René Salazar
Head of Banking Solutions Latam
View from the Top

Latin America is Increasingly Welcoming Electronic Payments

By Sofía Hanna | Thu, 07/07/2022 - 10:13

Q: What opportunities has Fiserv identified in the Latin American market and how has the brand strengthened its presence in this region?

A: Fiserv started operations over 36 years ago in the US providing financial services technology to some financial institutions. Over 20 years ago, Fiserv started offering its solutions to several countries in Latin America, the EU, the Middle East, Africa and Asia Pacific. In Latin America, we started as a provider of banking solutions like the core banking system. Fiserv provided a solution for the data centers of financial institutions that allowed them to operate more efficiently. Our solutions have proven to be reliable, safe and adaptable.


In 2019, Fiserv acquired First Data and became one of the main suppliers of payment solutions for financial services. Wherever there is a financial transaction, it is highly probable that one of our solutions is involved behind the scenes.


Latin America is a great market and we have a strong presence in different businesses. Despite the prevalent use of cash in the region, Latin America is a market where electronic payments are evolving. Fiserv aims to introduce solutions that leverage technology to provide the best services.


Q: How do the solutions you offer in Latin America differ from those for other markets?

A: In the US, we can provide solutions to any financial institution regardless of its size. But outside of the country, there is a limited portfolio of solutions that can be provided because regulations are very different across countries. We need to offer solutions that adapt to different markets.


In Latin America, our largest business line pertains to electronic payments. During the past few years, the acceptance of digital payments has evolved and accelerated dramatically. Businesses that did not accept digital payments in the past had to start accepting payments through different digital channels.


Our second-largest area is the issuing business, which involves processing credit cards. In Mexico, for example, there are several financial institutions that issue credit cards. Usually, those who have one credit card might have several more. The third-largest business line in the region is providing support to financial institutions, allowing them to offer digital solutions through different electronic channels or to protect transactions from money laundering. We also provide solutions so back offices can support their accounting divisions and we can forecast how much money ATMs will require, among other services.


Q: How has the informal economy in Latin America represented an opportunity for Fiserv?

A: Our solutions help both traditional financial institutions and emerging ones to address the needs of the informal economy. We can provide information to financial institutions that allow them to arrive at an accurate forecast of how much cash they will need on hand. Mainly, however, we provide solutions based on the digital economy, including attractive products and services that specific markets can use to boost the formalization of monetary transactions. For example, major retailers and convenience stores allow customers to create an account and pay for third-party services or to buy from different stores, despite this target market usually preferring cash.


For example, in Brazil, Pix allows users to put money in a digital wallet to pay for whichever service they want. This is less expensive than paying with a credit card; it is like moving cash through digital barriers. A similar scenario can be seen with Mexico’s CoDi, which was created for the transformation of cash through electronic payments and could eventually support the transition toward credit without a credit card.


Q: What are the emerging trends that we will see in the financial sector?

A: The omnichannel trend is growing. Companies are also developing super apps that manage a vast amount of information, such as distribution and expenses, to fully control the experience they offer. Another trend is the shift from traditional banking to specialized services for different types of loans; it will be less common for consumers to access every service in a single financial institution. Digital players will likely dominate the market by getting information and connecting with different service providers, such as insurance companies, to offer options to customers. 


Meanwhile, traditional players are understanding that their methods do not allow them to be fast and provide a digital experience, which is affecting how they are perceived by younger generations. For that reason, traditional banks are creating a digital version of themselves to offer their services and we help them move forward with those plans.


Fintechs also provide interesting business models that can be replicated to generate value and volume. Many retailers are also playing in this ecosystem both by themselves or through partnerships with financial institutions. We will start seeing banking-as-a-service models, in which banking services are provided on the web and on-demand.


Q: Considering high inflation rates and global issues, how can trade continue to be a global priority within financial services?

A: Certainly, we are living in difficult times. Unforeseen events are affecting strong markets, so countries and financial institutions need to focus on their strengths. We will see a reduction in the number of strong players and offerings. Economies will be reshaped and only some businesses will survive. Despite the international context, the world continues to progress and it is difficult to predict what will happen.


Q: What opportunities exist in Latin America to secure data access?

A: This is a significant opportunity. The concept of open banking has existed for a long time. The UK, for example, is moving toward open banking and other countries are leveraging its model to launch their own open banking initiatives. 


Following the rules published in the UK, we developed an evolved core banking system that protects assets and information to allow our clients to interact. The international core that we provide to the Latin American market is the same one being used in the EU and Asia Pacific. The UK is the most advanced market and we adapted to that to generate this solution.


Q: What are the next steps for Fiserv in Latin America and which countries is it focusing on?

A: We are present in many countries in the region. But our main operations are in Brazil, Mexico and Argentina. We plan to expand our footprint in Brazil and Mexico. Fiserv also has a strong presence in the Caribbean and in South America, where some markets, such as Chile, are starting to accept every single type of electronic payment. There are numerous opportunities for Fiserv in our three business areas: accepting payments, processing services and banking solutions, which is why we’ll carry on working to create technology and solutions that allow us to empower businesses and help them do what they do best, while they continue growing and bringing value to their customers.


Fiserv is the first nonbank acquirer in Mexico and a world leader in technology for payment processing. It helps simplify commerce for consumers, businesses, financial institutions and governments in over 100 countries.

Sofía Hanna Sofía Hanna Journalist and Industry Analyst