Peru’s Fintech sector has been expanding at a steady pace during the past few years. There are at least 171 Fintechs operating in the country, as of September 2021. These numbers represent a sizable 16% increase from last year, as well as a yearly growth rate of 20% during the past 7 years, according to a report released by EY Law.
Despite considerable growth, these stats suggest that Peru’s Fintech ecosystem still remains quite underdeveloped when compared to larger economies like Brazil and Mexico. However, a fast-growing economy, along with a rising affluent middle-class, a relatively large population of unbanked as well as high-mobile penetration rate are expected to create an environment that’s conducive to steady growth, according to a report from Swiss agency Switzerland Global Enterprise (S-GE).
Peru’s informal and underbanked (or financially underserved) sector accounts for over 70% of the local workforce and more than 90% of small and medium-sized businesses, and the financial sector, which is led by a few incumbent banking institutions, has been fairly slow to adopt the latest Fintech solutions, the report revealed.
Meanwhile, financial inclusion rates are quite low. During the first quarter of last year, the percentage of adults using one financial product (or more) was around 43%, according to data provided by the Asociación de Bancos del Perú (which is the Association of Banks of Peru, ASBANC).
As reported by Fintech News, an analysis of the different Fintech industry segments, carried out by S-GE, indicates that there are opportunities that exist for financial tech challengers..
For instance, in deposit and lending, the paper reveals that the general lack of alternative financing services with fast approval times and dependable credit scoring presents a great business opportunity.
Meanwhile, in the payments sector, the significant increase in digital commerce and food delivery apps following the Coronavirus outbreak / lockdowns should support the rise in mobile payments. Last year, the use of mobile payments in the area increased 3x and the usage of mobile apps for payments surged around 4x, the paper reveals. This represents a shift in consumer behavior that’s set to continue in a post-COVID environment.
Banking-as-a-service (BaaS) and banking infrastructure are also set for continued growth. This should help with further building on increasing demand from incumbent banking institutions for innovative solutions to integrate digital financial services.
The update from EY notes that the Fintech sector in Peru is being led by firms focused on the lending sector (41 firms). These companies are followed by payments and digital wallets (27 firms), SME finance platforms (21 companies), and personal financial management (14). Other Fintech industry segments reportedly include Techfin (9 firms), blockchain and crypto-focused platforms (9 companies), crowdfunding (8 firms), credit scoring (6), and Insurtech (4).