All that fintech investment had a real impact on banking penetration in Latin America


What impact do startups have on the world? Often, a heck of a lot. And when a group of startups works on a similar set of problems, they frequently bring about massive shifts in how day-to-day life is lived. In the case of financial access in Latin America, new data indicates that startups have had a large, and measurable, impact.

As the global venture capital market has contracted, Latin American startups have raised significantly less than they used to compared to other markets that TechCrunch tracks. This is not a new trend by any means, but the figures are stark now that we’re more than halfway through 2023.


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A new Atlantico report indicates that venture capital volumes (measured in billions of dollars) in Latin America declined 65% in the second quarter of 2023 compared to a year earlier. Notably, that indicates that investment in fintech, the category that has historically attracted the most capital in the region, also declined in the region.

It is obviously not encouraging that Latin American startups are facing a more severe lack of funding than other markets right now — not all news there is bad, it’s worth noting — but to look at only the bad news of the moment would mean we’re effectively ignoring how much impact startups in the region have had. In particular, we’re talking about the impact of startup investment, fintech and Latin American consumer finance.

In Latin America, fintech has long been a sector that startups have loved to tackle. It is not hard to understand why: The region was, and remains, significantly underbanked than many other large countries. In its report, Atlantico compares Latin America to India and the United States, noting that from 2011 to 2017, the rate of bank account penetration in LatAm rose from 39% to 55%. In contrast, India saw penetration soar from 35% to 80% in the same period, while the United States had a more modest 88% to 93% gain.

Things look different after 2017, though. Bank account penetration rose from 55% in Latin America to 74%, while in India, it receded from 80% to 78%.

No national statistic is influenced by a singular factor, so we do not want to overstate the case. But, given how many fintech startups raised money (and the buckets of money investors poured into the sector) in Latin America during the last venture boom, it’s not hard to connect rapidly improving bank account penetration with startup activity over the same period. All that capital had a real impact.



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