Over the past decade, the fintech phenomenon has dramatically reshaped North America’s financial landscape. Ten years ago, mobile penetration was approximately 60% in the U.S. and Canada and 40% in Mexico. Fintech startups were beginning to gain traction, with shy of 3,000 venture-backed startups across North America. Today, mobile penetration has exceeded 80% in Mexico and 90% in the US and Canada. The financial services sector's contribution to GDP has grown to 8.4% in the US, 7.3% in Canada, and 5.5% in Mexico. The number of venture-backed fintech startups has nearly doubled in a decade, and North America is home to numerous tech unicorns and a robust venture capital ecosystem continuously supports this industry.

In the U.S., the fintech revolution has witnessed the rise of giants like PayPal, Square, CreditKarma, Remitly, Flywire, and SoFi, among others. Many of these companies have democratized access to financial services and investment opportunities. These firms leveraged the growing internet infrastructure and mobile technology to offer seamless, accessible financial solutions, catering to a mass market that prioritized convenience and efficiency.

Even Canada, a country known for its stable financial system, has witnessed an escalation in the fintech sector. Wealthsimple, Koho, and Shakepay are some of the leading companies, offering innovative solutions in wealth management and personal finance. Canada's fintech scene is characterized by a strong emphasis on regulatory compliance and consumer protection, fostering trust and widespread adoption of new financial technologies.

Meanwhile, Mexico represents a unique fintech frontier, driven by the need for greater financial inclusion. The country has witnessed a recent surge in fintech startups such as Clip, Kavak, Bitso, and Nu, which provide essential financial services to a large population of young and tech-savvy consumers. These firms leverage mobile technology as a bridge between traditional banking and the underbanked, offering solutions ranging from digital payments and consumer credit to business loans.

Historically, the fintech evolution in North America has been fragmented by barriers such as language, culture, and diverse regulatory environments. These factors have prevented the region from being perceived as a cohesive market with common trends and network effects. However, the future holds promising transformations. With the advantage of artificial intelligence, fintech businesses are increasingly able to craft personalized consumer experiences that resonate with the unique jargon, cultural preferences, and local dynamics of each market. The growing presence of generative AI, allows these technologies to embrace and adapt to regional nuances, fostering deep empathy and trust with users. This technological advancement is supporting the dissolution of cross-border frictions, enabling seamless delivery of superior product experiences across North America. These synergies are expected to lead to a more interconnected talent pool, as fintech firms attract top professionals from across the continent. Despite macroeconomic challenges, the fintech investment landscape in North America shows signs of recovery in 2024.

Despite recent macroeconomic challenges, capital investments grow strong, as they return to pre-pandemic levels. In Q1 2024, global venture funding reached $66 billion, up 6% from the previous quarter. Within North America, total late-stage venture investments were $16.8 billion in Q3 2023, reflecting an 8% increase from the previous quarter too. In the U.S., fintech startups have seen substantial backing, with major rounds in AI. In Canada, the fintech scene has also been active, supported by significant investments. In Mexico, fintech investments have surged in Q2 with remarkable funding rounds.  For instance, Clip raised $100 million and Aplazo raised $70M in debt and quite series B financing, demonstrating Mexico's growing influence in the fintech industry. This confluence of technology, talent, and capital is setting the stage for a unified and dynamic fintech ecosystem, poised for unprecedented innovation and growth.

Looking ahead, the future of fintech in North America is bright. According to the second edition of the Global Fintech Report, coauthored by BCG and QED Investors, the sector is still in its early days of disruption and innovation, with many new drivers for growth emerging on the horizon. As discussed, the adoption of artificial intelligence and machine learning is set to revolutionize the sector. Digital Public Infrastructure technology around identity, payments, and data holds the promise of more secure, efficient, and transparent financial transactions. Embedded finance will become all-pervasive, taking financial services to non-financial companies where consumers are present, promoting the trend of BNPL into payments, lending, and insurance. Additionally, open banking initiatives are set to further democratize financial data, enabling a new wave of personalized financial services.

As we move forward, we witness existing banks reinventing themselves as digital engagement platforms. Fintechs will become stronger partners, democratizing fundamental technological infrastructure, and moving towards more profitable and sustainable models. Governments will intervene to ensure risk compliance around data and privacy and should foster comprehensive and integrated Digital Public Infrastructure. The focus will be technological advancements as means to build a more inclusive, efficient, and resilient financial system. The convergence of technology, talent, and capital in North America creates a fertile ground for fintech innovation, ensuring that the region remains at the forefront of the global fintech revolution. The journey has just begun, and the road ahead is filled with opportunities for those willing to embrace change and drive forward with vision and purpose.