Rethinking Financial Inclusion in Latin America

Published by Fintech Americas on Feb 20, 2024

Discover the most innovative perspectives on the state of Financial Inclusion in Latin America in 2024.

As we seek to tame and harness the Digital Jungle, there is an opportunity — or perhaps a mandate — to make financial inclusion a cornerstone of progress. Financial inclusion in Latin America is undergoing a significant transformation driven by digitalization and the possibilities enabled by technology. This trend is critically important in a region where access to traditional banking services has often been out of reach for large segments of the population. The growth of digital financial services is helping close this gap, bringing banking and financial tools to millions of unbanked individuals.

Between 2020 and 2023, more than 100 million Latin Americans accessed digital financial services for the first time, according to Mastercard. However, the challenge remains significant, as 7 out of 10 people in the region still lack full access to banking services or certain financial products, according to Latin America Reports.

Countries such as Brazil, Colombia, and Mexico are leading inclusion efforts. Brazil’s Pix system has proven to be a transformative game changer, providing instant, low-cost payment options to millions of people. Colombia and Mexico are also advancing with digital wallets and mobile banking services that are increasingly accessible even in remote areas.

For 3 out of 4 banking institutions, financial inclusion is now a cornerstone of their corporate strategy, according to Deloitte. In addition, 50% plan to leverage new technologies and innovative business models to expand their financial inclusion efforts in the short term. Governments in developing economies are also playing a more prominent role in consumer payments by expanding financial inclusion, reducing inefficiencies, and fostering competition.

This trend toward digitalization and technological innovation is not only transforming financial services in Latin America; it is also reshaping the economic landscape, creating new opportunities for growth, stability, and prosperity across the region. As these efforts continue, we can expect to see a more inclusive and robust financial ecosystem emerge throughout Latin America.

To gain deeper insight into the financial industry’s perspective on the present and future of financial inclusion, Fintech Americas consulted leaders from some of the region’s most important institutions. Below, we share their views and perspectives on this critical topic for the growth of the financial industry.

Manuel Velarde, Innovation and Digital Transformation Leader, Caja Municipal de Sullana (Peru)

Manuel Velarde believes that “2024 will be a year of major progress in financial inclusion. It is true that the financial industry will present opportunities that both banks and non-financial companies — including Fintechs and retailers — will seek to capitalize on. Financial inclusion not only benefits underserved populations by improving their well-being, but it also drives market growth by formalizing access to financial services such as financing and savings, which were previously handled informally.

Collaboration between different types of companies, Open Banking, neobanks, new technologies, and the participation of big tech companies will play a crucial role in accelerating financial inclusion. It is encouraging to see the potential for synergies that will drive innovative solutions.

It is also important that governments prioritize financial inclusion effectively and collaborate with the private sector through joint initiatives. This will not only benefit financial institutions but also contribute to broader economic and social development.”

Learn more about Manuel’s perspective on financial inclusion here.

Fidel Durán, General Manager, Banco Solidario (Ecuador)

For Fidel Durán, “to deepen financial inclusion among the population — especially women — policy must emphasize improving the infrastructure available within the system and fostering the development of products and channels designed around customer needs to ensure sustainability.

Among the main regulatory restrictions are interest rate caps, which have excluded customers, particularly those at the base of the pyramid where women represent a significant share. There are also limitations affecting the availability of microinsurance products, which are highly valued by women because they help reduce vulnerability and restore financial stability in the event of an emergency without sacrificing household assets or quality of life.

At the same time, general regulations related to risk management — including credit risk, operational risk, and anti-money laundering controls — generate significant costs that limit institutions’ ability to offer products to low-income populations. Addressing these limitations and promoting effective financial education, alongside strong consumer protection frameworks, will be key to achieving greater financial inclusion.”

Learn more about Fidel’s perspective on financial inclusion here.

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Diego Fuentes, Chief Digital Officer, Banco Unión (Bolivia)

From Diego Fuentes’ perspective, “the Global Findex database sponsored by the World Bank, in its latest report on Latin America and financial inclusion, shows that between 2011 and 2021 access to savings accounts among the adult population increased by 30%, reaching a total of 71%. However, the results are less encouraging from a financing perspective, where only 30% achieved access to credit.

These milestones were achieved through transformation processes within the banking industry that incorporated digital solutions, expanded mobile banking functionality, enabled instant payments, introduced accessible payment cards and digital wallet solutions, and leveraged the growing use of social media platforms that continue driving the adoption of digital-native behaviors. All of this impacts the banking industry and financial services in Latin America, as they are the key actors that, through financial inclusion, can help reduce poverty and improve opportunities across all segments of their populations.”

Learn more about Diego’s perspective on financial inclusion here.

David Topete, Deputy General Director of Financial Inclusion, Banco del Bienestar (Mexico)

David Topete believes that: “under the principle that financial inclusion is a means to achieve financial well-being for the majority of the population, and with the goal of fulfilling the commitments of the 2030 Agenda so that people at least have access to an account that allows them to save money and participate in the formal financial system, commercial banking in general has shifted toward meeting customer needs through digital solutions such as digital banks, new apps, digital cards, and by facilitating rapid and agile access to financial services, reducing the physical presence of institutions in the process.”

Learn more about Diego’s perspective on financial inclusion here.

The Conversation Around Financial Inclusion Continues in Miami

Immerse yourself in the pulse of Latin America’s financial evolution, surrounded by innovative leaders and visionaries for an electrifying experience. It’s not a dream — it’s the reality waiting for you at Fintech Americas Miami 2024!

Join the leading financial technology conference taking place from May 7–9 at the iconic Fontainebleau Hotel in Miami Beach:

• Connect with 1,250 banking leaders and visionaries from more than 20 countries across the Americas.
• Gain insights from 150 world-class speakers covering the hottest topics such as Financial Inclusion,
• Artificial Intelligence, Blockchain, Digital Payments, Technological Infrastructure, and much more.
• Participate in interactive workshops led by peers and gain practical ideas in our exclusive How To sessions.
• Enjoy Miami your way.
• And much more!

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