

“The relationship between regulators and fintech in Latin America is advancing, but it needs more agility and harmonization to unlock the full potential of the sector. With clear and collaborative regulatory frameworks, the region can become a global leader in financial innovation and banking,” says Cano, who adds that it is also necessary to encourage the creation of new regulatory sandboxes and innovation hubs to test new technologies.

As for their projections for 2025, specialists anticipate a great future, highlighting that many leading fintechs in the region will diversify their services and expand beyond their national markets.

“At Pygma we support this sector and focus on Latinos building fintechs because we see a great opportunity for the future. The best is yet to come, as with the new blockchain infrastructures, openfinance, APIs and artificial intelligence, we can expect greater connectivity, intelligence and interoperability of the financial system, generating even more inclusion,” said Ospina.

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(Featured image by Simon via Pixabay)

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

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