Fintech in Chile: A fast growing ecosystem
With a population of 19 million, Chile is the sixth most populated country in South America. Likewise, Chile stands out for being one of the fastest growing countries in the region, reaching a GDP of USD 283.00 million by 2019. However, the Covid-19 pandemic negatively affected this figure since in 2020 it fell close to 6 % (America economy, 2021)
In addition to the impact of the pandemic, Chile has been going through a series of protests in recent years, as a result of discontent with the economic and political model, because despite rapid growth, it has not been possible to improve the results of the labor market and reduce inequality in greater measure (World Bank, 2021). Regarding this inequality, more than 30% of the population is economically vulnerable and there is high income inequality
About the business sector in Chile, it is estimated that 96.9% are MSMEs. However, its sales represent less than a quarter of the total (Economía, 2019). However, there are still certain gaps that prevent further growth of this type of companies, such as the lack of access to financing and the lack of support for entrepreneurs.
Fintech in Chile
The Fintech ecosystem in Chile has grown considerably since 2019, with the number of Fintech companies having increased by 60%. There are currently approximately 112 Fintech in Chile. Among the main characteristics we have that these Fintech companies focus on the B2B segment and that the main source of financing for the majority (27%) of Chilean Fintech companies are angel investors. Santiago de Chile is the principal Fintech city.
Moreover, approximately 63% of the fintechs offer at least one financial inclusion solution. Also, 69% of these fintechs have more than 3 years of operation, reflecting a low mortality rate of 12%.
The main Fintech segment in Chile is payments and transfers (23% of the total), followed by the segment of Business Finance Management solutions (Enterprise Financial Management) which represent 20%. In third place we have the loan sector with 13% of the total
The complete list is as follows (Finnovista, 2021):
- Payments and Remittances, with 42 startups (23%)
- Business Finance Management (EFM), with 35 startups (20%)
- Lending, with 24 startups (13%)
- Business Technologies for Financial Institutions (ETFI), with 18 startups (10%)
- Score, Identity and Fraud, with 12 startups (7%)
- Insurance, with 12 startups (7%)
- Wealth Management, with 10 startups (6%)
- Crowdfunding, with 9 startups (5%)
- Personal Finance Management (PFM), with 8 startups (4%)
- Trading and Capital Markets, with 6 startups (3%)
- Digital Banks, with 3 startups (2%)
Chile has presented significant growth rates in the Fintech sector, however, the absence of a regulatory framework is one of the main obstacles that have arisen and that do not allow it to be within the top 3 in Latin America.
Nevertheless, given the latest results the Fintech sector in Chile looks good and with great opportunities. Especially in the case of the lending sector, which can help to reduce the lending gap and help the economy recovery of the country
