The fintech scene in Latin America is poised for strong growth and innovation in 2024 according to Jeremy Baber, CEO of card issuing company Lanistar.

Baber projects  the growth prospects of prominent Latin American markets such as Brazil, Argentina and Colombia which remain undervalued and unrealised in comparison to European counterparts.

These markets have built up individual elements and regulatory frameworks which provide favourable conditions for fintech startups to kickstart business and create a platform for future growth. 

Baber remarked: “Rebounding from 2023 as a year of capital constraints for the region, we should expect Latin American fintechs to gear up in 2024 with an increased momentum.

“With a great appetite for seamless, accessible and transparent services, LatAm is rapidly developing into an ideal environment for fintech start-ups to call home as digital wallets become the norm.”

It is hard to deny that Europe and North America often catch the most attention when it comes to fintech and payments innovation, largely due to being home to some of the world’s biggest companies in this area.

The US is of course home to tech giants in Silicon Valley, funded by Wall Street whilst Europe is the founding location of some of the world’s biggest banks.

However, with the emergence of neobanks and challenger banks in recent years, Latin America may become more prominent. In contrast to Europeans, Latin Americans have a greater appetite for alternative payment methods (APMs) for one thing.

Development of such payment methods have been driven not just by consumer demand but also by governments and central banks themselves, with Brazil being perhaps the most widely recognised example of this. 

In 2020, BCB, theCentral Bank of Brazil launched Pix as a nationwide instant payments platform, which as of December 2023 has amassed a user base of 150 million to become the most widely used payment method in the country. 

The central bank is considering an international rollout of Pix, with interest apparently canvassed from Asian markets as well as from Italy, in which the government seeks a centralised payments platform for domiciled businesses. 

Meanwhile, the forthcoming launch of a regulated betting market in Brazil will drive interest in the country among fintechs and payments providers even further.

“Less established banking regions and countries offer a greater opportunity for growth in digital wallets,” Baber continued.

“Brazil, Columbia and Argentina are prime regions to embrace this technology, as they are developing into the ideal environment for fintech start-ups to call home as investment and adoption continue to boom.”

Another advantage Latin American fintech has in its favour is demographics, with the continent being home to a larger younger generation of consumers than North America and Europe – a prominent  issue visible in all Western European economies.  

This generation often has greater demand for new payment methods and is more accepting of new technologies. This trend has been witnessed worldwide – for example, Payment Expert spoke to GoDaddy earlier this year about the company’s observations on Gen Z and millennial payment preferences.

Again, this could prove to be very lucrative to neobanks and APM providers targeting the Latin American market, where more consistent demand for their services may be found, above a conservative approach in Europe and North America. 

In Baber’s view: “In the emerging market, meeting the convenience of the consumer is a priority to capture and keep attention. Thus, the virtual market has the most opportunity for fintechs to settle and develop, as Gen Z and Millennial demographics favour online transactions but are rarely loyal to sticking blindly to a particular brand.”

“These demographics are far more likely to adopt contactless methods or those that reduce payment steps rather than stick blindly to a company that doesn’t ultimately have their best interests at heart. 

“Brazil, for example, has been able to take this one step further, with heavy developments in payment methods such as PIX and QR-code-driven payments – something the European market can look to learn from and adopt themselves. 

“This growth has aided in standardising payment practices across the region, making it less volatile and more focused on innovation overall.”

Lastly, Latin America is also a region where cryptocurrency has proven popular, both among consumers and governments.

The most high profile example of this is probably El Savlador, which became the first nation in the world to adopt Bitcoin as legal tender back in 2021 – backed as an ‘economic principal’ of the regime of ‘Millenial President’ Nayib Bukele.  

Similar enthusiasm for crypto has been noted in other Latin American countries, such as Argentina. Though newly elected Argentine President Javier Milei has spoken very favourably of crypto in the past his administration maintains ‘dollarizing the Argentine economy’ in a bid to avert hyper-inflation that has dogged Argentina’s economic recovery as the sick man of South America. 

Baber concluded: “As we’ve seen in past years with El Salvador’s formal acceptance and adoption of cryptocurrency, the governments and regulators in the LatAm region are great supporters of embracing fintech, crypto and new developments in the finance industry. 

“From an investment perspective, hubs such as Europe and the US have taken note of this fintech boom in the region and are now investing millions into the market themselves. 

“An appetite for change is exactly what fintech start-ups need, which is why LatAm is the perfect environment.”