Fintech grew over 90% in El Salvador in last two years

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By LatAm Reports Staff Writers

El Salvador reports 27 companies anchored to the technofinness ecosystem, which represent just 0.8% of the total recorded in Latin America.

The ventures developed under the techno-finance model in El Salvador doubled in two years, although they are still tiny in the regional ecosystem, a report by the Inter-American Development Bank (IDB) revealed. 

The report, the fourth in a series prepared together with Finnovista, reveals that in El Salvador 27 techno-finances, popularly known as fintech, are registered, equivalent to a growth of 92.8 % compared to the 14 businesses reported in the 2022 edition.

Although the term fintech began to be read in economic information in 1990, it was in the last decade that businesses took off with the boom of enterprises that use technology to offer solutions in specific segments, as Hugo started whose operation was bought by the German Delivery Hero, and considered one of the most successful technological companies El Salvador has had so far.

El Salvador did not continue to figure in the first report prepared by the IDB in 2017 and it was until the 2018 publication that it reported just four fintech businesses. In five six years, the techno-finance ecosystem grew 6.7 times, according to IDB records.

In addition, a greater operation of cryptoactive companies in El Salvador was identified,

Chile and Panama as countries of origin, adds the report presented this Thursday in Bogotá, Colombia.

Rebound in the region

Despite the strong growth in the Salvadoran economy, the fintech share is minuscule and barely accounts for 0.8% of the total.

In Central America, Costa Rica led the sector with 48 fintech, while Guatemala reports 34 and Panama 33. El Salvador would occupy four places, while Honduras registers 18 businesses in this model and Nicaragua is in line, with only four.

The report notes that the fintech ecosystem in Latin America and the Caribbean registered a 340 percent growth in the last six years, from 703 in the 2017 report to 3,069 companies in 26 countries in 2023.

Information is key incentives for countries in the region to generate public policies that give clarity to investors and catalyze the growth of the regional fintech ecosystem, said Anderson Caputo, head of the IDB’s connectivity, markets and finance division.

Fintechs are characterized by the fact that they offer digital solutions, especially for small businesses or non-banked people. Its services include remittance payments, loan approval or business finance management.

The report reflects that the growth of this segment is due to the high demand of financial consumers and the available financial digital infrastructure.

                                                                                                                                                                                                                                                                                                         Brazil remains the leading country in the deployment of these businesses, with 722 techno-finance, representing 23.5 percent of the regional total.

v     Aligned with the size of the economy, Mexico is                           with fintech companies in the region, with 618  es (20.1 per cent), followed by Colombia with 409 (13.3 per cent) and Argentina with 312 (10.1 per cent)  


This article has been translated after first appearing in Diario El Mundo