Banks and other financial entities in Latin America have fintech strategies

As a result of the strong irruption of the fintech ecosystem in Latin America and a greater digitization of financial services as a result of the Covid-19 pandemic, banks and other intermediaries in the region have implemented a fintech strategy to face this trend.

The Fintech Radar 2021 prepared by Finnovista collected, on this occasion, the position of traditional financial entities (incumbents) in the countries of the Pacific Alliance (Chile, Colombia, Mexico and Peru) regarding their fintech strategies to face competition that represents this ecosystem.

According to the document, a large part of the surveyed institutions indicated that they have a fintech strategy, be it formal or informal.

“Fintech strategy is understood to be all those actions and measures developed by the incumbent financial institutions, to strengthen capacities, minimize risks and take advantage of the benefits derived from the convergence between financial services and technology”, he points out.

He adds: “This is evidence of one of the consequences of the rapid growth of the independent fintech solutions ecosystem in the region.”

The study shows that while banks are the entities that most often have a fintech strategy, insurers stand out for being less proactive in this regard; In addition, almost a third of those surveyed indicate that it is already in the operational stage.

Technology, strategy

The radar highlights that the main fintech strategy of the incumbents surveyed in the countries of the Pacific Alliance is the acquisition of technology that improves the offer of services with 52% of the responses.

This was followed by the establishment of brand alliances with fintech companies with 39%; launch of pilot programs and proofs of concept with 39 and 35%, respectively; offer of services to startups 25%; sponsorship of competitions and hackathons 20%; investment in these through funds 17%; launch of their own digital brands 17%; mergers and / or acquisitions 10%; and the establishment of programs to incubate and accelerate companies of this type with 7 percent.

In contrast, 25% of those surveyed answered that they do not currently collaborate with fintech companies.

“This indicates that in addition to investing and collaborating with fintech companies, the incumbents of the financial industry of the countries of the Pacific Alliance also develop their own fintech products, taking advantage of the competitive advantages they have, such as a wide existing customer base. and regulatory support ”, he says.

Examples in Mexico

The study mentions as an example of the fintech strategies of banks in Mexico, the case of the alliance between Banorte and Rappi announced in 2020; and in the case of Banregio, the launch of its Hey Banco digital arm, which is seeking its own banking license.

Regarding the main fintech strategies of Mexican incumbents, the trend was similar to that of the region, highlighting commercial alliances with startups such as the first; followed by pilot, incubation and acceleration programs; brand partners; Proof of concept; competitions and hackathons; receipt of capital by a financial institution; and mergers and acquisitions with a lower percentage.

The union, in the voice of the Association of Banks of Mexico, has welcomed the competition and collaboration of this ecosystem, but has asked for an even floor in regulatory matters.

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