Latin America is undergoing a rapid financial revolution. New instant payment systems in more than 17 countries, combined with broad regulatory innovation (despite some inertia in certain countries) and the scaling of a rapidly growing fintech sector of more than 3,000 active firms, have expanded the market to segments of society that were previously excluded or underbanked — an estimated 200 million adults.
But there are stubborn limits to what more access has delivered so far. In Brazil alone, despite having the most advanced fintech market in the region, the corporate credit gap is estimated at $890 billion. To achieve much more meaningful levels of financial deepening, the next phase requires moving beyond simple digital payments and basic credit products. By merging localized, high-adoption strategies with global Digital Public Infrastructure (DPI) such as instant payment rails, the region can achieve fuller financial access and build a financial ecosystem which leverages innovation with integrity.
The Latin American lag
Brazil has achieved critical mass with the digital payments platform Pix, a project launched by the country’s central bank that by early 2025 reached nearly 170 million users, practically the entire adult population. But much of the rest of Latin America has struggled to reach this stage. Latin America has seen a 340% increase in the number of fintechs launched since 2017, mainly payments and remittances companies and new forms of data-driven credit models led by traditional financial institutions and digital lenders. That growth, however, is unevenly distributed, and much can be done to unleash more innovation across the entire region.
There are several structural reasons for this lag.
Brazil’s success was driven in part by a clear mandate to the Central Bank of Brazil (BCB), which took a proactive, hands-on role in designing and enforcing Pix. But many other central banks across Latin America lack similar legal mandates or political will to lead such a transformative project.
In Brazil, the BCB’s “Agenda BC#” explicitly prioritized competition and democratization. Brazil is also the first country in Latin America to take steps in the direction of a government-mandated insurance marketplace, similar to an initiative in India, with Brazilian insurance regulator SUSEP leading an “Open Insurance” initiative.
But there is regulatory inertia in many of Brazil’s neighbors. The failure of many governments to update outdated regulations to meet new digital realities has stalled innovation. While Brazil and Chile lead with account ownership rates above 85%, countries like Nicaragua (24%) and Guatemala (38%) reflect significant regional disparities. Resistance from incumbents is part of that problem, as established financial players often fight against new systems to protect legacy investments and high-fee models. Markets in those countries currently lack the incentives to promote cheaper, more transparent alternatives.
Another headwind in much of the region is that most individual Latin American markets are too small to achieve scale independently. Brazil is an exception, given its size, but market fragmentation across the region is holding back progress and discouraging needed investment.
Countries currently lagging have a unique “leapfrog” opportunity, with clear potential benefits to end consumers. Some countries, such as Colombia and Peru, are already following Brazil’s example. They are convinced that common digital public infrastructure, open finance and open data frameworks, along with the right incentive structure, can create the conditions for specialized providers and traditional financial institutions alike to build on top of the DPI and deliver better, safer and cheaper financial services, including cross-border payments. For example, Brazilian fintech SuperSim uses a credit scoring system built on Pix that can deliver immediate disbursement of the loans, similar to India’s KreditBee.
However, similar services are currently not yet an option available in most other countries in Latin America. The level of readiness to adopt a Brazil-style roadmap of digital transformation and DPI development varies widely, and it requires political will, institutional capacity, the right incentives and regulatory trust. These elements are often lacking in these countries, hindered by privacy concerns over the use of biometric ID, surveillance risks and the lack of institutional capacity. Those concerns are added to general resistance to change, including from some of the dominant players.
The global blueprint: Solving for financial access at scale
Latin American policymakers would do well to look to the “India model,” a suite of platforms anchored on a biometric-based national digital identity system known as Aadhaar and the Unified Payments Interface (UPI). Together, this system of open public digital infrastructure — sometimes called the “India Stack” — solved the massive challenges posed by digital onboarding, interoperability issues and high cost barriers in a cash-heavy and highly informal economy. By 2025, India handled nearly half of the world’s digital transaction volume, with UPI processing over 250 billion annual transactions worth $3.4 trillion. This allowed even the smallest street vendor to accept digital payments, effectively digitizing the informal economy and creating a data trail that could later be used for things like credit scoring.
Building on this payment foundation, India has rapidly scaled two additional layers of its tech stack to address the $500 billion credit gap for micro, small and medium enterprises (MSMEs) and the historically low insurance penetration. On the credit front, India’s new Open Credit Enablement Network (OCEN) and the Unified Lending Interface (ULI) have transformed how credit is delivered to the 89% of small businesses that previously lacked formal financing. Companies like Kinara Capital are addressing the small business lending gap by using real-time transaction data to provide micro loans to small business owners who have no physical assets but clear digital records of revenue.
