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We are only in the first chapter of Latin America’s long journey to technological growth. But with the region’s thirst for innovation, the market is expected to grow almost tenfold over the next decade, with an open bank through the use of APIs leading the way and acting as digital transformation enablers.
With the continued integration of Latin American businesses and startups into new age platforms and services, adopting an API-based transformation strategy has become essential – as a result, the entire financial system is “APIfiedâ€.
In other words, this open API ecosystem, in which third-party service providers access consumer data from financial institutions, means that financial services will be optimized to reduce costs and time spent on transactions and improve performance. user experience.
The benefits of open communication between different products and services are almost endless for credit scoring, transferring money between bank accounts and verticals such as neobanks, credit providers and personal finance products. Latin Americans use it every day.
In 2019, the use of APIs was more mature in the financial and e-commerce sectors, but is now venturing into other areas such as marketing and insurance. FinTech companies increasingly collaborate with traditional players such as banks, payment organizations, insurers and stock exchanges. Cryptocurrency trading platforms and firms are also fighting for their place in the spotlight and have adopted API platforms to support cryptoassets as most of their operations are already digitized.
The API revolution seems to be well underway. So what’s next for Latin America?
The key to technological penetration in Latin America: APIs
Until recently, many financial institutions and traditional banks in Latin America were gatekeepers, with a bank account being the prerequisite for consumer participation in the economy. And before the advent of fintech, the back-office infrastructures of these financial institutions for risk management, credit decisions and fraud detection involved manual efforts and required inter-departmental coordination.
Every step has been taken by one person, from registering a user to producing products and services. This often left customer data untapped, increased transaction costs, hampered innovation, and degraded the customer experience.
As financial institutions grapple with digital transformation, Andres Meta, vice-president of Grupo Bind and co-founder of Arfintech, said many banks are partnering with fintechs or accessing technology products to create unique business models and stay relevant.
One way to reorganize the back office, reduce costs, and improve communication is to use APIs. This will allow access to information, improve the consumption of products and services, and disrupt and deconstruct established value chains.
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