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 lead financial

sector specialist, 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.

'THE SECOND HALF'

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.