Puerto Rico Fintech ecosystem

In recent years, Puerto Rico has been one of the most dynamic and competitive economies in Latin America and the Caribbean. It’s economy is mainly based on services and industry. The service industry’s main sectors include tourism, finance, insurance, trade, real estate, transportation and utilities, while the Puerto Rican industry sector mainly produces drugs, electronic devices, petrochemicals, processed foods, clothing and textiles (Santander Trade, 2021)

Covid-19 pandemic negatively affected its economy and in 2020 it´s GDP decreased by an estimated 7.5%. However, the economy is expected to recover in the coming years, with the IMF’s April 2021 estimates predicting growth of 2.5% for 2021 and 0.7% for 2022 (Santander Trade, 2021). 

One of the biggest problems Puerto Rico has been suffering is the long recession that has been for almost a decade, which has led to high levels of debt. In 2020, public debt represented 67.9% of GDP. It is expected to gradually decrease to 64.8% of GDP in 2021 and 63.4% of GDP in 2022 (Santander Trade, 2021).

Fintech in Puerto Rico

Puerto Rico has become one of the places with considerable progress in the Fintech sector. Thanks to its proximity to the world’s financial center (New York), Puerto Rico’s Fintech companies have been able to benefit from certain aspects such as STEM talent, local financial literacy, and attractive tax incentives. Here are some facts of the growing of the Fintech sector in Puerto Rico (Finovate, 2020)

• In 2017, Puerto Rican firm Evertec was the # 1 provider of payment processing services in Latin America, exporting financial services to 25 countries around the world
• After just four years, Evertec’s money transfer platform, ATH Movil, reached over 1 million users, 6,000 businesses, and 80% of banks and credit unions
• Banco Popular’s ​​digital platform also leads the industry in the implementation of fintech solutions
• Abexus Analytics identifies commercial lending solutions to SMEs as one of the key areas of opportunities in Puerto Rico’s fintech landscape
• Puerto Rico is recognized by the wide use of digital banking tools, mobile financial applications, and globally recognized payment processing technology. Also, Puerto Rico is leading the way in helping fintech, insurtech, and blockchain become more ubiquitous

Moreover, according to the US Census, approximately 66.1% of the island’s Puerto Ricans had a smartphone or handheld computer in 2018, compared to 43.0% five years ago (MW Market Watch, 2020)

While the economy in Puerto Rico is still recovering, Fintech can play an important role in the recovery. The advances in the sector are already important and, this, added to the advances in technological adoption in the country, shows an interesting panorama for the island.