Examples of similar models being rolled out in Latin America include Konfío in Mexico, Credix in Brazil and, even more recently, Ualá and Nubank’s small business lending lines. Similarly, companies like KreditBee in India are addressing the gap in loans for gig economy workers. The Latin America equivalents include Kueski in Mexico, a leader in real-time micro-lending, as well as SuperSim in Brazil, Addi in Brazil and Mexico and Ualá in Argentina, Mexico and Colombia.
India is also pushing toward insurance coverage for all by 2047. That effort includes Bima Sugam, an Amazon-like digital marketplace for insurance. The platform is designed to act as the industry’s shared infrastructure where every insurance company in the country lists its products. Bima Sugam simplifies the entire insurance lifecycle, much as UPI did for banking. Like UPI, it’s also linked to Aadhaar, the digital ID system, so customers can track policies digitally and make onboarding easier.
This initiative should increase insurance coverage in a country where non-life insurance penetration was just about 1% of GDP. It also lowers premiums for the end consumer. Insurtech pioneers like Digit and ACKO are already using this infrastructure to offer hyper-personalized micro-insurance products for as little as a few rupees a day, reaching millions of new-to-insurance customers.
As Vikram S. Gandhi wrote in a recent article for Duckbucks, the “next challenge” for India’s massive public digital finance infrastructure is “turning unprecedented access into more financial participation.” This evolution is already underway. By integrating these layers, India’s stack has evolved from a simple payment rail into a holistic financial engine that provides full financial access to previously underserved populations.
In addition, India bridged its systems with financial hubs like Singapore, which pioneered integrated systems and supported initiatives like Project Nexus, led by the Bank for International Settlements (BIS). Nexus reduces friction in cross-border payments by connecting national instant payment systems into a single gateway, with the aim of allowing money to move between countries as easily as it does within them. BIS spun off Nexus, which was incorporated in Singapore in 2025, as Nexus Global Payments (NGP) to operationalize and internationalize this system. Nexus can expand digital inclusion beyond national borders — and can be leveraged in Latin America.
‘The goal shouldn’t just be digital payments but building what could be called an ‘operating system for life’ that embeds financial services into daily habits.’
The Singapore model of digital transformation and innovation in the financial sector is built on a proactive whole ecosystem-driven approach that moves beyond traditional regulation. A core pillar of this model is the regulatory sandbox. While the United Kingdom pioneered the “FinTech Regulatory Sandbox” in late 2015, the Monetary Authority of Singapore (MAS) perfected and internationalized the model.
Under Ravi Menon and Sopnendu Mohanty, Singapore took the UK’s concept and evolved it into a multi-tiered, highly efficient engine for national digital transformation. The sandbox allowed fintech firms to test innovative financial products and services in a controlled environment with relaxed regulatory requirements. For example, the Sandbox Express provides a faster approval process for lower-risk activities, enabling startups to bring inclusive products to market more quickly.
Another defining element is Project Guardian, a collaborative initiative led by the MAS and industry partners to test the feasibility of asset tokenization and decentralized finance (DeFi). Under this project, major financial institutions like JPMorgan and DBS have conducted successful pilots for tokenized bonds and deposits, establishing high-fidelity, real-time data feeds and standardized protocols that bridge the gap between blockchain technology and regulated finance. This forward-looking approach, now taken globally by the Global Finance & Technology Network (GFTN), focuses on building foundational DPI such as instant payment systems (e.g., PayNow) and integrated data sharing frameworks (e.g., SGFinDex) to create a resilient and innovation-ready financial ecosystem.
Leapfrog opportunity
By learning from the models of India, Singapore and Brazil, Latin American countries can use the latest technology to do it better and more safely than the pioneers. Colombia is currently at the forefront of this wave with “Bre-B,” its new interoperable payment infrastructure that started rolling out towards the end of last year — and now already has registered over 76 million “keys” (or aliases) for roughly 31 million users.
To include more people without increasing fraud and indebtedness, countries across the region should adopt a three-pillar strategy:
First, tackle safety by design. New systems can mitigate the risk of cybercrime from the ground up. Brazil is already moving toward “MED 2.0,” a special return mechanism to improve fraud recovery, but new entrants can go even further and build AI-driven fraud detection directly into the core ledger of their national stacks rather than addressing the issue as an afterthought.
Secondly, embrace regulatory sandboxes. Countries can use regulatory sandboxes to allow fintechs to test innovative products in a controlled environment. This fosters competition with high-fee banks while ensuring consumer protection. Successful sandboxes in the UK and Singapore have shown that they reduce time-to-market for inclusive products. Brazil itself has been a launchpad for today’s largest digital financial institutions thanks to a regulatory approach that promotes innovation.
