Major Latin American banks are racing toward 100% digital models. Despite the rise of fintechs, traditional banks are determined not to be left behind.
Digital transformation is no longer a buzzword in Latin America; it is an existential imperative.
Digital natives like Brazilian neobank Nubank, Argentine fintech Ualá, and regional payments platform Mercado Pago are scaling into super-app ecosystems while giants like Santander and BBVA push forward with their own digital units. The next several years may determine whether traditional banks can reinvent themselves fast enough to remain competitive, or whether the fintech wave will carry Latin America into a new era of finance.
The number of fintechs operating in the region surged from 703 in 2017 to over 3,000 in 2023: a staggering 400% increase, according to a joint study by the Inter-American Development Bank (IDB) and Finnovista. The explosion of financial startups has upended traditional banking, and is pressuring established institutions to reinvent themselves or risk obsolescence.
Giorgio Trettenero Castro, secretary general of the Federación Latinoamericana de Bancos (FELABAN)
Data from Accenture underscores the challenge: Digital-only banking players have grown revenue by 76% compared to 44% for traditional banks replicating legacy models online. This suggests that simply bolting digital interfaces onto outdated systems yields diminishing returns. Instead, agility and modularity are the new competitive currency.
The rise of digital-only players, the acceleration of instant payment systems like Brazil’s PIX, and the rapid adoption of super-app models are converging to redraw the competitive map. Traditional banks are racing to shed legacy systems and cultural inertia while fintechs expand aggressively into core banking territory.
Constraining the race toward 100% digital banking is a lack of up-to-date basic infrastructure, warns Giorgio Trettenero Castro, secretary general of the Federación Latinoamericana de Bancos (FELABAN).
“Financial services demand that the general public have access to quality, competitively priced internet,” he says. “That is not entirely the case in Latin America, where rural areas face a deeper divide; only 39% of rural populations have internet access. Moreover, Latin America has just 4.8% of the world’s data centers, with Brazil in the lead. This shortage hampers competitiveness and raises costs.”
These structural weaknesses coexist with distinct opportunities. About 57% of fintechs target the region’s unbanked population, according to the IDB and Finnovista report. Currently, around 20% of Latin American adults are not financially included, according to a 2024 study by Mastercard and Payments and Commerce Market Intelligence: a substantial population waiting to be tapped.
Newcomers Reshape The Financial Arena
Traditional banks and fintechs increasingly resemble each other when it comes to their processes.
“In the past, a customer had to bring a pile of documents and meet with a bank manager to open an account and wait several days. Now, everything can be done in minutes on a smartphone: an innovation pioneered by Nubank 12 years ago,” observes José Leoni, managing director at Moneymind Partners, a São Paulo-based financing advisory firm. “Back in the 1980s, the main customer retention tool was automatic debit, clearly a tech innovation for the time. Today, every bank has similar offerings. What makes a bank attractive now are costs, a unified platform for all products, and customer experience.”
Banco do Brasil has put significant effort into customer experience, but despite a technology investment that reached $554 million last year, it still maintains legacy systems.
“Now we have 30% of our applications in cloud computing, so we operate on a hybrid system that has worked well so far,” says Bárbara Lopes, head of Customer Experience for digital and physical channels Banco do Brasil.
Bárbara Lopes, head of Customer Experience for digital and physical channels Banco do Brasil
While part of its infrastructure remains on-premises, Banco do Brasil considers itself 100% digital, as 94% of clients using its app carry out their transactions through digital channels. Of its 86 million total clients, 31 million are active digital users, a number that continues to grow yearly.
“Our goal is to provide a good, customized experience with AI to serve all our different audiences,” Lopes says: “young people, vulnerable populations, agribusiness workers, and entrepreneurs.” Competition is massive, she notes, and personalizing customer experience is one of the most important strategies for retaining clients.
Banco de Inversiones de Chile (BCI) has adopted a similar strategy, stressing investment in technology as critical to keeping up with trends and delivering a better customer experience.
“Innovation and data management are fundamental pillars of BCI’s growth strategy,” says Claudia Ramos, manager of Innovation and Data Analytics. “That’s why, in recent years, we invested $100 million in our app, which delivered benefits representing nearly 20% of our EBITDA. Today, all our customers use digital channels.”
