The Fintech revolution has profoundly transformed the global financial landscape, and Latin America has been one of the leading regions. The emergence and growth of financial technologies have been a key driver of financial inclusion, providing access to these services across various sectors of the population that were previously underserved.

To begin, it is important to familiarize ourselves with the genesis of this term: “Fintech” combines “finance” and “technology,” and its origins in Latin America date back to the early 2010s. This period marked the beginning of the first startups that focused on digital payment and lending solutions. Countries such as Brazil and Mexico were pioneers, setting a precedent for regional growth.

Top 3 milestones:

• 2013: Founding of Nubank in Brazil, a neobank that revolutionized digital banking services.
• 2015: Implementation of the Fintech Law in Mexico, providing a robust regulatory framework.
• 2016: Creation of the first regulatory sandbox in Brazil, allowing Fintechs to test their products in a controlled environment.

Catalysts of the process

While countries were already making efforts to “act digital” before the pandemic, the 2020 health crisis served as a trigger that accelerated the adoption of digital technologies at an unprecedented rate.

Thus, the COVID-19 pandemic is considered a major catalyst for digital transformation, as it forced companies and consumers to quickly adopt technological solutions to continue operating in an environment of social distancing and confinement.

In this context, the Fintech sector was driven by the need to offer accessible and efficient financial services through digital platforms. The demand for contactless payments, online banking, and digital credit solutions grew exponentially, accelerating the adoption of Fintech technologies. This phenomenon was particularly notable in regions with limited traditional financial infrastructures, where Fintechs provided a viable and secure alternative for conducting transactions and managing finances during the health crisis.

Additionally, the pandemic reinforced the importance of resilience and agility in the financial sector. Thus, Fintechs and their desires for ‘rapid innovation and adaptability’ positioned themselves as key players to ensure the continuity of financial services. The implementation of technologies such as artificial intelligence, blockchain, and cloud services enabled Fintechs to not only respond to immediate demand but also optimize operational efficiency and improve user experience.

Both financial institutions and other large industries had to accelerate their digitalization plans in search of robust digital solutions to ensure their survival in an increasingly ‘connected’ market.

According to a report by the Inter-American Development Bank, this period of accelerated transformation has left a lasting mark on the global financial ecosystem, consolidating Fintechs as an essential component of the financial future.

Costa Rica, a protagonist in the Fintech sector

While countries like Brazil and Mexico were pioneers in this area, Costa Rica has also emerged as a prominent leader in the Fintech industry in Central America, standing out as the second country with the highest growth in this sector. This significant progress has been achieved thanks to the synergy between the public and private sectors, which has been fundamental in establishing an ecosystem conducive to technological innovation and financial inclusion. Close collaboration between these sectors has enabled the implementation of favorable regulatory policies and the development of advanced technological infrastructures.

As evidence of this, in 2022, Costa Rica implemented several key regulations to strengthen this ecosystem, such as the updating of rules for payment gateways and the SINPE system; “a technological platform developed and managed by the Central Bank of Costa Rica, which connects financial entities and public institutions in the country through a private telecommunications network, enabling them to electronically transfer funds between IBAN accounts and participate in the trading markets organized by the Central Bank of Costa Rica.”

Given the efforts of multiple sectors to leverage the Fintech sector, the Inter-American Development Bank reaffirmed this strategic alliance as a boost to access digital financial services aimed primarily at improving the population's banking inclusion. This progress not only strengthens Costa Rica's position as a regional technological hub but also contributes to inclusive and sustainable economic development, benefiting both citizens and businesses.

Fintech, a technological embrace for society

The exponential growth of the Fintech industry can be recognized as an embrace extended to society in search of greater financial inclusion, especially in regions like Latin America.

According to Silicon Valley Bank, in 2017, approximately 70% of the Latin American population was excluded from the traditional financial system, which significantly limited their access to basic financial services and economic opportunities. However, the emergence of Fintechs has started to close this gap by providing accessible, efficient financial services tailored to the needs of a wide range of users.

Through technological innovations such as digital payments, online loans, and financial management platforms, Fintechs are transforming the financial landscape, enabling more people to fully participate in the formal economy and improve their financial well-being.

Here, we all add up!

Regarding the solutions generated, it is important to mention Novacomp's great ally in banking and the Fintech sector: Innovative, which, offering a range of services designed to optimize the efficiency and security of financial transactions, has 12 years of experience driving digital transformation in the region.

Among its solutions is NovaMP, a payment media manager that facilitates the sending and receiving of transactions through SINPE, improving the agility and reliability of operations. To ensure transaction security, NovaToken provides a two-factor authentication app, protecting users from fraud and unauthorized access. Additionally, its service NovaSign offers an omnichannel platform to digitalize banking services, allowing financial institutions to provide a more efficient and accessible experience to their clients. Finally, NovaBank; an integration of the main banking channels, such as Internet Banking and Mobile Banking, aims to meet the modern demands of users.

The benefits have no borders

While today we can talk about significant progress, the Fintech sector still faces several challenges that need to be addressed to ensure its sustainable growth. One of the main challenges is the need for a more robust regulatory framework that can adapt to rapid technological evolution and ensure consumer protection. Additionally, improving technological infrastructure is crucial to support the continuous growth and expansion of Fintech services.

Nevertheless, the opportunities this sector presents outweigh the current challenges, with enormous potential for development and innovation. Collaboration between regulators, Fintech companies, large industries, and the public and private sectors will be essential to maximize the benefits and foster an environment that favors growth and financial inclusion in the region.

Today, the democratization of financial services allows a larger proportion of the population to manage their finances effectively, as these platforms, in addition to facilitating access to online banking, have also played a crucial role in financial education by providing tools and educational resources that promote more informed financial decision-making.

And as if that weren’t enough, the ongoing implementation of advanced technologies has significantly improved transparency and security in financial transactions, generating greater trust and reducing the risk of fraud. These innovations have contributed to Fintechs being seen as trustworthy and necessary players in the modern financial ecosystem.

Acting digital means betting on the Fintech sector

The Fintech industry is changing the way we manage our finances, creating a more inclusive and equitable environment for all. By adopting and promoting these technologies, we are paving the way for a future where everyone can fully participate in the financial system. From Novacomp, as active participants in the technological sector, and with the help of a great ally like Innovative, we are committed to continuing to strengthen this sector through the development of advanced solutions that improve the accessibility, efficiency, and security of financial services.

These commitments include the implementation of tools that drive digital transformation and ensure that all citizens have access to quality financial services. We invite you to learn more about our 25+ years of experience leading innovation processes in banking.

Join us in the Fintech revolution and let’s build together a more inclusive and accessible financial future for everyone!

Novacomp Services: https://www.crnova.com/servicios/

Innovative Services:
https://www.in-novative.com/novamp-sinpe/