Latin American countries have historically been cash first economies. However, as technologies develop, its becoming more and more unavoidable for companies to begin digitising their services.
The financial sector has seen huge development. As was discussed at Fintech Week London by an esteemed group of panellists from across LatAm, the pandemic accelerated the need for digital solutions – this resulted in more Mexicans using fintechs according to Carlos Torres Guzman from YG Consultants, and how “the [fintech] industry creates opportunities for the population” as prior to the pandemic, “between 50 and 70% of the population had bad or no access to banking.” said Mariano Francisco from Argentina Fintech Association.
Looking to get a better understanding of the LatAm financial landscape, The Fintech Times spoke to Martin Naor, founder and CEO of Bankingly, the Uruguayan based digital banking software provider:
What do you think makes Bankingly stand out and unique?
Bankingly’s uniqueness comes from the combination of more than 20 years of experience in how the largest and most sophisticated financial institutions serve their customers digitally, paired with a laser focus on a severely underserved segment of the financial ecosystem – the set of institutions that aim to bring the two billion unbanked and underbanked people around the world into the formal financial system. Over 75% of our clients started offering their first digital services with Bankingly.
What inspired Bankingly to be set up in South America?
Bankingly was born out of our experience serving the Latin American market and that’s why we started there. We have already expanded to Africa and SE Asia is next on our plans.
What are some of Bankingly’s unique features?
Bankingly puts together a business model that aligns perfectly with our customers. We provide them with a world-class solution in terms of design, usability, security and performance; but instead of charging the huge upfront fees that are normal in traditional software, we support our customer’s digital transformation process by charging them for actual usage of our product on a monthly basis. In addition, we operate and evolve the platform on our customers’ behalf, ensuring that they stay secure, relevant and competitive. We also provide a wide range of services like 24×7 support, so financial institutions don’t have to make extra investment in their teams.
How have consumers responded to these unique features?
Customers vote with their feet (or their hands in this case). Every month we have more users, who use the product more times, and undertake more transactions. Financial institutions we work with report results from a 12% increase in credit origination, to a 22% increase in payroll accounts, and a 45% decrease in transactions costs.
What do Bankingly’s road map and growth plan look like? How do you plan to continue to differentiate the company from the rest of the competition?
Our customers and prospects are a great source of inspiration for our roadmap, and having so many customers in so many countries is part of our of differentiation. It allows us to see what a very broad spectrum of people this segment needs. In terms of specific areas, we are focusing on how to keep eliminating friction from the payment options our customers have, how to make onboarding simple and immediate, and how to help our financial institutions be the primary financial provider for their customers. For that we are not only building product, but also a substantial ecosystem of solutions that come pre-integrated in our product and solve specific scenarios, both local and global.
The pandemic has been a mixed blessing for companies in the financial sector. Some have been able to digitise and prosper whereas some have failed miserably. How has the pandemic affected Bankingly?
We have seen both sides but on average growth has accelerated and new customers are coming on board faster. Some of our customers have struggled to operate efficiently under these extreme conditions, but most have accelerated their digital transformation. Bankingly has a time to market of approximately eight weeks, which is very important in the context of a pandemic and has made the difference for those institutions that were making their first steps into digital.
What have been the greatest innovations in paytech/digital banking that the founder has seen in the last decade?
One of the greatest changes I’ve seen in digital banking is actually cultural and comes from inside the financial institutions. They have finally internalised that digital should be their largest channel in terms of transactions and that they should build the other channels as a complement to that, instead of in parallel.
From the tech standpoint I think real time payments have enabled many interesting scenarios for consumers in their ability to pay/consume and for SMEs in their ability to sell/charge.
Consumer credit has made interesting progress in reaching new customers, but intelligent risk assessment and fair pricing is still a work in progress.
Embedded finance is starting to show real promise in extending the reach of the financial ecosystem to places that previously depended on more traditional payment methods.
What problems have these innovations solved?
Innovations in the financial system typically start by removing friction from existing processes and then enabling new scenarios. We are seeing more people buying and selling online because there are more payment methods and many of those are verifiable in real time. During the pandemic, selling via Instagram, charging via bank transfer and being able to verify that the funds were really credited, was a life saver for many small and micro businesses.
We have seen more access to consumer credit and (when done responsibly) that is a great thing for the consumer and for the economy, but pricing is still an issue.
What do you believe still needs to be done in the field?
In order to reach more people and to make credit an instrument of upward social mobility, we need to keep working on how to really understand creditworthiness at the bottom of the pyramid and set conditions accordingly. SME financing is still a huge issue in most of the world, particularly in emerging markets where a sizeable portion of this credit is treated as personal credit as opposed to business credit.