Pablo Viguera
CEO & Co-Founder
Belvo
/
Startup Contributor

Three Trends Impacting Latam’s Use of APIs for Hypergrowth

By Pablo Viguera | Thu, 10/28/2021 - 09:10

Latin America has undoubtedly become fertile ground for the entire fintech sector, attracting a historic investment of more than $8 billion in 2020 alone, according to data from the first LATAM Fintech 2020 Report, created by KoreFusion. On top of this, the global growth of embedded finance – the integration of financial services into non-financial websites, mobile apps, and business processes – is one of the clearest trends for the financial sector, generating $22.5 billion globally by 2020.

These two figures serve as the basis for arguing that infrastructure providers and enablers of financial innovators are the key to creating, launching and scaling products and services quickly and securely. Until recently, being able to offer these services and products took too long and required a large investment of resources and technological development, which prevented companies from achieving their goals.

This has changed dramatically with the emergence of financial infrastructure providers and enablers, such as open banking APIs, payment gateways or service aggregators between providers to offer a platform or network of interconnected solutions, allowing customers to access the best solutions through a frictionless experience.

These new tools help financial firms stay on track and focus on what matters. By removing technological barriers and speeding up implementation times, financial innovators will now be able to focus on their core business and invest their resources in all the actions that will help them scale in a more sustainable way.

But the boom in these technologies did not come out of nowhere, as there are clear trends that are helping to consolidate embedded finance models. The first is undoubtedly the digitization of financial services, as the COVID-19 pandemic has pushed more and more companies to start moving toward the digitization of products and the reduction of human contact.

The second trend is the openness of consumers to non-traditional financial providers. With the growth rates in the fintech sector in Latin America – the hypergrowth of neo-banks, the emergence of alternative financing and credit models and all the disruptive business models in the region – we see that Latin American users are comfortable and willing to consume alternative services and are looking for a much friendlier, simpler and faster experience than that provided by traditional companies.

Finally, there is a willingness to share personal data. There is a generational divide in consumers' comfort level with sharing personally identifiable information with mobile apps, a necessary ingredient for embedded finance. For users, the main promise – and benefit – of embedded finance is the reduction of friction in the customer experience, as well as access to services and products that were previously out of reach.

In addition, the ability of these solutions to innovate is a vital point. By not using the same logic as traditional providers, embedded finance gives you the ability to revolutionize services, as they can offer more tailored solutions, better manage risk and increase customer retention.

Ultimately, working with a financial infrastructure partner is key to accelerating the time it takes to enter new markets, understand user needs and launch new financial products that are tailored to them, with scalability and efficiency.

Photo by:   Pablo Viguera