BCI’s road to digitalization began in 2015; two years later, it launched Machbank, a fully digital neobank offering investment solutions to improve customer experience and broaden inclusion. Machbank now has 4.2 million clients, with a youthful, userfriendly profile, out of a total of almost 6 million at BCI. The bank continues to offer a strong digital value proposition across its 183-branch network, where all customers now use digital solutions.
The latest trends point to interactions driven by massive use of technology, Ramos argues: “Simplicity, transparency, and more objective experiences are the best proposals for financial inclusion. Our next step is to further leverage AI to enhance user experience.”
Challenges Ahead
For incumbents, the challenge is often less technological than cultural; resistance within teams and reluctance to change entrenched routines often slow progress. At BTG Pactual, Marcelo Flora, managing partner and head of Digital Platforms, says he struggled for years to convince his colleagues to embrace digital transformation.
Following the example of Goldman Sachs, BTG Pactual built its reputation on asset management, wealth management, and investment banking, generating comfortable profits of R$4 billion per year ($736 million) in 2014.
“We were victims of our own success,” says Flora: why change a model that was working so well?
Once fintechs emerged and incumbents started to lag, however, BTG Pactual prepared itself for the next wave. The results were striking; profits quadrupled in 10 years, from $736 million to $2.9 billion.
“Now we have the speed of a fintech and the credibility of an incumbent,” Flora says.
Most banks established before the rise of digital players have faced similar hurdles.
“The main challenge is usually not technological, but cultural and organizational,” agrees Andrés Fontão, CEO of Finnosummit, organizer of the annual Latin American fintech conference. “Many institutions carry inherited structures and processes, and if senior management is not fully aligned with the digitalization mission or able to transmit that vision downward, change stalls.”
Digital banking lowers the barriers that traditional models raise: fewer documents, no need to visit a branch, simpler interfaces. This opens doors for previously excluded populations.
“In Mexico, only about 55% of adults had an account in 2023,” notes Fontão. “Other reports indicate just 49% are banked, leaving about 66 million people without access. But between 2017 and 2021, Latin America saw the largest increase in financial inclusion globally—19%—thanks to innovations such as digital payments, online commerce, and digital subsidy distribution.”
That does not mean branch banking is going the way of the dodo.
“Although neobanks are cheaper to operate because they don’t maintain physical branches and promote digital inclusion, in Latin America, the belief in bank branches remains strong,” says Francisco Orozco, professor at the Center for Financial Access, Inclusion and Research of the Monterrey Institute of Technology and Higher Education. “Reputation is essential, and even though young people are digital natives, there is a kind of inherited financial habit. Most people still want to use cash and visit branches.”
Leveraging this predilection, Nu Mexico signed an agreement with the OXXO convenience store chain in January to expand its cash deposit and withdrawal network.
“This is a way to promote digital inclusion,” says Orozco.
Beyond Branches And Borders
Latin America’s transformation could point the way for other developing regions. It combines massive unmet demand, agile fintech innovation, and regulatory experimentation. If incumbents can overcome cultural inertia and infrastructure gaps, they may leapfrog into a model of fully digital, inclusive, and interoperable banking.
These two companies are setting the bar high for what an innovative financial services enterprise should be.
It’s been a disappointing year for these two companies. As of Aug. 21, Block(XYZ 6.78%) shares have tanked 13% in 2025. PayPal(PYPL 3.43%) has fared worse, with its shares down 21% this year. If that weren’t bad enough, both are trading more than 70% below their all-time highs, a gut-wrenching reality that might scare most investors away.
But to be clear, both companies have positive attributes. Between Block and PayPal, which is the better fintech stock to buy?
Image source: Getty Images.
Block’s two ecosystems continue to grow
Block operates two successful ecosystems that can be viewed as separate businesses. Square posted 11% gross profit growth last quarter (Q2 2025, ended June 30), offering tools and services to merchants. Cash App, which serves individuals, is growing at a faster clip. And it has 57 million monthly active users.
The business continues to innovate to drive further growth. For instance, Square AI gives merchants access to valuable data insights. And Cash App Borrow, a short-term lending product, saw originations rise 95% year over year. Block’s expansion playbook is focused on introducing new products and services to bring more merchants and consumers into the fold. Then it’s about boosting use and monetization.
