Ximena Aleman is co-founder and chief enterprise growth officer at Prometeo, an open banking platform that serves Latin America.
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We’re solely within the first chapter of Latin America’s lengthy journey to tech progress. However with the area’s thirst for innovation, the market is anticipated to increase almost tenfold over the subsequent decade, with open banking by means of using APIs main the best way and performing as digital transformation facilitators.
With LatAm companies and startups repeatedly integrating with new-age platforms and providers, adopting an API-driven transformation technique has grow to be important – in consequence, all the monetary system is being “APIfied.”
In different phrases, this open API ecosystem, during which third-party service suppliers entry shopper knowledge from monetary establishments, means monetary providers will probably be optimized to decrease prices and time spent on transactions and enhance person expertise.
The benefits of having open communication between completely different services are almost infinite for credit score scoring, transferring cash between financial institution accounts, and spanning verticals just like the neobanks, credit score suppliers, and private finance merchandise Latin Individuals use each day.
In 2019, API utilization was extra mature within the monetary and e-commerce sectors, however it’s now venturing into different areas similar to advertising and insurance coverage. Fintech firms are more and more collaborating with conventional gamers like banks, fee businesses, insurance coverage suppliers and inventory exchanges. Cryptocurrency buying and selling platforms and firms are additionally preventing for his or her area within the highlight and have adopted API platforms to assist crypto-assets since most of their operations are already digitized.
The API revolution appears effectively underway. So, what’s subsequent for LatAm?
The important thing to tech penetration in LatAm: APIs
Till not too long ago, many conventional monetary establishments and banks in LatAm had been gatekeepers, with a checking account being the prerequisite for shoppers to take part within the financial system. And previous to the appearance of fintech, these monetary establishments’ back-office infrastructures for danger administration, credit score selections, and fraud detection concerned guide effort and required cross-departmental coordination.
Every step was carried out by an individual, from registering a person to the manufacturing of services. This typically left buyer knowledge unexploited, elevated transaction prices, impeded innovation and degraded buyer expertise.
As monetary establishments grapple with digital transformation, Andres Meta, VP at Grupo Bind and co-founder of Arfintech, mentioned many banks are partnering with fintechs or accessing technology-based merchandise to create distinctive enterprise fashions and keep related.
One option to revamp the back-office, decrease prices and enhance communication is to make use of APIs. This may allow entry to data, enhance consumption of services, and disrupt and de-structure established worth chains.