Latin America’s growing middle-class are seeking faster, more inclusive financial services. So they’re turning to digital banking and payment apps.
Neobanks and non-bank payment applications are closing the gaps in traditional banking and meeting the needs of a new market segment. Our recent study of digital payment and e-commerce preferences in Latin America, the LATAM Digital Payments and eCommerce Guide revealed that Latin American bank users overwhelmingly use online banking and banking apps.
Almost 90 percent of respondents across all countries (Argentina, Brazil, Colombia and Mexico) reported using their bank’s app or website. However, challenges to the financial services sector remain and nearly half of the region is still unbanked (World Bank). Because of this, financial services only have room to grow in Latin America.
Online Banking and Payment Apps in Latin America Are Filling the Gaps of Traditional Banking
More than 60 percent of consumers across Brazil, Mexico, and Colombia reported being willing to leave their brick-and-mortar bank for their fully digital competitors. Latin American consumers value the speed, convenience, and lack of paperwork of digital banks. Because of this digital banks and non-bank payment methods are increasingly encroaching on the territory of traditional banks. These are creating growth opportunities and greater access for the 200 million unbanked in Latin America (Statista).
The Vast Majority of LATAM Consumers Are Using Non-Bank Payment Applications
During our research into digital payment and ecommerce preferences in Latin America revealed in the LATAM Digital Payments and eCommerce Guide, we saw a widespread usage of non-bank payment applications across Latin America. Over 84 percent of those surveyed across all nations reported using a non-bank payment application. PayPal, Mercado Pago, and PagSeguro are common Latin American payment apps. These payment apps are less costly and simpler solutions to traditional accessibility, convenience and operational payment challenges.
An Improved User Experience Means Improved Adoption
Bank’s traditional paths to creating loyalty in Latin America have failed to keep pace with consumer needs in today’s digital age. Consumers expect to be able to access their accounts and balances on any device, at any time, and move their money as quickly as completing a search on their phone. As digital banks, payment apps, and governments step up to meet consumer financial needs, businesses and merchants must continue to adapt to these quickly emerging markets.
Ready to Meet Consumer Demands in LATAM?
It’s time to put fintech solutions work for you. Rapyd’s fintech solutions can – from the same cloud-based platform – enable a simple use case, like helping a merchant collect payments using locally-preferred methods in 100+ countries. We also support more complex scenarios, like a large consumer brand offering their own international ewallet solution, with ID Verification, AML screening, local cash top-up, integrated FX, disbursement, and loyalty programs.
With Rapyd, getting started accepting payments, sending payouts and offering your own financial services is as easy as embedding our pre-built API for a seamless customer-facing, user experience.
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The World Bank. “Latin America: Most still keep their money under the mattress.” https://blogs.worldbank.org/latinamerica/ latin-america-most-still-keep-their-money-under-the-mattress.