How Can Banks in LATAM Become Even More Personalized, Sustainable, Digital, and Inclusive?
By Jaime Moreno, CEO and Founder of Mormedi
The economy cannot stop. Digitalisation has enabled banks to continue serving customers even in the midst of a pandemic. However, on its own, digitalisation is worthless. If users are unable to use digital channels, it is of no value.
In the last three years alone, banks have invested more than one trillion dollars globally in digital transformation. In LATAM, this had led to a rapid growth in the use of digital channels pre-COVID-19, particularly for basic operations such as transfers and payments. These findings were corroborated by panellists Bancolombia, Banco Pichincha, and BBVA Mexico, in the webinar we organized with IE Business School a few days ago: “How has digitalisation in banking in LATAM changed in the past 6 months? What’s next?”. And, even here in Spain, we have seen an over 30% increase in the use of digital banking among the general population, with a huge 50% increase in use among people over 65.
The COVID-19 crisis has, however, highlighted another challenge in LATAM: financial inclusion. During the webinar, the panellists laid out a series of powerful initiatives that they had implemented to help the most vulnerable in society and to ensure that economic relief arrives in a timely fashion. The challenge that LATAM faces is that just over half of the adult population (55.1%) is banked, according to the latest World Bank report.
How do we reach that 45% of the adult population in LATAM that is not banked? What kind of digitalisation will allow us to expand the customer universe?
How can we communicate a sense of security to those who refuse to use digital tools due to distrust? And what is the formula for achieving financial inclusion that is profitable for the bank?
Most Latin American banks already have powerful digital channels, which allow customers to perform not only day-to-day transactions such as transfers, but other more complex transactions such as investments. At Mormedi, we believe that digitalisation must be accompanied by a strategy supported by three pillars: sustainability, with a strong focus on inclusion; customer experience, where what matters most is a relevant and satisfying experience, and; innovation, where the focus is on the flexibility to continue to transform in response to changing technology and needs.
What is next in banking digitalisation?
So, digitalisation should help banks to advance to a more agile, seamless, digital proposition that utilises real-time data, has a robust back end, and also has a very intuitive, easy-to-use, and secure user experience.
But from a customer experience perspective, the real value that digitalisation could offer that was not possible before would be to convert the bank into an on-demand “hub” that would advise its customers on how to solve their financial needs. In the future, rather than focusing purely on cutting service staff, digitally empowered bank staff will need to be provided with the best tools to be able to be better informed, to be able to work from anywhere, and use data to attain a deeper knowledge of their clients to give the best possible advice.
The challenge then becomes how to convert the bank into a trusted companion, available at any given moment, from the day-to-day to significant life events.
COVID-19 has accelerated the need to build a more personalized, sustainable, and digital bank that is able to serve all segments of the population: from the users who have remained unbanked; to those who prefer to queue at the door of the branch to wait for it to open, because they still do not trust the online channels; to the digital native who expects everything to be just a click away on their phone. Banks will need to take the next step to outpace their single-service-focused competitors in being the only ones who can become a companion to every type of customer.