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News Article

COVID-19 Spurs Growth in Digital Payments

By Gabriela Mastache | Fri, 05/29/2020 - 13:59

In light of the COVID-19 pandemic, the Mexican banking sector and its users have resorted to the use of digital channels to perform financial operations. The current and future use of digital channels have already spurred investment in fintech companies.

According to BBVA México, in January 2020 the bank had 10.3 million digital clients. However, by the end of March 2020, the bank registered 10.7 million digital clients. Moreover, the bank mentions that in February 2020, 58 percent of the total sales made by the bank were done through digital channels, while in April 2020 this percentage increased to 67 percent.  Overall, the volume of electronic transfers made by users went from 33 million to 35 million. Hugo Nájera, Director General of Client Solutions at BBVA México, has said that the COVID-19 sanitary emergency will generate a change in the way banks interact with their clients.

Grupo Santander is another bank that is betting on innovation and the use of digital channels. The bank just announced that it has invested in the Latin American fintech company a55. This startup with presence in Brazil and Mexico provides loans and credits to SMEs with their income as collateral. a55 has been in Mexico since 2018 and has provided loans accounting to MX$150 million (US$6.7 million), but it expects to double the amount of credits given in the next 12 months.

Manuel Silva, Partner and Director of Santander InnoVentures, which is Santander’s entrepreneur investment fund, said the current COVID-19 pandemic “will accelerate changes in consumption habits towards digital and subscription models. This will benefit in great manner SaaS companies that will need alternative financial suppliers to finance their growth. a55 is well positioned to support Brazilian and Mexican companies with its financial offer, adapted to its needs and particularities, built by entrepreneurs for entrepreneurs.”

The future of financial services is looking increasingly more digital. According to Alejandro Pineda, President of the Payments Commission of ABM, contactless payments or CoDi payments will become more popular once the pandemic is over. According to Pineda, the COVID-19 pandemic decelerated the implementation of CoDi and other types of contactless payments. However, the risk that exists of cash being a COVID-19 transmission method will boost the use of digital payments. Pineda also mentioned that the decline that has been registered at points-of-sale terminals is the result of the social-distancing measures that have been put in place. Nevertheless, almost 50 percent of the terminals have already been enabled to receive contactless payments. For Pineda, the ball is now on card companies, since they have to massively provide cards that function in a contactless manner.

 

The data used in this article was sourced from:  
El Economista
Photo by:   Pixabay
Gabriela Mastache Gabriela Mastache Senior Journalist and Industry Analyst