‘Payment-first models build the trust necessary for ‘credit-later’ expansion.’
The central lesson from Brazil’s most successful fintechs and digital native finance companies is that successful financial deepening often follows a specific sequence for fintechs. Products start as a digital wallet to solve a narrow payment friction issue, then expand into a super app that integrates into the lifestyles of users before finally securing a full banking license to offer more complex products like credit. Take the example of PicPay, which scaled to over 60 million users in Brazil by following this path, proving that payment-first models build the trust necessary for “credit-later” expansion. For other Latin American countries, the goal shouldn’t just be digital payments but actually building what could be called an “operating system for life” that embeds financial services into daily habits.
Third, include credit guardrails. To prevent the “trap” of over-indebtedness, new stacks must include mandatory data-sharing (Open Finance) and automated guardrails. The very real risks of excess debt were highlighted in a recent article by Lauro Gonzalez for Duckbucks, which noted how low-income Brazilians — those receiving Bolsa Família welfare benefits — have on average seen the amount of income committed to paying debt and interest reach 38%. By improving financial education and using real-time transaction data from systems like Pix, or its new Colombian equivalent Bre-B, lenders can provide right-sized credit that matches a user’s actual repayment capacity. That possibility has been highlighted in recent studies on financial inclusion in Brazil.
A Latin America tech stack
Latin American countries should join together to tackle these projects on a cooperative regional basis, something that would overcome market fragmentation issues and help drive better financial and economic integration. The blueprint for a “Latin America tech stack” that improves upon the Brazil model — Pix, Open Finance, Drex and Gov.br — while also learning lessons from India and Singapore would focus on four areas which could each be built as an interlinked infrastructure layer: digital ID systems, cross-border regional interoperability, AI-driven consumer protection and sector-agnostic data sharing.
Layer 1: Identity & trusted onboarding
Building on the success of Gov.br, which covers about 90% of Brazil’s adult population with 155 million users, this layer would implement a supranational digital ID system that can be mutually accepted across countries.
Instead of being confined to isolated national systems, this layer would use shared electronic know-your-customer (eKYC) standards — and, in the not-so-distant future, electronic know-your-agent (eKYA) standards — to allow citizens from one country to open a simplified account in another instantly. For improved security, this layer would integrate biometric authentication inspired by India’s Aadhaar system to reduce the onboarding fraud that currently plagues the region.
Layer 2: Interoperable payment rails
This layer takes the Pix model, which brought 71.5 million unbanked people into the digital economy, and adds Project Nexus-style regional connectivity. A central gateway would connect national systems like Brazil’s Pix and Colombia’s Bre-B to allow instant, low-cost cross-border remittances — a vital flow for the region. Existing regional publicly backed financial entities like the Latin American Reserve Fund can help orchestrate such interconnection building on functionalities like those offered by Nexus.
Improving on current systems, this stack should also include “lite” protocols to enable transactions in areas with poor internet connectivity, similar to India’s UPI Lite X.
Layer 3: Data & intelligence
Brazil’s Open Finance is the world’s most comprehensive, with 42 million users. A regional stack would evolve this into Open X and expand services well beyond traditional banking. Sharing standardized data between not just banks but also utilities, telcos and e-commerce ventures — like the Mercado Pago data platform does already in Brazil — enables more accurate credit scores for the informal sector. Building an “Open Insurance” system could also increase insurance penetration in a region that currently accounts for just 4% of the world’s insurance market. Meanwhile, integrating AI at the core provides autonomous financial operations. Among the potential advantages, AI agents could proactively prevent users from taking on high-interest debt if their data suggests a high risk of over-indebtedness.
Layer 4: Programmable finance
Using Brazil’s central bank digital token — the “digital real” known as Drex — as a template, this layer would provide a platform for smart contracts and asset tokenization. Loans could be “programmed” to be released only when certain conditions are met, such as agricultural credit released based on satellite-verified crop planting. That would reduce lender risk — and thus lower interest rates. Programmable finance elements could also allow the creation of a regional digital rail for capital markets that allows MSMEs to access credit from a wider pool of regional investors.
The key to successful implementation of this four-layer blueprint is more in the how than in the what. Customers expect simpler, faster, cheaper and safer products. User experience must be top of mind in the design of solutions, from private provision of B2C financial products to digital public infrastructure rails. That is why Brazil and Colombia invested so much time and effort on the branding, the look and feel of their instant payment systems to deliver products that would actually appeal to residents and attract users. By adopting these lessons, Latin American nations can together build a regionally interconnected “Brazil Stack” or “Colombia Stack” that doesn’t just digitize cash but creates the resilient, data-driven foundation for long-term economic prosperity.
