Legacy FIs are taking quick steps to roll out new digital solutions as banking expectations shift — for example, the Central Bank of the Argentine Republic (BCRA) Transferencia 3.0 program officially went live at the end of November. The program enables its customers to make QR code-based payments across different channels and devices, including through virtual wallets or digital banking apps that are tailored to fit users’ mobile devices. This is a move that could lead to more consumers leaving cash behind in favor of newfound digital payment methods as they become more widely available. As alternative payment solutions have become more popular, however, Latin American financial institutions (FIs) are facing stiffer competition from emerging digital-first players to engage and retain customers. In the latest Digitizing Payments in Latin America Playbook, PYMNTS examines how Latin American consumers’ banking and payment preferences are shifting, and how legacy FIs must move to keep pace as the region’s financial ecosystem becomes more saturated.
The availability and popularity of digital services is expanding within Latin America at a rapid rate, leading consumers who were previously dependent on cash to open bank accounts or utilize other online payment tools for the very first time. As such, a rising number of consumers are seeking out newfound digital financial experiences — but outdated infrastructure could be hampering legacy FIs’ ability to offer such solutions. Latin Americans may be growing more familiar with digital payment methods, but they may not be heading to legacy FIs to find them. A higher number of the region’s residents remain unbanked even as mobile penetration ticks up, meaning many customers are interested in utilizing mobile-optimized payment methods that may run outside of the traditional banking sphere. This is putting increased pressure on legacy FIs, which must innovate their own features to keep pace with digital or mobile-first competitors.