News Americas, NEW YORK, NY, Tues. April 27, 2021: Latin America has been seeing an incredible development in its financial technology in the last few years. In fact, it might even be one of the most successful and lively markets for Fintech in the world. Latin America has welcomed this change with open arms and is greatly benefitting from it. Here’s how Fintech has been developing in Latin American countries.
How Fintech Has Benefitted Latin America
Latin America is undoubtedly vast in size. For many years in the past, banks in Latin America were mainly more favorable to the rich. The poor couldn’t benefit from these banks and found it hard to use the credit facilities.
People in most of these Latin American countries had a more traditional experience of banks. They had to physically go to these banks and spend a lot of time getting their work done. Economies were then mainly cash-based, and digital banking wasn’t serving the people well.
But over the years, the regulations have become more friendly to the development of Fintech, and Latin America has welcomed Fintech with open arms. People became even more reliant on Fintech in recent times with the COVID-19 pandemic.
We now see traditional pen-and-paper solutions being substituted with artificial technology and smart, sophisticated solutions. With increased mobile penetration, it has become possible for customers to access digital products and services easily.
This financial inclusion was much needed. The new regulations effectively broken down the entry barriers, and we now see a huge trend with many people having their own fintech startups. Hence, with this sort of initiative and entrepreneurial drive, Latin America is becoming one of the best markets for Fintech.
There are now more than thousands of fintech startups. Due to the level of competition among these startups, many parts of the world will likely benefit from the new technologies, innovations and smart financial solutions coming from young entrepreneurs. This explosion has undoubtedly attracted investors and venture capitalists to Latin American countries.
It is becoming hard to differentiate between payment companies and data companies. With the increase in Application Programming Interfaces (APIs) for payments, it has become possible to reduce many functions into one simple function. People can now easily buy what they need with a simple one-click payment service.
Latin America is also seeing great development in what is known as a gig economy, where we can now see a sharp increase in contract work and freelancing. These gig platforms are becoming significant sources of income for many Latin Americans. They are the ground from which many innovations are now emerging. Due to this growing trend, Latin Americans have better consumer experiences. Fintech has helped to power the gig economy effectively.
Hence, because Fintech is powering many companies, we see better models of business relationships and impressive growth of the Small and Medium Enterprises (SME) sector. These small and medium businesses are now enjoying an increase in online presence and visibility.
Online shopping has become very easy and popular in Latin American countries with the adoption of digital payments. At present, with the adoption of these digital payment practices, Fintech has become instrumental in recovering the Latin American market. Latin American service providers also offer automated e-invoicing solutions. Chile has emerged as a global leader in its e-invoicing solutions.
Fintech service providers are not helping businesses and consumers but also the many Latin American Banks. These service providers can help with cash distribution and other varied services, which can significantly help a bank with cash forecasting and financial stability.
Neo banks have also been a boon to Latin America. They are also known as digital challenger banks. Neo banks essentially have all their banking operations completely online. The customers of neo banks can easily and quickly open an account with them and use it to access the funds at their convenience. There is no need to go physically to a local branch and formally open an account. Nubank of Brazil has currently become the largest fintech in the world.
Fintech has benefited the workers immensely. They now have access to more personalized solutions for their problems and can now easily use loans, credit facilities and other banking services. Because their digital wallets are directly connected to the banking app, all the transactions are smoother and quicker.
Fintech also helps address common security and trust concerns in the banking experience. With modern biometrics and other safety measures, customers can rest assured that they will have a safe and secure banking experience.
The digitalization of financial services in Latin America has been one of the greatest blessings for its people. It is no surprise that there is a decrease in reliance on traditional banking as more alternative and smart financial solutions and services are now rising to the surface increasingly.