The state of banking and FinTech growth in Latin America
Welcome to the fifth edition of The Risk Radar, where we explore the latest news and trends in finance and lending!
This week, we cover how FinTech in Latin America is on the rise and the growing need for robust compliance. In the U.S., banks are rebounding through digital strategies and strategic mergers while pushing for innovation. Consumer banking trends show increased mobile banking, a decline in debit card use, and challenges with financial inclusion as many remain unbanked or underbanked.
Driving forces behind Latin America's FinTech boom
Nearly 45% of adults in Latin America remain unbanked, yet the region is highly online, creating a unique opportunity for FinTech companies. These digital-first firms are attracting a customer base historically underserved by traditional banks, offering fast, tailored financial services. As banks adopt more inclusive tools like digital account openings, the financial space is evolving towards a more accessible consumer experience.
However, navigating the region’s fragmented and ever-changing regulatory landscape is a significant challenge for FinTech startups. Countries like Mexico and Brazil have introduced progressive laws, such as Mexico’s FinTech Law and Brazil’s Open Banking, yet compliance requirements for KYC, AML, and Open Banking differ across jurisdictions. Startups that overlook the importance of compliance risk legal setbacks, and those that embrace robust systems will gain trust and credibility, positioning themselves for long-term success in this rapidly growing market.
The state of U.S. banking in 2025
In 2024, banks raised over $7 billion in senior debt and equity offerings, signaling a revival in capital markets driven by improved fundamentals and stabilizing interest rates. This renewed investor confidence is pushing banks to prioritize innovation, such as investing in next-gen digital platforms and data-driven lending strategies, to stay competitive in an increasingly tech-driven world. Additionally, smaller regional players are leveraging this shift to pursue growth opportunities, especially through M&A deals that were previously stalled.
Strategic mergers and acquisitions are accelerating, with 126 deals announced last year, and transactions over $250 million becoming more common as banks aim to enhance regional dominance and technology assets. Digital innovation is also gaining momentum as banks focus on scalable, secure solutions to compete with fintech, despite challenges like cybersecurity risks and customer demands. With projections for improved earnings in 2026, banks are set to benefit from cost-cutting measures and technology-driven insights, positioning themselves for long-term growth and agility in a rapidly evolving industry.
Trends shaping consumer banking
The median U.S. savings account balance stands at $7,000, while the median checking account balance is $3,400, with 71% of bank customers regularly using online banking and 43% using mobile banking. Mobile banking usage continues to grow, as consumers increasingly rely on their smartphones for financial tasks like checking balances, transferring money, and paying bills. Meanwhile, debit card use is trending downward, while credit card adoption is on the rise, especially as rewards programs improve, and prepaid debit cards gain popularity among unbanked households.
Despite technological advancements, 7% of U.S. households remain unbanked, and nearly 20% are underbanked, with younger and lower-income groups disproportionately affected. Income volatility is a key factor contributing to the unbanked population, with those experiencing greater fluctuations in earnings more likely to lack bank access. Additionally, while online and mobile banking offer convenience, they also lead to increased competition, with online banks gaining market share by offering lower fees and higher interest rates compared to traditional brick-and-mortar institutions.