Whose customer are you? The Reality of Digital Banking in Latin America

June 12, 2018
Global, Latin America
Latin America is fast becoming a hotspot for fintech innovation. Encouraged by progressive legislation, banks and fintechs are collaborating to deliver digital banking to the masses.

Banking with a social cause

Latin American banks and fintechs are racing to lower costs and access for the unbanked millions.

Just over half of all Latin American adults now have bank accounts. But credit and debit card ownership and usage lag that in the US and Europe. This has a subsequent effect on e-commerce purchases: 41% of internet shoppers paid cash on delivery last year.

However, an increasingly confident fintech sector that puts simplicity, low cost and social inclusion at the top of the agenda means that digitisation is a tool for improving access and equality in Latin America. Banks have responded by accelerating their digitalisation strategies.

Much of this regional change is being driven by changing customer behaviour and demands—often at a phenomenal pace.

But with over 200m potential new customers also at stake, Latin American banks see a bigger impact coming from new entrants than their peers see in the rest of the world (48% v 36% globally).

However, for the established banks, new payment players are the biggest threat, according to 51% of respondents. This is followed by neo-banks (23%), which offer bank-like transaction services without a full service current account.

Mobile money operators have also taken root in Latin America, with the number of registered accounts growing by 35% in the year to December 2016. Yet, just 10m mobile money accounts were active at the end of that year, leaving many consumers still without the means to make online, mobile or point-of-sale payments electronically. Accordingly, just 21% of Latin American bankers think that non financial firms, such as telecommunications or retailers, could become the biggest competition threat by 2020.

Primary Industry

Renée Friedman
Editor

Renée Friedman joined The Economist Group in July 2016 as a Managing editor for EMEA.  Her work focuses on thought leadership programmes for the financial services sector.

Prior to joining The Economist Group, Renée worked in a variety of roles: in Economic and Political risk consulting, in finance in the City of London as an Economist, a Macro strategist and a Bond fund manager,  in the  international and UK domestic policy spheres as an Economist to the Treasury Select Committee at the House of Commons and as Senior Economist and Chief Technical Advisor for the UN Development Programme’s (UNDP) Regional Bureau for Europe and the CIS,  and as an academic, designing and teaching economics courses at universities across London.

Renée has spoken on a variety of panels  and events focused on Russia, Ukraine and other emerging market economies including those for BNE Intellinews, IHS Global Insight, the IMF Poverty Reduction Strategy meetings, and for the UNDP. She has also appeared on CNBC.

Renée holds a PhD in Economics from London Business School, a Masters in Russian and East European Studies from the University of Birmingham, and a Bachelors in International Trade and Development from the London School of Economics & Political Science.  She is also a Prince 2 certified project manager. In addition to her native English, Renée speaks Russian.

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