With the ongoing crisis of Covid-19 crippling world economies, the situation is no different for Latin America.
Reportedly, the number of cases has surpassed the U.S. and Europe. Amid the already prevailing economic instability and financial exclusion, the growth has not climbed beyond 1% since 2014.
According to a survey only about 51% of the people hold bank accounts. Though the situation is grim, and the businesses are walking on thin ice, there is a glimpse of hope: Fintech. Fintech is a portmanteau of the terms “finance” and “technology” and refers to businesses that use technology to enhance their growth and automate their services.
There are 703 Fintech startups operating in Latin America, with more than 50% being launched in the last six years with a funding of $481 million in the second quarter of 2019. These startups which make extensive use of technologies are contributing to the growing economy in Latin America.
Countries like Nicaragua which had only about 29% of their people holding bank accounts presented a bleak situation. The Argentinian Fintech company Ualá and Brazil’s Neon give citizens a prepaid card and an app to make domestic and international payments with transfers between Ualá users being free of cost.
While there is a long way to go for these startups to sustain themselves and receive further funding to help the economy slowly climb back to stability, the conglomeration of banking, finance, and technology in Latin America is something worthy of appreciation and to look forward to in changing lives in the longer run.