Fintech in Ecuador
Ecuador’s economy has been improving considerably in the last year. The economy of Ecuador is the eighth largest in Latin America and the 69th largest in the world by total GDP. It’s economy is mainly based on mining, agriculture and fishing (Heritage, 2021). Nevertheless, Covid-19 impact in Ecuador was also considerable.
As of December 1, 2020, 13,501 deaths had been attributed to the pandemic in Ecuador, and the economy was forecast to contract by 11.0 percent for the year (Heritage, 2021). This led to a rebound in poverty and the unemployment rate increased to 5.2% in 2020. The pandemic also revealed structural weaknesses, like the high level of informality and a poorly prepared healthcare system (World Bank, 2021) In terms of informality, nearly 35% of the population has “non-appropriate”, part-time or unpaid jobs, and with the informal sector accounting for 45% of employment, many households do not receive the minimum wage and full social benefits (Santander Trade, 2021)
In Ecuador there are around 900,000 companies, of which 90% are micro-companies, 7% are small companies and 2% are medium-sized companies. In other words, 99% of the companies in Ecuador are MSMEs, and they generate 60% of the jobs. However, access to financing is still a very limited system (World Bank, 2020) Also, the rate of adults with access to financial services is around 46% and only 13% have had access to formal loan services (Finnovista, 2017).
Growth is expected to pick up to 2.5% this year, subject to the post-pandemic global economic recovery. Still, GDP growth should slow down in 2022, reaching 1.3% (Santander Trade, 2021)
Ecuador Fintech ecosystem
The Fintech ecosystem in Ecuador is still developing and in 2017 there were around 31 Fintech. The vast majority of Fintech startups as of 2017 are within the segment called Enterprise Financial Management, comprising 32% of the identified startups. In second place, the Enterprise Technologies for Financial Institutions segment ranks alongside the Payments and Remittances segment, both with 16% of the identified Fintech startups dedicated to them. In the case of Lending Fintech companies in Ecuador, only 3% of the Fintech startups identified fall into this category, while 13% operate in the Crowdfunding segment (Finnovista, 2017)
One of the most notorious Fintech is Mujeres Wow, which focuses on Online Loans and Credit Rating for Women Entrepreneurs. Likewise, Crece Ecuador is one of the Lending Fintech with high growth in recent years
Considering the lack of adequate financing for SMEs and people in general, fintech companies have a great opportunity in the country to improve access to credit and have good business results.
