How centralized regulation is driving a fintech revolution in Latin America

Driven by market necessity and regulatory evolution, the fintech industry in Latin America (LatAm) has experienced significant growth over the last decade. In just three years, the number of fintech platforms in the region more than doubled, growing from 1,166 in 2018 to 2,482 in 2021. This is driven by innovation aimed at addressing deep-rooted financial exclusion.

70% of the LatAm population is classified as either ‘unbanked’ or ‘underbanked’. Access to credit and savings remains scarce with only 28% of adults having access to financial institutions. The suppression of consumer-led financial growth in LatAm is an opportunity for new financial infrastructure to be a key factor in regional development.

Digital payment methods, such as mobile wallets, QR code payments and real-time payment systems like Brazil’s Pix, Mexico’s SPEI and Argentina’s Transferencias 3.0, now comprise 60% of all consumer spending in Latin America. This is bolstering local economies through the adoption of digital payments thanks to a reinvigorated regulatory environment.

In contrast to the more fragmented, market-driven regulatory approach seen in the US, Latin American countries have embraced centralized frameworks that have actively shaped the trajectory of fintech growth across the region.

Brazil’s Central Bank has taken Open Finance to new heights. As of early 2024, it has recorded over 42 million active user consents and processes more than 1.5 billion weekly API calls. This makes it one of the largest and most active Open Finance ecosystems globally. Meanwhile, its real-time payments system, Pix, has become a national powerhouse. It handled roughly 42 billion transactions in 2023, with each transaction settling in just a few seconds. The world’s largest neobank outside Asia, Brazil’s Nubank, is a homegrown innovator in LatAm. It is scaling rapidly with over 100 million customers in Brazil alone, representing 57% of the country's adult population.

LatAm is emerging as a hub of fintech innovation, with countries adopting progressive regulatory frameworks and real-time payment (RTP) systems to drive financial inclusion and digital transformation. Colombia and Chile have led innovation-friendly policies. Chile’s Fintech Act (Law No. 21,521) and Colombia’s regulatory sandbox are creating fertile spaces for Open Finance experimentation.

RTP infrastructure is advancing rapidly across the region. Brazil’s Pix, Mexico’s SPEI, Argentina’s Transferencias 3.0 and Colombia’s upcoming Breve system are making instant payments the norm. Peru has taken a bold step by adopting India’s UPI platform, a move that underscores the region’s willingness to look beyond traditional Western models for financial solutions. These advances are enabling fintechs like Colombia’s Rappi – now a $5.25 billion super app with over 3 million users – to integrate services from delivery to digital banking (via RappiPay and RappiBank). It has at least 50% market share and is setting a precedent for embedded finance across LatAm.

Mexico’s 2018 "Law to Regulate Financial Technology Institutions" was among the first of its kind, enacted to provide a comprehensive regulatory framework for the burgeoning fintech sector. This law seeks to encourage the integration of new technologies into the financial system in a responsible way.

Platforms like RappiBank and Nubank are offering digital accounts and credit to gig workers previously excluded from formal financial systems. Startups such as Félix Pago are transforming remittance transfers with real-time, low-cost digital tools. These proactive national strategies are enabling fintechs to scale faster. It attracts more capital and provides more inclusive services than counterparts operating in less coordinated regulatory environments. This turns local problem solvers into global examples of innovative applications of fintech infrastructure.

Symbiotic relationships are fueling capital efficiency and policy agility, while simultaneously validating regulatory theses that emerged in the wake of the COVID-19 pandemic. During the crisis, the need for contactless transactions, real-time disbursements and digital identity became urgent and fintechs across the region responded with a rapid deployment of solutions reaching underserved communities at scale.

As fintech infrastructure becomes more embedded in economic development strategies, Latin America is proving that thoughtful regulation and agile technology can catalyze inclusive, resilient financial ecosystems.