Latin America’s FinTech industry is experiencing significant growth and transformation, with the region presenting vast potential for further development. Recent reports here on Finextra have highlighted the flourishing nature of the Latin American fintech market, with a surge in new entrants and substantial venture capital investment. The market has witnessed a remarkable 690% increase in VC investment in FinTech startups over the past five years, amounting to $2.1 billion in 2019. This growth has spurred a FinTech movement, particularly in the realm of digital wallets, challenging established players and addressing critical industry issues.
Cloud-based Financial Services across Latin America
Cloud technology has emerged as a pivotal driver of enhanced financial inclusion in Latin America. The business-to-business (B2B) cloud market presents a significant opportunity across the region. Brazil’s financial services and fintech industry are increasingly embracing cloud adoption to streamline operations, reduce costs, enhance scalability, and access advanced technologies. Cloud-based solutions are being leveraged to automate processes, elevate customer experiences, and facilitate faster, more secure payments. Furthermore, these services are instrumental in fostering the development of application programming interfaces (APIs) and open banking solutions, thereby contributing to expanded financial inclusion.
WaaS, BaaS: Software-as-a-Service Solutions in FinTech
Fintech companies in Latin America are actively addressing the region’s outdated financial and payments infrastructure. Software-as-a-service (SaaS) solutions tailored for financial institutions, including banks and non-banking financial institutions (NBFIs), have gained substantial traction in the region. Cloud-based services such as Wallet-as-a-Service (WaaS) and Banking-as-a-Service (BaaS) empower companies to offer banking products and services efficiently and securely without necessitating extensive operational or infrastructural changes or regulatory approvals.
Wallet-as-a-Service (WaaS): Empowering Financial Businesses in LatAm
WaaS, a cloud-based solution, enables businesses to provide digital wallet services to their customers without significant infrastructure or technological investments. Providers like Wallet Factory offer a comprehensive suite of services, encompassing wallet creation, management, maintenance, and seamless integration with third-party services and APIs. WaaS presents a compelling value proposition for emerging financial entities in Latin America, including banks and NBFIs, by facilitating the swift and cost-effective launch of digital wallet services. The benefits of WaaS for budding financial businesses in Latin America include cost-effectiveness, scalability, customization, and robust security measures, ultimately enhancing customer engagement, revenue, and cost efficiencies.
Digital Wallets in LatAm: Driving Financial Inclusion
The proliferation of digital wallets in Latin America has played a pivotal role in advancing financial inclusion across the region. The adoption of digital wallets is projected to witness substantial growth, with transactions expected to surpass $16 trillion by 2028. Integrating digital wallets into banking and retail operations presents a strategic advantage, with projections indicating a 20% annual increase in usage until 2025, reaching over $70 billion in value. Notably, digital payments have emerged as the most widely used fintech application, catering to nearly eight in 10 users. The widespread adoption of digital wallets has effectively extended financial services to previously unbanked or underbanked segments of the population, underscoring its instrumental role in fostering financial inclusion.
E-kyash: A Testament to Financial Inclusion and Technological Innovation
The success story of Belize Bank’s E-kyash, the country’s pioneering digital wallet, exemplifies the transformative impact of financial inclusion and technological innovation. By addressing the needs of the unbanked population and harnessing the potential of digital payments, E-kyash has revolutionized Belize’s financial landscape, contributing to sustainable development and economic growth. The digital wallet has facilitated access to financial services for approximately 40,000 unbanked young individuals, aligning with Belize’s national financial inclusion strategy and bolstering poverty reduction efforts.
Digital Wallet Integration: Enhancing Banking Business
The seamless integration of E-kyash has delivered substantial value to businesses, customers, and the overall financial inclusion landscape in Belize. Noteworthy milestones include identifying the unbanked population as an opportunity for driving financial inclusion, launching the fully approved digital wallet, acquiring 30% of the previously unbanked population, streamlining the onboarding process, and offering a diverse array of functionalities on a single platform, ranging from peer-to-peer transfers to bill payments.
In conclusion, the future of FinTech in Latin America is brimming with opportunities for innovation, growth, and enhanced financial inclusion. The convergence of cloud-based financial services, WaaS, BaaS, and digital wallets is reshaping the financial landscape of the region, empowering businesses and consumers alike. As the FinTech industry continues to evolve, these advancements will play a pivotal role in extending essential financial services to underserved and unbanked populations, fostering economic development and prosperity across Latin America.