Looking ahead, it’s clear that Bitcoin will slowly become a bigger factor in Block’s success. Founder and CEO Jack Dorsey is very bullish on this crypto. And he has overseen new projects, like the development of a hardware wallet and mining equipment, to further accelerate Bitcoin’s adoption. Should the digital asset continue on its impressive trajectory, this could be a boon for Block over the long term.
PayPal has long been a leader in digital payments
PayPal has a presence in more than 200 countries across the globe. It handled $443 billion in total payment volume in the second quarter (ended June 30). And it counts 438 million active users. This scale demonstrates just how important PayPal is in the world of online commerce. And with its two-sided platform, PayPal benefits from a network effect.
But the company has dealt with slower growth in recent years, which prompted a leadership change. Alex Chriss, who has been CEO since September 2023, is doing a good job so far of righting the ship. He has brought innovation back to the forefront.
For instance, a key recent initiative is PayPal World. Set to launch later this year, it’s a global platform that will connect different digital wallets and payment systems. This could provide a more seamless experience. PayPal also has its own stablecoin, called PYUSD, to lower costs and speed up transactions.
Under Chriss, PayPal is also better monetizing its Venmo segment, which essentially competes directly with Block’s Cash App. Venmo is trying to become more than a peer-to-peer payment service, for example, with its very popular debit card. Venmo posted greater-than-20% revenue growth in Q2, better than that of the company overall.
Despite the stock’s performance, PayPal operates from a position of financial strength. Earnings per share calculated according to generally accepted accounting principles (GAAP) soared 20% in Q2. Free cash flow is expected to be $6 billion to $7 billion for the full year.
The final verdict
There’s no denying that both of these companies have established themselves as powerful forces in the fintech industry. Block operates with a bigger presence in physical commerce, while PayPal leads in online payments. Nonetheless, both of these businesses face a lot of competition.
Investors who have a higher risk tolerance might want to consider Block. The company’s focus on Bitcoin activities adds upside, but it also introduces uncertainty, as ultimate success isn’t guaranteed. On the other hand, investors who want to own a financially sound digital payments powerhouse will favor PayPal. The company’s much cheaper forward price-to-earnings ratio of 12.9 is also hard to overlook.
And, of course, those who want more exposure to the fintech space could choose to own both of these stocks.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
Upstart, Adyen, and Nu all look undervalued relative to their growth potential.
The financial sector is dominated by big banks which mainly focus on generating stable profits instead of breakneck growth. However, a new generation of fintech companies — which are modernizing traditional payment and banking services with their tech platforms — are growing a lot faster than those aging industry leaders.
But it can be tough to separate the winners and losers in that fragmented fintech market. So today, I’ll discuss three potential winners which have plenty of long-term growth potential: Upstart(UPST 8.34%), Adyen(ADYE.Y 2.86%), and Nu Holdings(NU 1.94%).
Image source: Getty Images.
1. Upstart
Upstart is an online lending marketplace that uses AI to approve loans. Instead of using traditional data like an applicant’s annual income or credit score, it uses non-traditional data points like standardized test scores, GPAs, and previous jobs to approve a broader range of loans for younger and lower-income applicants with limited credit histories.
Upstart doesn’t provide any loans of its own. It only serves as an AI-powered middleman for its partners, which mainly include banks, credit unions, and auto dealerships. It generates most of its revenue by charging those partners processing fees for approving their loans.
Upstart suffered a severe slowdown in 2023 as soaring interest rates curbed the market’s appetite for new loans. But its growth accelerated again in 2024 as interest rates declined, and analysts expect its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a CAGR of 36% and 245%, respectively, from 2024 to 2027. Those are incredible growth rates for a stock that trades at 21 times next year’s adjusted EBITDA. The near-term concerns about slower interest rate cuts are likely squeezing its valuations, but its stock could soar a lot higher once those headwinds dissipate.
2. Adyen
Adyen is a Dutch fintech company that doesn’t provide any consumer-facing payment apps. Instead, it develops backend software for processing payments, analyzing customer data, and organizing financial information. Its software works behind the scenes and can be directly integrated into a merchant’s existing online, mobile, and on-store payment platforms. It also enables merchants to develop their own digital wallets and branded payment cards.
That flexibility makes it popular choice for businesses that don’t want to lock themselves to a bigger payments platform like PayPal(PYPL 3.43%). That’s probably why eBay, PayPal’s former parent company and top e-commerce partner, chose Adyen to replace PayPal as its preferred payment platform in a five-year transition from 2018 to 2023.
