Topic

The shifting focus of Latin American banking and the technological challenges facing the industry

By Fernando Vergara | 23 September 2021

Last week I was able to attend Felaban’s CLAB 2021 conference (Congreso Virtual Latinoamericano De Tecnología e Innovación). The conference provided an opportunity to learn how banks across the Latin America are tackling the technological challenges of today and the future, the disruption and adaptation of FinTech’s, Open Banking in the region, and how COVID-19 has impacted their strategies.

The impact of COVID-19

As with other financial sectors, banks are adapting to the new digital world. Whether it’s operational strategies, such as moving to the cloud or bringing efficiencies to their banking apps – most banks recognise that to compete and stay relevant, they need to adapt to the latest technologies.

When COVID-19 hit and many countries in Latin America went into lockdown, millions of people were forced to go online and make transactions for the first time. The lockdown forced many banks to accelerate their digital transformation. Demand from the users went up, along with the number of online transactions in the region.

FinTech disruption

COVID-19 also highlighted how some new FinTech’s in the region were able to fill in the gaps that banks could not cover during lockdown. One particular digital payments FinTech in Mexico focused on small to medium sized businesses. They built a proven digital ecosystem that businesses could trust, which in turn gave them a model of success that differentiated them from their competitors.

Knowing that money would hit their accounts in 24 hours was paramount to their clients, given the financial uncertainty faced over the last 18+ months. Also contributing to their success was the fact that they have a strong support team, no monthly fees or penalties and a quick response time.

Open Banking

More and more people are also now understanding the importance of being in the banking system. It’s estimated that almost 220 million people living in Central and South America are not in the banking system, so do not have access to any benefits, such as taking out credit.

In Brazil, they are trying to tackle the issues of bringing in more of the population into banking through Open Banking and technology. Brazil has always been an early adaptor of tech, whether it was through smartphones, social media, or transportation apps, the people in Brazil do not resist the ‘new’. They believe that their citizens will see open banking as a way for people to use payment systems and give the 30 million people in the country, who earn via their living via cash, more opportunities in the future.

Using technology to manage digital payments

SmartStream’s digital payments solution automates reconciliation, settlement, fee calculation and dispute management processes. It supports all payments players, irrespective of size. Integrating artificial intelligence, it enables rapid on-boarding and complete transaction lifecycle management.

The solution allows payment investigations for SWIFT and RTGS to be carried out. Pre-configured workflows automate large parts of the exception handling process, guiding users and virtually eliminating the risk of error.

Find out more about our digital payments solution

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