- Alternative payment providers emerge as strong competition for banks in Latin America
- Increased remittance volumes and SME lending offers at the core of the commercial dispute
According to a recent Temenos and The Economist Impact study, 56% of Latin American banks consider payment providers (e.g., PayPal, Apple Pay, or Visa) their main competition among non-traditional industry players. The Latin American financial ecosystem is constantly transforming, driven by the emergence of new players and the accelerated adoption of digital technologies. In this context, traditional banks face an increasingly competitive landscape, where survival depends on their ability to innovate.
Payment Providers vs. Banks
International remittances, self-managed investments, and loans to small and medium-sized enterprises (SMEs) are the segments where new players are gaining ground most significantly. Traditional banks must focus their efforts on these areas to maintain their market relevance.
Cloud Banking: A Competitive Advantage
Faced with the pressure from these new competitors, Temenos analysis reveals that Latin American banks are turning to Cloud Banking as a fundamental tool to remain competitive. Migrating to the cloud enables greater agility to develop and launch new products and services to market faster, and adapt to changing market demands without infrastructure limitations, while also gaining in security.
Alejandro Masseroni, Temenos’ regional sales director for Latin America, explains that “the diverse social, political, and economic situations that Latin American countries have experienced have led millions of people to migrate in search of better opportunities. The World Bank estimates that more than 41 million Latin Americans live outside their country of origin, driven mainly by labor and economic reasons. This has boosted international remittances in the region. To face these challenges, banks must adopt innovative strategies and quickly adapt to changing market needs.” He added, “The cloud, combined with an API-based open component banking platform, will enable financial institutions to innovate more quickly and adapt to changing market needs.”
Cloud migration, together with the adoption of modern and open banking platforms, allows Latin American banks to compete with payment providers, alternative credit providers, and all types of non-traditional financial products.
Banking in Latin America is at a turning point. Those banks that are able to adapt to the new market realities, adopt technological innovation, and focus on the needs of their customers will be better positioned to prosper in the future.
Key Figures from the Study:
- 56%: Percentage of Latin American banks that consider payment providers to be their main competition among non-traditional industry players.
- 36%: Percentage of banks that believe that international remittances are the main segment where new players will gain the most market share.
- 52%: Percentage of Latin American banks that predict that in five years banks will no longer own their own data centers and will migrate to the cloud.