Adyen’s revenue growth accelerated during the pandemic as more customers ramped up their online spending, but it suffered a slowdown in 2022 and 2023 as it lapped those gains. Rising interest rates, geopolitical conflicts, and other macro headwinds exacerbated its slowdown.
But Adyen’s growth accelerated again in 2024, and analysts expect its revenue and adjusted EBITDA to rise at a CAGR of 22% and 28%, respectively, from 2024 to 2027. Adyen still looks reasonably valued at 22 times next year’s adjusted EBITDA, and it should keep growing as it pulls more merchants away from centralized payment platforms.
3. Nu Holdings
Nu Holdings owns NuBank, the largest digital bank in Latin America. It’s based in Brazil, and it also provides its services in Mexico and Colombia. Without any brick-and-mortar branches, it expanded much faster than traditional banks. It served 122.7 million customers at the end of the second quarter of 2025, compared to 33.3 million customers at the end of 2021. As Nu gained more customers, it increased the stickiness of its platform with credit cards, e-commerce services, and cryptocurrency trading tools.
As a result, its average revenue per active customer (ARPAC) jumped from $4.50 in 2021 to $12.20 in its latest quarter. Its average cost for serving each customer also held steady, and its margins expanded. Nu has plenty of room to grow because about a quarter of Latin America’s adult population remains unbanked.
From 2024 to 2027, analysts expect Nu’s revenue and net income (which turned positive in 2023) to rise at a CAGR of 23% and 36%, respectively. Yet its stock still looks dirt cheap at 18 times next year’s earnings per share (EPS) — presumably because investors are concerned about the persistent inflation and political instability in its top markets. If you expect Nu to overcome those challenges — as it did in the past — then it deserves a much higher valuation.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adyen, PayPal, Upstart, and eBay. The Motley Fool recommends Nu Holdings and recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
HomeBankingAs Dominican Republic’s Fintech Sector Booms, Financial Inclusion Is Big Goal
Fintechs are a rapidly growing presence in the Dominican Republic, where they promise to improve inclusiveness in a still-underbanked nation.
Along with Jamaica and Puerto Rico, the Association of Fintech Companies (Adofintech) has spotlighted the Dominican Republic as a fintech leader in Central America and the Caribbean. The Inter-American Development Bank (IDB) reports that the number of companies the island nation hosts in the field grew from six in 2018 to 65 in 2024. This places the country eighth in Latin America for its fintech economy and the leader in Central America and the Caribbean.
Dominican Republic internet banking and electronic payments are showing substantial growth of over 20% year-on-year from 2023-2024, along with impressive innovation. This is especially true in connection with tourism and remittances, which combined make up 30% of the country’s GDP. Case in point is Qik, the country’s first neobank, which Banco Popular launched in 2022 and which has rapidly grown from an app to a standalone digital bank with over 600,000 customers.
Part of the fall-out from the Covid-19 pandemic in the republic was increased demand for non-traditional financial services, coupled with accelerated digitization. Improved regulatory guidance from the Central Bank of the Dominican Republic and the Superintendencia of Banks, including the Innovation Law of 2016 and a focus on financial inclusion, has invigorated the fintech sector, says José Alberto Adam Adam, country manager with Equifax Dominican Republic.
“The [fintech] industry has evolved toward greater diversification, technological sophistication, and a focus on financial inclusion,” he says. “There’s now multi-service expansion, fintechs for specific segments like personal finance tools for Generation Z, and banking solutions for migrants or informal workers.”
At the upper end of the fintech ecosystem are startups exploring tokenization and decentralized finance (DeFi) and the use of artificial intelligence in credit scoring. The industry has come a long way, Adam notes, since BlueWallet, a Bitcoin wallet, and PrestamistApp, a loan calculation and management aid for financial institutions, launched in 2018.
Financial inclusion has lagged thus far, despite the republic’s consistent GDP growth; only 55% of adults are banked, making it “one of the Dominican Republic’s main challenges,” Adam argues. “The concentration of supply-side efforts on the previously banked population is about to reach peak penetration. Therefore, converting the unbanked population would significantly help the economic sectors we need to continue growing.”
