We’re solely within the first chapter of Latin America’s lengthy journey to tech development. However with the area’s thirst for innovation, the market is anticipated to develop almost tenfold over the subsequent decade, with open banking by the usage of APIs main the best way and performing as digital transformation facilitators.
With LatAm companies and startups constantly integrating with new-age platforms and providers, adopting an API-driven transformation technique has grow to be important – because of this, the complete monetary system is being “APIfied.”
In different phrases, this open API ecosystem, by which third-party service suppliers entry shopper information from monetary establishments, means monetary providers might be optimized to decrease prices and time spent on transactions and enhance consumer expertise.
The benefits of having open communication between totally different services are almost infinite for credit score scoring, shifting cash between financial institution accounts, and spanning verticals just like the neobanks, credit score suppliers, and private finance merchandise Latin People 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 corporations are more and more collaborating with conventional gamers like banks, fee companies, insurance coverage suppliers and inventory exchanges. Cryptocurrency buying and selling platforms and firms are additionally combating for his or her house within the highlight and have adopted API platforms to assist crypto-assets since most of their operations are already digitized.
The API revolution appears properly 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 have been gatekeepers, with a checking account being the prerequisite for customers to take part within the economic system. And previous to the introduction of fintech, these monetary establishments’ back-office infrastructures for threat administration, credit score choices, and fraud detection concerned handbook effort and required cross-departmental coordination.
Every step was carried out by an individual, from registering a consumer to the manufacturing of services. This typically left buyer information 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 method to revamp the back-office, decrease prices and enhance communication is to make use of APIs. This can allow entry to data, enhance consumption of services, and disrupt and de-structure established worth chains.