The global fintech marketplace has a lot of new game-changing innovations in store. Specific to LatAm though, what are some of the biggest fintech trends that are enabling better services for consumers? Juliana Etcheverry, Director of Strategic Payment Partnerships & Market Expansion – LatAm at EBANX joins us to share her thoughts:
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Can you tell us a little about yourself Juliana? Tell us about your journey at EBANX and we’d love to hear about EBANX’s growth story…
I’ve been working in the ecommerce and payments industry for more than 10 years. I ran into EBANX when I was looking for payments solutions in Brazil, back in 2014. It was back then that EBANX had decided to expand their footprint throughout Latin America, and that’s how my journey at EBANX started…
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The project was to launch operations in Mexico, Colombia, Chile and Peru. From scratch. This meant incorporating local entities in each country, working hand by hand with law firms, accounting firms, tax advisors. Opening new bank accounts. And partnering the payment ecosystem as a whole. The aim was to enable Latin Americans to be able to buy online using those payment methods with which they were familiar with, those they trusted. And provide international merchants with a one stand stop to reach this population willing to access international products and services.
One of the main challenges in LatAm in terms of ecommerce is reaching consumers who don’t have a credit card. In a region where almost a third of the population is still unbanked, credit cards are still a niche product, especially when it comes to international credit cards for cross-border purchases. The journey has been exciting as much as challenging.
Currently we’re covering 9 markets in LatAm (Brazil, Mexico, Colombia, Chile, Peru, Bolivia, Ecuador, Argentina and Uruguay), offering payment solutions to global companies that want to sell to these markets. And although we’re all in the same region, we need to understand that each country has its particularities, and there are differences. And payments is one of those. Political backgrounds, cultural, even technology adoption differ. Still certain patterns repeat: installments, debit, cash payments are key to unlock the region. Today we’re connected to more than 50 formal banks, and are offering more than 100 payment options in the region. And the trip goes on and on, as this market keeps evolving, and we keep being ahead of the game.
What are some of the futuristic innovations you are seeing influence and transform the payments landscape globally and more specifically in LatAm?
Even before the pandemic, the payment ecosystem has been going through changes in LatAm. In many ways. The family keeps growing as new players jump in with new innovations. Electronic money issuers are multiplying in all markets, with different names.
E-wallets are slowly becoming financial solutions for the workers in the gig economy in LatAm. The acquiring ecosystem keeps opening in LatAm to new competitors. The terms monopoly/duopoly or dominant position are being replaced by interoperability, multi-acquiring, competition and new players.
Since the pandemic, we’re going through a disruption as people are forced to live differently. We’re adopting new behaviors and some will stick. There are new consumers who were slow technology adopters who have been pushed to alter their consumer patterns and have discovered the convenience of the online. And this has had a huge impact in the payments ecosystem in LatAm. Buying essentials in the retailers, pharmacy, groceries, other daily supplies has become frequent to the ecommerce in LatAm.
Our ways of working, studying and interacting have changed. We’re leveraging the internet more than ever. In general the use of the internet is huge, and digitization is occurring. Furthermore, mobile access has set the pillars for this transformation. Ecommerce has been accessed by the base of the pyramid, and even the middle class has increased their online usage. The ecommerce penetration has increased and these new users need to have a good experience.
The ecommerce boom is the expected response to lockdowns in the region, and probably this trend comes here to stay, together with the digitalization.
LatAm now holds 8% of the worldwide GDP, summing USD 5,8T. Ecommerce penetration has more than doubled in the region since the pandemic began. A high % of Latin Americans do not have bank accounts. Still, more than 30% are millennials who request for digital inclusion and want to pay for services such as Uber, Netflix, Spotify. This provides a fertile ground for disruption and innovation. The regulation plays a key role in the promotion of a financial inclusion considering that purchase patterns are changing dramatically in Latin America as consumers grow more confident with digital channels. The pillars for an exploding neobank industry are set. Nevertheless, cash is still very relevant in this scenario. It is cultural for latinos and is here to stay. New alternative payment methods are gaining traction, such as new prepaid cards and e-wallets which are booming in LatAm, and governments are relying on them to distribute emergency aids.
How have you seen the global fintech market respond to the Covid-19, in general, in the way new solutions were introduced during this time, in LatAm what were some of the biggest responses from fintechs?
LatAm has historically been known for its “financial exclusion”. Only about 50% of the LatAm population have access to a bank account, and this is driven by both the demand and supply side. Insufficient or variable income is considered a reason on the demand side for not opening a bank account, as much as the low formal workforce participation and the poor perceptions of the banking sector. Turning to the supply side we must consider that costs charged by banks appear to be serious barriers for many of the unbanked, as much as the low bank branch coverage in rural areas. One might expect that banks would customize products to meet demand for financial services across different segments of the population. But this is not always the case. New technologies can help solve this gap, and that’s how neobanks and fintechs are leading in providing solutions to help people manage their money digitally. This trend has been here for a while, but with Covid-19, the adoption of new technologies has accelerated.
Digital wallets for instance have boomed throughout LatAm. These are uncountable, with QR codes, and prepaid cards (Ualá, Nequi, Machpay, among others). These tools have become a key player for governments to provide emergency aids and payments to businesses from the government. Because of this, new payment alternatives have gained force and the migration trend from cash to the digital world through different channels is now a reality. This is mainly driven by innovation, investment and regulation.
