The power of partnerships in LAC
How banks can drive digital payments innovation in the region.
Juan Pablo Cuevas
Vice President, LAC Visa Business Solutions Head
Juan Pablo Cuevas
Vice President, LAC Visa Business Solutions Head
The digital economy of Latin America and the Caribbean (LAC) has seen rapid evolution in recent years. From technology to infrastructure, digital transformation in payments presents countries across LAC with a real opportunity to drive business growth, forge new economic models, and even improve people’s lives.
Argentina’s cattle exchange, for example, has seen increasing digitization with the use of virtual cards.
But whether you’re a farmer in Argentina, a small business owner in Chile, or the leader of a large corporate treasury in Brazil, making the most of new payment services isn’t always straightforward. While there’s huge opportunity on the table, there’s still a great deal of work to be done to ensure every business can enjoy the upsides of payments innovation.
Banks and financial institutions throughout the region have a vital role to play in this acceleration of innovation – but to do it successfully, they’ll need to harness the power of partnerships.
Innovation in the region: the story so far
Industries across LAC are already realizing the benefits of payments innovation. Agriculture, an industry that contributes significantly to the GDP of developing countries, is a prime example.
Many rural smallholders across LAC remain unbanked, with a reliance on cash that can impede financial flexibility and minimize their capability for growth. In response, a great deal of work has been done to drive the adoption of digital payments. Argentina’s cattle exchange, for example, has seen increasing digitization with the use of virtual cards, enabling payments for cattle to move quickly and more securely between the region’s farmers and their customers.
Elsewhere, payments innovation is improving flows of money and commerce across borders within LAC. Again, because cash and checks reign supreme, even in the B2B landscape, many corporate treasuries are limited in their ability to become more efficient, secure and digitally resilient.
But with a young, digitally-native population and huge levels of investment into fintech, the region is experiencing significant innovation – and new digital payment capabilities are bursting into adoption across LAC, enabling corporate treasuries to transform their operations. For example, innovative payment providers like EBANX are delivering new models that enable cross-border eCommerce through local payment methods.
INNOVATIVE TECHNOLOGY SOLUTIONS
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The challenge of a vast innovation landscape
The opportunity is wide-reaching. Whether it’s moving away from manual accounting, opening up new lines of business and new customer segments, protecting treasuries from fraud, or enhancing customer experiences, or all of the above, innovation provides the corporate treasurer with the experience of digital integration in their day-to-day activities.
But therein lies the challenge. Presented with a fast-moving landscape of disparate payments vendors and solutions, many businesses are overwhelmed with choice and possibility.
Procurement and selection of vendors is a time-consuming process. Once implemented, every individual solution or integration brings its own management burden – meaning all too quickly, the benefits of innovation are outweighed by the work involved to get up and running in the first place.
Fortunately, there is a solution. Corporates need a simpler, more streamlined way to package up the services and solutions most relevant to them. Banks across the region are ideally placed to provide this – leaving corporates free to enjoy benefits like improved efficiency in the corporate treasury, streamlined payments, improved ecosystem relationships, greater speed and more flexibility.
So – what does this strategy look like in reality?
All too quickly, the benefits of innovation are outweighed by the work involved to get up and running in the first place.
The clearest path forward is to collaborate with organizations or networks that have the global reach, scale, and expertise required to handle the velocity of change.
The power of partnerships
There’s an old saying: if you want to go fast, go alone – but if you want to go far, go together. In the case of LAC’s digital economy, going fast and going far can only result from collaboration and industry partnerships. By working in this way, everyone can drive excellence in their own area, while spreading the benefits across the value chain. Businesses and corporate treasuries across LAC need banking partners that provide timely and straightforward access to payments innovation. To achieve this, businesses can and should be prepared to directly ask their banking partners to offer services in this way, rather than waiting to be offered new ways to access innovation. Asking directly can help all parties get to innovation faster, as clear customer demand helps banks build the business case for working in this way.
For banks, the task is to stay abreast of the innovative services corporate customers need – and then act as the central hub for a range of packaged-up services and solutions expertly designed to meet certain requirements. This will add significant value for their corporate customers, strengthening long-term relationships by empowering businesses to focus on their core tasks and growth strategies.
But just as corporates need banks to package up and provide access to innovation, banks also need assistance with drawing together and compiling relevant innovative solutions into consumable packages. This is no small feat, given how quickly the landscape is evolving.
As activity in recent years has demonstrated, financial institutions in the region can look to payment networks and fintechs for support with this admittedly challenging task. The clearest path forward is to collaborate with organizations or networks that have the global reach, scale, and expertise required to handle the velocity of change.
Such players can act as the conduit for broader partnership. For example, banks and payment networks can work together to define optimal partner models for businesses – providing clear guidance on building the business case for investment, and navigating the process of implementation. This ultimately means that everyone is free to focus on their own area of expertise – while the entire value chain benefits from innovation wherever they need it most.
The collaborative future of LAC's digital economy
Relying on partnerships to get ahead doesn’t always come naturally for businesses and banks, many of whom are used to competing as individual units to get ahead.
But in LAC’s new digital economy, collaboration is the order of the day – and so the pressure is on for financial institutions to ensure they can leverage industry partnerships to drive digital payments transformation forward. Fortunately for banks across LAC, the world’s payments innovators have never been more open to working together.
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