The Inter-American Development Bank and Finnovista say the number of financial technology startups in the region increased by 66% between 2017–18.

In their latest fintech report, the IDB and Finnovista – an organisation that works to strengthen the sector – say there are now 1,166 such enterprises in 18 Latin American countries.

Activity is being led by Brazil, where there are 380 startups, Mexico with 273, Colombia with 148, Argentina with 116, and Chile with 84.

New enterprises providing payments and remittances, lending, and enterprise financial management make up 67% of all the fintech providers in the region, a third of which are operating beyond the borders of their country of origin.

The IDB says fintech growth is being driven in part by the rapid penetration of mobile devices in Latin America and the poor services offered by traditional financial institutions such as banks.

Fintech startups are also responding to the financial exclusion of poorer sectors of society, and according to the World Bank 45% of Latin American adults are still unable to open a bank account.

Champions of financial inclusion argue that public saving and economic welfare benefit significantly from fintech activities.

The IDB says venture capital is targeting Latin America’s fintech providers which, in the last two quarters of 2017, raised US$430 million in risk capital from angel investors, accelerators and investment funds.

Governments are responding to the rapid growth of fintech with public policies and regulations to boost confidence in the sector.

In 2018, the Mexican congress passed Latin America’s first law to regulate financial technology.