In our recent Making Payments webinar, The Acceleration of the Digital Economy: Risks and Challenges and How To Overcome Them (Spanish), experts from Microsoft, Puntored and ACI Worldwide shared their insights on these three pressing topics facing financial institutions across LATAM:
1. COVID-19 as a digitalization accelerator
2. Keys to navigating a changing industry
3. What payment players should expect in the near future
Here are a few of the key insights shared by our panel:
COVID-19 as a digitalization accelerator
COVID-19 has undisputedly accelerated the digitization of the world’s economy, and Latin America has been no exception. The pandemic has forced the rapid adoption of digital solutions to meet the needs of confined consumers.
According to Andres Alban, CEO of Puntored, “Although the Latin American economy was already adopting different digitalization processes in some countries, the fact is that what was expected to happen in three to five years happened in a matter of months — both large and small corporations, even individuals, were forced to adopt technologies almost immediately.”
With this rapid acceleration, the payments industry in particular faced challenges such as unexpectedly high volumes, increased financial inclusion needs, the entry of new players into the payments ecosystem and new forms of fraud. This led to a reevaluation of priorities and accelerated roadmaps to help payments face this new reality.
As shared by Fabio Mittelstaedt, senior executive director, industry strategy and digital innovation for Microsoft, “During the crisis, the percentage of cash transactions fell from 86 percent to 74 percent in the region, indicating an evolution in the digitization of payments.”
These trends have also enabled an evolution in the use of data. In Colombia, for example, digital wallet transactions grew by 580 percent during the last twelve months, allowing the country to collect relevant information about payments behavior from thousands of citizens located at the base of the economic pyramid, who in many cases do not have a bank account.
Several additional factors, beyond COVID-19, also spurred on the digitalized economy. For example, the launch of PIX in Brazil increased attention on open finance/banking, new regulations and efforts around technological inclusion.
Knowing that consumer expectations are high and rapidly becoming more complex, products and services brought to market must rely on sound and proven technology. Leonardo Escobar, senior vice president and head of LATAM for ACI Worldwide, believes that the key to meeting these needs will be adaptability coupled with having the right use cases to fit those needs at the ready. According to Leonardo, there are three key elements to consider when innovating: enabling access to customer funds, simplifying the receipt of funds and adding value on new payment instruments.
What payment players should expect in the near future
Simply put, collaboration is the future. Co-innovation models will be essential, featuring all participants within the financial system working together, competing on a more equal playing field and developing new customer-centric services. This will serve the ultimate goal of maximizing personalization to enhance customer experience.
Equally important will be the use of artificial intelligence and data analytics to explore payment behaviors and money expenditure, helping to deliver tailor-made services and anticipate or prepare for hyper-growth, cybersecurity issues, new agile models and disruptive financial services.
Read this blog in Spanish
Learn more about the debate in the on-demand webinar (Spanish)