As the global market for open banking transactions explodes across borders, Latin America stands out as a region with exceptional growth in the open banking industry and plenty of room to run.
According to a new report from Juniper Research, worldwide open banking payments transactions are projected to surpass $330 billion by 2027 — and Latin American nations are poised to take a big slice of that market.
Recently, we were joined on the Converge podcast by two visionaries in this space, Germana Cruz, CEO and Head of Financial Institutions for Standard Chartered Bank Latin America, and Fady Abdel-Nour, venture capitalist and Latin American fintech investor with Antler Elevate.
Serving a significant market
With trillions of dollars flowing through Latin American banks every week, the opportunities in the region are seemingly limitless.
“There’s tons of value to be created here,” Abdel-Nour says. “Just the addressable market here, we think, is incredibly large, and the opportunity is very, very large.”
In recent years, digital payments and noncash payments overall have seen a rapid rise in Latin America. Surveys from McKinsey show that, from 2021 to 2023 alone, the proportion of transactions conducted through debit cards, credit cards or mobile wallets has more than doubled. This rise is a key stepping stone for the uptake of other innovations like open banking.
Prometeo Open Banking poised to pop
Abdel-Nour’s firm has invested in Prometeo Open Banking, an emerging company that aggregates useful financial data across Latin America’s banking system to solve and automate access through a single API. The unique model helps clients verify information and receive or initiate account-to-account payments.
“We think that angle is very, very interesting, and there are very few others that are really trying to aggregate the banking system in the way that they are,” Abdel-Nour says.
“What’s interesting about Latin America and specifically Spanish-speaking Latin America is there are a lot of these regional banks that operate across those countries, but the solution to operate cross-border doesn’t really exist in any way today. So I think the combination of that prize, as well as the fact that there are very few people tackling it, is really exciting.”
Setting the new “standard” in open banking
Standard Chartered Bank is over 170 years old, but Cruz could not be more optimistic about the multinational bank’s future — especially in Latin America, which she says is primed for innovation.
“We need to be ready for that because it’s moving very fast,” says Cruz, who works out of Brazil.
She notes that open banking now provides so much insight into the risks and opportunities of each client’s bank accounts — as well as broader market trends — that her team can use the information to provide world-class customer service.
“We need to know exactly what the client needs,” Cruz says. “This information is crucial for us.”
The recent fintech boom has also enabled Standard to evolve from being a global facilitator of transactions to a close, long-term partner of its clients, Cruz says. “Open banking is finally providing that for us. … Providing information to our team so they can think ahead [and] offering products that make sense to the client.”
Key advantages in Latin America for financial inclusion
Comparatively, Latin America’s open banking system is ahead of many other regions, and Cruz suggests that it has as much to do with the region’s flexible culture as its economy.
“We are all known as being flexible, open-minded, ready to change,” Cruz says.
Abdel-Nour agrees with the sentiment and says that he’s seen it in action, particularly in Mexico, where consumers have rapidly shifted their e-commerce behaviors.
Cruz attributes this to the region’s resilience amid decades of inflation and political instability.
“Nothing is stable,” Cruz says. “Everything can be in constant change, and that creates this behavior, this environment where we are all open to new ideas and we welcome new ideas, fostering financial inclusion.”
Infrastructure challenges for financial institutions
One area for improvement in Latin America’s journey toward open banking is its adoption of standardization in terms of payments, taxes and other compliance-related practices.
Cruz notes that while Latin America is loaded with “bright minds coming up in fintech,” there are disparities between the individual countries and each one’s access to resources, including financial institutions.
“It’s not surprising that you see Brazil, Mexico, Columbia and Chile as the countries where most of those fintechs or those platforms are being developed,” Cruz says. “These countries provide the minimum infrastructure like internet connections, electricity all over, access to equipment, nice laptops, computers, servers, software, and more.”
Bringing open banking app solutions to Latin American governments
While the governments of Latin America may need to play a major role in moving the region’s cross-border payments systems and open banking networks forward, there is plenty of opportunity for the private sector to aid in the transition.
“How can we help the government through the private sector or even [work] directly with the government to build that infrastructure?” Cruz asks.
As data availability increases, financial professionals, new firms and traditional banks alike are adapting to industry shifts in real time.
“I think this is coming,” Cruz says. “I see Latin America in the right direction.”
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The information shared on this blog is for informational purposes only and should not be considered financial advice. Please note that the opinions expressed on Converge are solely the opinions of the host and the guests, not Convera’s.
