SANTIAGO, June 20 (Reuters) - The number of financial technology startups, known as "fintechs," has more than quadrupled in the past six years in Latin America, a report showed on Thursday, with one expert pointing to more room to grow in the region.

The region's fintechs went from 703 in 2017 to 3,069 in 2023, according to the report compiled by the Inter-American Development Bank (IDB) and Finnovista, a fintech development firm.

The majority of today's fintechs - 57% - target Latin America's unbanked or "underbanked" population, the report showed.

Most fintechs providing services to unbanked individuals offer them loans, according to the report, while fintechs working with small businesses tend to offer payment services.

Brazil leads the region in the number of fintechs, representing just under a quarter, followed by Mexico with 20%, Colombia with 13% and Argentina and Chile with 10% each.

"One thing that's clear from the reports is the correlation between advances in regulation and the capacity for growth in each country," said Anderson Caputo, the IDB's markets and finance chief, in an interview.

The study highlighted the roll-out of laws and regulations on the fintech sector in Chile, Ecuador and Peru in recent years, as well as an "instant transactions and open finance" framework put in place in Colombia.


Smaller countries in the region are seeing the largest growth in the sector, the report argued, with Peru, Ecuador, the Dominican Republic, Uruguay, Costa Rica and Guatemala averaging year-on-year growth of 44% from 2017 to 2023.

"There's still a lot to do," said Finnovista co-founder Fermin Bueno. "There are many, many unmet needs still. We're just in the first half of the game, we need to play the second half too."

The top challenges for fintechs are scalability and access to financing, according to the report.

In recent years, a number of fintechs have partnered with traditional banks in the region to share services or financing, Bueno said.

"The leading markets like Brazil, Mexico, Colombia, where the most sophisticated traditional incumbents are, they've already passed the phase of denial and are now moving to co-create solutions of even invest funds," Bueno said.

Bueno pointed to Citi's Mexico unit Banamex and its tie-up with fintech Minu to offer payday loans as an example, while Bancolombia and BBVA's Mexico branch have launched their own venture capital funds to invest in fintechs.

(Reporting by Juana Casas; Writing by Kylie Madry; Editing by Aurora Ellis)