How Digitalization Can Accelerate Future Financial Services in the Region

Digitalization is changing the rules of the traditional financial sector, positioning itself at the core of entities’ strategies to gain competitive advantages and avoid obsolescence in the face of new competitors. Digital acceleration in the financial sector is critical for maximizing its impact on the region’s development in financial inclusion (from both savings and credit dispersion perspectives), energy transition, and business development.

As a result, many entities in the sector are investing in new technologies such as artificial intelligence, cloud, cybersecurity, and big data to reduce operational costs and impact new customer segments. This helps address one of the sector’s main challenges: promoting financial inclusion and banking.

Although there has been some progress in the region, approximately 1.7 billion people worldwide are unbanked, representing one-third of the adult population (with unique barriers for specific groups such as women), according to Findex Report data.

These investments in new technologies must go along with the capture of digital talent, training programs, and digital career plans that enable effective digital transformation. Only in this way can a digital mindset culture permeate comprehensively, favoring the adoption of agile structures and processes to be flexible in the face of new technological and market changes.

Technological innovations are shaping sector trends and significantly impacting how financial transactions are conducted. The digitization of products and services and the operations of financial entities is no longer an option; it is critical to survive in a scenario where customers compare digital experiences with those received from non-financial native digital players (e.g., Mercado Pago).

Some of the most relevant examples are the automation of activities to improve companies’ operational efficiency through Robotic Process Automation (RPAs). Chatbots for customer service, automated digitization of documents with Optical Character Recognition (OCR), and biometrics to streamline the onboarding process are also noteworthy for their adoption levels.

Simultaneously, regulators are advancing in developing and approving digital regulations such as digital payments, data, cybersecurity, sustainable finance, and Central Bank Digital Currencies (CBDCs). Read more…

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