Over the past few years, Latin America has seen an explosion of development in its financial technology sector. According to News America Now, it is one of the most successful and lively markets in the world. The countries in this region have welcomed these new innovations with open arms and in turn, have benefitted greatly from them.
For many years in the past, banks in Latina America were reserved for mainly the rich as the poor were shut out from their services and most importantly their credit. People of this region were more familiar with the traditional way of banking. They had to physically go to these banks and spend a lot of time getting their work done. In return, these developing nations were cash-based, and digital banks weren’t being offered to its citizens.
As time has passed, regulations have eased and the development of fintech in Latin America has boomed! Also, when you consider the challenges traditional banks have faced since the start of the coronavirus pandemic, the time was ripe for change. What can be seen now is traditional pen-and-paper solutions being substituted with artificial technology and smart, sophisticated solutions. With a large increase in mobile penetration, it has become more of a reality for people to access digital products and services easily.
This is what the region desperately needed, and the ease of regulations has given a sort of initiative and entrepreneurial drive that has led Latin America to become one of the best markets for Fintech. As of this year, there are now over a thousand fintech startups serving hundreds of thousands of customers. This explosion has undoubtedly attracted investors and venture capitalists to Latin American countries.
With the emergence of Application Programming Interfaces (APIs) for payments, it has allowed many functions to be reduced into one simple function. People can now easily buy what they need with a simple one-click payment service. The region is also seeing a surge in its gig economy, which is contract work or freelancing like uber. These platforms are becoming a significant source of income for many and the trend shows no sign of slowing down.
Online shopping has also emerged as an easy and popular way to shop with the adoption of digital payments. With retailers at a disadvantage due to COVID lockdowns, this has provided a new source of income for many small and medium-size businesses. Latin American service providers also offer automated e-invoicing solutions. Chile has emerged as a global leader in its e-invoicing solutions.
Digital banks or “Neo Banks” as they are called in the industry have been a boon to Latin America. Customers of these neo banks can open accounts online with ease and quickness and can have access to their funds at their convenience. Also, many now have access to loans, credit facilities, and other banking services that they haven’t before. With digital wallets directly connected to the banking app on their phone, all the transactions are smoother and quicker. The move to digitize financial services in Latin America has been a godsend to its people. It should come as no surprise that more and more Latin Americans will choose these digital services rather than traditional banks.
newsamericas. “Fintech Development In Latin America.” Caribbean and Latin America Daily News, 27 Apr. 2021, newsamericasnow.com/technology-news-fintech-development-in-latin-america.