The role of technology in the Latin American banking industry

My first trip to Latin America came after a long corporate career with a more global position. I remember that on those first visits financial matters were still handled in person. When I saw that, I understood that, despite our humble beginnings within Latin America, we had the opportunity to do our bit in transforming the region.

Previously, traditional banks had plenty of time and space to grow their customer base and consolidate their market positions. Digital disruptors such as neobanks and fintechs have turned things around in recent years by rapidly accelerating consumer digital adoption rates.

Customer expectations have evolved dramatically and conventional banks are competing against innovation to keep up. In Backbase’s most recent study with Americas Marketing Intelligence (AMI), 54% of Latin American customers in seven countries showed a desire for additional features from their online banking providers. For example, web portals for online purchases. The same is true for the younger generations, Gen Z and Millennials, who are shaping the digital banking space in Latin America.

Meeting the demands and expectations of these digital natives has become particularly important in this region, as they increasingly demand fast and personalized online experiences.

Engaging and maintaining the loyalty of this generation is paramount as they gain greater purchasing power. Banks must rise to the challenge of reaching out to these younger consumers by offering new approaches. It is not enough to digitize existing products. It is necessary to capitalize on the expansion of existing marketing strategies so that they reflect the habits, expectations and preferences of younger consumers, such as:

I) Rapid adoption of online banking channels and solutions to simplify the management of personal finances.

II) Emerging payment methods, including digital and mobile wallets. Generation Z and Millennial consumers are more likely than ever to use their phones for financial tasks.

III) Contactless, QR and other digital payment tools to provide an effortless and streamlined payment experience.

The challenge is that most traditional banks have legacy systems that reduce their time to market. Having the right system to become agile and flexible is the key to capturing generational disruptors.

True next-generation innovation depends as much on what is innovated as when and how it is done. Digital early banks have faster time to market, higher revenue, and more satisfied customers. When evaluating financial institutions, today’s customers no longer compare organizations but experiences. The future of digital banking in Latin America lies in its personalization. With the right platform, you can create memorable banking experiences for your youngest consumers.

* Vice President for Latin America of Backbase.