The lending market in Latin America has been growing at an unprecedented rate over the past few years. With Brazil and Mexico being the two largest markets in the region, it is no surprise they have been driving this growth. LatAm fintech ecosystem grew 112% between 2018 and 2021, according to IDB invest and Finnovista. A popular segment in the second place of fintech companies is lending, with 18%, only surpassed by payments with 25% of companies in the ecosystem.

Brazil and Mexico dominate the continent

Brazil dominates the Latin American fintech market with more than 700 fintech companies and 31% of the LatAm institutions. Digital lending and payments are the most popular categories in the country, and their growth is mainly thanks to the incorporation of easy-to-access technologies for fintech natives. Teens and young adults represent 52% of the entire population in Latin America and the Caribbean, who have quickly adapted onto that platforms. The country's lending market is mainly driven by consumer credit, with a representative number of loans used for purchasing durable goods such as cars and appliances.

Mexico, in particular, has seen an impressive increase in lending over the past few years. In 2021 the lending category was the most popular in the ecosystem (21%), followed by payments (18%). This growth is driven by several factors, including an expanding middle class, increasing access to credit, and a stable economy. In 2018 Mexico became the first Latin American country to establish a dedicated fintech legal framework, and the Mexican government's efforts to promote financial inclusion and improve the country's credit system have also significantly driven this growth.

Alternative lending is popular in the south

According to a report by Prometeo called: Fintech Ecosystem in Latin America, this is how 2022 closed, alternative lending solutions started leaving credit cards behind, and people are using other methods to access credit like Buy now, pay later (BNPL), in LatAm 12% of the lending startups are offering that solution. Another type of alternative lending are the Mexican non-bank financial companies called SOFOMs (Sociedad Financiera de Objeto Múltiple), those companies can grant loans, finance leasing operations, and provide factoring services, and although they are facing new challenges due to new possible regulations, they are increasing in the country: as of January 2021, 1 750 SOFOMs with a combined loan book of 1.2 trillion pesos ($57.2 billion), were registered in the country.

The lending market in Latin America is also seeing a shift toward adopting new financial technologies. With the rise of Fintech companies in the region, traditional banks are also adopting digital and mobile platforms to enhance their services and offer more convenient options for customers. This trend has resulted in an increasing number of online loan origination and management platforms in the region.

Our solution for the Latin American market

Fintech Market (FTM) is one platform that provides an innovative solution to the lending market in Latin America. The product offers a wide range of functionalities, including loan origination, customer management, process automatization, and risk management. The platform is user-friendly and easy to navigate, making it ideal for lending businesses of all sizes. It also reduces the manual labor required to manage loans, which can benefit companies looking to expand and grow.

Risk management is a critical aspect of a sustainable lending company. Recognizing this, Fintech Market has developed a powerful risk management application to help lending businesses make informed decisions. The application allows users to create scoring models and decision trees for determining client credit scores, with a complete range of options available. In addition, several analytics capabilities are already in place, like batch testing, A/B testing, and Champion Challenger tests, enabling businesses to verify the results and make data-driven decisions. On top of that, FTM offers its users an additional layer of security and protection. The platform integrates with Veriff, an identity verification solution, to minimize fraud and compliance risks.

In conclusion, the lending market in Latin America is a rapidly growing industry, with Mexico and Brazil being the main drivers of growth. With increasing access to credit and the adoption of new technologies, the lending market is expected to continue its upward trajectory in the coming years. Tech companies like Fintech Market provide solutions that help businesses increase revenue and decrease the risk of bad loans, leading to more stable business results. As technology continues to evolve, platforms like Fintech Market's lending and risk management platform will play an increasingly important role in the success of lending businesses in the region.