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The hyperactive open banking market of Latin America: How the area is being APIfied

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Ximena Aleman

Ximena Aleman is co-founder and chief enterprise improvement 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 predicted to broaden practically tenfold over the subsequent decade, with open banking by means of using APIs main the way in which and performing as digital transformation facilitators.

With LatAm companies and startups repeatedly integrating with new-age platforms and companies, adopting an API-driven transformation technique has develop into important – in consequence, the whole monetary system is being “APIfied.”

In different phrases, this open API ecosystem, by which third-party service suppliers entry shopper knowledge from monetary establishments, means monetary companies 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 and products are practically 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 day-after-day.

In 2019, API utilization was extra mature within the monetary and e-commerce sectors, however it’s now venturing into different areas comparable to advertising and marketing 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 corporations are additionally preventing for his or her house within the highlight and have adopted API platforms to help 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 had been gatekeepers, with a checking account being the prerequisite for shoppers to take part within the financial system. And previous to the creation 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 and products. This usually 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, stated many banks are partnering with fintechs or accessing technology-based merchandise to create distinctive enterprise fashions and keep related.

One technique to revamp the back-office, decrease prices and enhance communication is to make use of APIs. This can allow entry to info, enhance consumption of services and products, and disrupt and de-structure established worth chains.

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