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What do you feel will change in fintech in 2021? Given the overview of what fintech looks like today in 2020 and this evolving space: how would you describe this market over the next decade? What will be some of the more dominant categories in future?
I can’t imagine an overnight change. I believe the trends we’re seeing, related to digital and financial inclusion, instant payments, contactless, blockchain, cybersecurity, artificial intelligence, will keep consolidating as companies keep embracing these. We’re adapting and the regulatory aspect is key for all these to evolve and mature. Authorities and digital providers have found in the financial and digital inclusion the grounds for an open dialogue to transform the traditional financial systems and provide access to the vast majorities. Digital banking, cryptocurrency, artificial intelligence and blockchain technology remain on the path of totally changing the face of financial transactions worldwide. And fintech regulation and data policies must run together to provide secure infrastructure for users to adapt and adopt these new habits.
Latin American countries need more regulatory framework and more competition. This is ongoing already, we’ve seen Fintech Law in Mexico, end of historical acquiring monopoly in Chile, interoperability in Peru, opening to new acquirers in Colombia, the launch of PIX instant payments in Brazil coming soon. All these changes are needed so that LatAm can capitalize on new fintech technology to the fullest.
As banking institutes and financial institutions focus on digitizing every aspect of their operations and offering, how are you seeing payment platforms and fintechs partner more closely to provider better services?
As long as the objectives are aligned, it’s inevitable that payment platforms and fintechs partner to cover the needs of the underserved that require bridges. We’re embracing access. For end users to have a bridge to the globalized, digital world; and for global companies willing to access the population that has been uncovered throughout decades, these partnerships are not only inevitable, but the best strategy to fulfill these gaps. This is key for the growth in the region, to connect the population to the financial systems, and emerging economies to world markets. Open banking provides what financial institutions need to leverage this newfound consumer comfort with digitization. Better services today mean: fast, transparent and secure services. Many financial institutions have extremely complex core banking systems and legacy infrastructure. Partnering with advanced fintechs can drive and accelerate innovation, while allowing financial institutions to focus on their day-to-day business.
As payment platforms evolve with new features and capabilities, what are some of the things that will become redundant?
We’re seeing how new payment alternatives are gaining force, we need to include these in our product portfolio, and focus on recurrent capabilities, card on file, enable seamless and mobile payment experience. This is needed to serve digital services merchants, as much as to provide the best UX to end users willing to buy online, removing friction, creating seamless payment flows.
Payment platforms need redundancy, hybrid online/offline solutions, cross-border and local solutions, cash in and cash out features.
At EBANX we go beyond payments, we translate LatAm to our merchants, from the payments to logistics, taxes, marketing, conciliation. We are focused on offering tailor made solutions for our merchants to be able to land and conquer the hearts of Latin Americans.
Before we wrap up, what are the top leadership tips specific to fintech business heads you would share as a parting thought?
Be adaptable: LatAm is vivid, it’s like a teenager looking for answers to many questions.
Be Persistent and resilient: As we face many changes in our industry, be it regulatory, technological or of any other kind, we need to persist throughout time so that our objective is endurable and lasting. On many occasions we may face situations that we didn’t expect, that were not planned, and make us uncomfortable. With persistence, I believe we may find ways to move on, and get ahead. That’s the key for a company to survive throughout time. With persistence and with the commitment of its people. When the results don’t seem to appear in the short term, we must avoid giving up, rely on our persistence, focus on the target we want to reach, and keep going. In general, if we persist, we’ll achieve the objectives we’ve set out to achieve, even when the road gets steep.
Stay Knowledgeable: you need to know the market, know it well like the palm of your hand. Understand the needs and test how the market responds to your product and have the ability to rebuild with agility. Get creative in finding ways to operate.
Octavio Paz Lozano was a Mexican poet and diplomat which I like to refer to in a quote that says something like: Everything seems like a gigantic mistake. Everything happened as it shouldn’t have happened, we say to comfort ourselves. But we’re the ones mistaken, not history. We need to learn to face reality in the eye. Invent, if needed, new words, new ideas, for these new and strange realities that have stepped in our way. Being thoughtful is the first duty of intelligence. And in some cases, the only one.
EBANX is a global unicorn fintech company with Latin American DNA. It has operations in Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador, Bolivia, and Uruguay. The company was founded in 2012 to bridge the access gap between Latin Americans and international websites. Currently, EBANX offers over 100 Latin American local payment options to global merchants and has already helped over 70 million people to access global services and products, with over 1,000 merchants expanding to Latin America. AliExpress, Wish, Uber, Pipedrive, Airbnb, and Spotify (these two in a partnership with Worldline) are some of the companies that use EBANX solutions. In 2019, EBANX started to offer local payment processing solutions in Brazil through a new company, EBANX Pagamentos Ltda. In early 2020, the company entered the B2C world, with the launch of EBANX GO, a digital payments account with virtual and physical cards for Brazilian consumers.
Juliana leads all EBANX’s strategic expansion work in Latin America, guaranteeing the best synergy between the company and the players in the payments, digital commerce, financial ecosystems and fintech industries in the region. She has deep expertise in institutional relationships focused on solid and consistent connections to guarantee the development and international expansion of businesses in Latin America. She believes that payment solutions go beyond a simple need for online merchants – when well executed, they become a true business and expansion strategy for merchants who sell online, whether they sell physical products, digital goods, services or subscriptions.