Adam says to achieve that would entail a shift in focus to “inclusion, efficiency, scalability, and new hybrid models that combine the best of the traditional and decentralized worlds.” New efforts include fintech, mobile banking, education programs, and gender-focused initiatives. The central bank has targeted incorporating 65% of adults within the financial system by 2030.
A Blockchain Assist
In April, PaySett and Jamaica’s JMMB Bank partnered to expand into the country and will provide enhanced digital payments and financial inclusion through PaySett’s PayBank solution.
Félix Pago, a Miami-based fintech start-up, added coverage to the Dominican Republic as well as the Northern Triangle of El Salvador, Guatemala, and Honduras late last year. This followed a partnership with Mastercard that will see a chat-based platform carrying remittances out of the US. Félix Pago uses USDC stablecoin to save on currency exchange costs and passes on the savings to clients for a lower rate than on SWIFT transactions.
“Cryptocurrencies are a powerful enabler of remittances,” CEO Manuel Godoy said in a press release, “but you have to abstract them from the user. I always say it could be a donkey crossing the border, it doesn’t matter. What they want is the money, the local currency, and they want it instantly and at the best possible price. And cryptocurrencies allow for that.”
Last August, the International Monetary Fund (IMF) published a technical assistance report assessing the potential impact of a central bank digital currency (CBDC) on retail transactions in the Domincan Republic. It found that while the country has a well-developed national payment system, further improvements are necessary. Cash remains king in the region, and the IMF estimated that take-up of a Dominican CBDC would impact up to 20% of transactions, which in 2017 were over 90% in cash.
Ofcom has found that Channel 4 soap Hollyoaks breached its rules by promoting a financial technology app in an episode of the soap
Zara Woodcock Showbiz Reporter and Lauren Del Fabbro PA Entertainment Reporter
23:35, 15 Jul 2025
Hollyoaks breached Ofcom rules over promotion of fintech app in one episode(Image: PA Media)
Hollyoaks has fallen foul of two Ofcom regulations following its promotion of a financial technology application within the programme, the watchdog has determined. An instalment of the Channel 4 drama came under scrutiny after ClearScore, the show’s sponsor, received both spoken and visual mentions during the broadcast.
The broadcasting authority concluded that the product integration violated two separate guidelines – firstly Rule 9.10 concerning excessive prominence, which stipulates that “references to placed products, services and trade marks must not be unduly prominent”.
The second infringement involved Rule 9.9 regarding promotional content, which declares that “references to placed products, services and trade marks must not be promotional”.
Kieron Richardson’s character Ste Hay discussed the application with his son Lucas Hay(Image: PR)
The controversial product placement featured in the February 18 episode, where Kieron Richardson’s character Ste Hay discussed the application with his son Lucas Hay, portrayed by Oscar Curtis, whilst considering purchasing a laptop.
Viewers witnessed Ste retrieving his mobile device, displaying the ClearScore application prominently on screen whilst demonstrating its various features and capabilities before telling Lucas: “See this? They’ve shown me some options – based on my financial situation and it looks like I can get you that laptop for your studies.”
He continued: “I really want you to make a go of this, Lucas – (gesturing to the ClearScore app on his phone) and these guys are going to help me make it happen.”
The controversial product placement featured in the February 18 episode(Image: PA Wire/PA Images)
The report revealed that the broadcaster acknowledged the references were made due to a product placement agreement, separate from an arrangement with the company sponsoring the soap.
Channel 4 informed the regulator that the references were editorially justified and clarified that “part of the sponsorship and product placement agreements, potential integrations into existing storylines were proposed to ClearScore by the programme editorial team, in consultation with the programme compliance team.”
ClearScore had no editorial input into the storyline of the programme”. Channel 4 further explained that Ste’s character was central to the plot at the time, as he was attempting to rebuild his family after the death of a partner and spending a year in a coma.
The broadcaster added: “part of this storyline (was) his return to work to support his family, which (included) rebuilding his relationship with son Lucas and providing for him”.
The investigation concluded that the references exceeded its editorial justifications for the storyline and became more of a “demonstration” of how to use the app rather than a passing remark. Ofcom also determined that the references were promotional as they described and demonstrated how to use the app, thereby promoting the brand.
A Channel 4 representative has acknowledged the regulator’s verdict, stating: “We acknowledge Ofcom’s decision and will review its findings carefully. Our compliance responsibilities are of paramount importance to us and we will continue to engage with Ofcom and our partners to ensure our content remains compliant”.
