Experts reveal the opportunities and challenges ahead as the LATAM region embraces Open Finance
The LATAM region is fast becoming the new frontier in the global role out of Open Finance.
The exciting advance is proving to be much more than a compliance task across the globe. Traditional banks, large and small are taking their cue to launch dual transformation projects. They are not only rebuilding their core services, so they are fit for the digital age, but also reimagining new ways of delivering the best to customers through the appification of a diverse ecosystem of products and services offered through the cloud.
It will mean that customers have greater choice as banks begin to take a laser-focus on excellent customer experiences and allow a range of services to be accessed through a single portal. This will empower businesses and consumers to process digital payments at the touch of a button, manage savings ‘pots’, get loan decisions in seconds, buy foreign currency, and much more, all through the same screen. A new frictionless world awaits.
To get the inside track on how banking organisations are doing this, NTT DATA recently asked leading experts in the LATAM Open Banking sector where they see progress has taken the region’s markets so far and where the new wave of technology will soon have the biggest impact. The findings have been summarised in a concise ebook featuring insight from a who’s who of Open Banking technology and banking services in LATAM, including:
- Manuel Romero, Global Head of NTT DATA’s Open Banking Practice;
- Emmanuel Got, Head of Business Development at Banco Sabadell Mexico
- Patricio Santelices, CEO at Transbank.
- Esther F. Mendez, Banking & Payments Partner Development Lead at Amazon Web Services Worldwide Financial Services;
- Edgardo Torres-Caballero, Managing Director for LATAM at Mambu
Impact of regulations on the Banking sector in LATAM Digital transformation in the cloud
Feedback from the experts suggests that Open Finance is prompting banks, both old and new, to forge ahead with digital transformation projects that are created, and then distributed, in the cloud.
Digital is all about innovating at speed and trying out new concepts which need to be launched with minimal delay and with maximum flexibility, should they need to be scaled. Edgardo Torres-Caballero, Managing Director for LATAM at Mambu reveals to eBook readers that across the region, these fast innovation projects are being widely referred to as ‘speed boats’.
Business and consumer benefits
This ability to pick and choose the most suitable financial products through a single provider is great news for consumers. However, one of the biggest impacts could well be financial inclusion. The underlying trend for digital services to bring banking to previously unbanked consumers was already growing at pace before the pandemic. However, lockdowns across the region typically saw governments offer financial support through digital payments which has seen a huge increase in financial inclusion.
Companies not only stand to benefit from instant digital payments made possible with the latest banking technology, they will also be able to take a lot of the paperwork out of running a firm. That paper is going to be replaced by data and it is here banking experts predict the sector will gain the most. By getting a clear understanding of customers and their buying habits, they will gain far better insight into clients than they could ever achieve through paper payments.
Digital payments help with managing cash flow, as do new Open Banking lending services which can approve finance for businesses, and consumers, in just minutes. Rather than devote hours to paper work, and wait days to find out if a loan has been approved, applicants can now get an answer in minutes.
Regulation and culture
At the moment, banking experts reveal the regulation needed to bring in an Open Banking revolution has yet to be fully implemented. However, the first laws that pave the way have been passed and more are set to come. Each country is taking its own path to open up its banking system and the first fully open markets are expected to launch towards the end of 2021. You can find out which markets are tipped as being at the forefront of developments in the free eBook.
While regulation will build a framework for Open Banking, one of the biggest changes for banks, according to experts, does not come from law makers but rather the banks themselves. Changing banking culture across the region is seen as a first step in allowing financial institutions to supplement legacy systems that have served them well over the past few decades.
To take the leap into developing new products and forging new partnership through growing software-as-a-service and platform-as-a-service offerings on the cloud, will take fundamental change.
LATAM banking experts reveal that in addition to sourcing the best talent, regulation and culture are the major challenges the financial services sector will need to navigate as they prepare for Open Banking. While regulators may lag behind technological advances, the organizations that will prosper in the new digital era are those whose Boards and IT managers fully commit to change their culture so they can embrace the massive opportunities Open Finance brings.