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This bank creates alliance to fight regional fraud and face the digital era

The impact of new technologies in the financial and banking industry has been evident, both for those who work in it, and for users, who experience the changes promoted by these companies.

But in addition to the adoption and adaptation to new tools, this sector has had to face the appearance of new actors lately. On the one hand, there is the incursion of large technology companies with financial and commercial products (Facebook, Apple, Google, etc); on the other, the emergence of fintechs, startups focused on providing financial services, in many cases disruptive.

This was also revealed by the latest IDB and Finnovista ranking on fintechs, where Brazil leads the trend with 380 startups dedicated to the financial issue. It is followed by Mexico with 273 initiatives, then Colombia, Argentina and Chile, which closes the fifth position with 84 online financial ventures.

The banking system is aware of the threatening landscape that these trends represent, so it has gone out to explore the options to join and, why not, lead the processes of digital transformation.

In fact, this is part of the objective pursued by the Latin American Congress of Technology and Financial Innovation, CLAB, an event that will take place from September 4 to 6 in Hollywood, Florida.

For Giorgio Trettenero, Secretary General of the Latin American Bank Federation (Felaban), the impact is such that “the banks, if they are not transformed or if they are no longer transformed, are already out of business”, because today’s speeds return it something “imperative, mandatory and mandatory”. That is why he adds: “This is a race that will not end and will be forever”.

Fintech effect

For this reason, it is interesting to note how banking is interacting with these new agents. Along these lines, an investigation carried out by Anif for FELABAN and CAF delivered the results of a survey conducted on the perception that banks have in Latin America regarding the fintech phenomenon.

  • 36% of respondents have alliances with fintech companies.
  • 29% do “organic” innovation within banks, where many with their own means and even “digital laboratories”.
  • 21% work this as an outsourcing of digital services to fintech companies
  • 9% have completed acquisitions of fintech companies.

Generational impact

Thus, with these numbers on the table and in conversation with AETecno, Trettenero comments: “Fintech are allies of banking. It is helping us to accelerate our digital transformation processes. There will be some, of course, that is disruptive and goes that way, but we have come to the conclusion that it is a natural alliance. ”

Latin America is seeing how the way of interacting with finances is being revolutionized and this shows, particularly, in the younger generations. According to data handled by Felaban, 67% of millennials use mobile applications. Similarly, a recent study by Mastercard and Kantar revealed part of the impact of new digital tools on young people in the region.

The report included Argentina, Peru, Brazil, Chile and Colombia and evidenced a decrease in the use of cash as a means of payment, especially in Chile, for the payment of bills, transfers and other payments digitally.

Regarding the trends and preferences of young people, 37% of respondents in Brazil said they would like to use the latest technology and 23% said they “could not live without their smartphone.” While in terms of control and administration of finances, 24% of respondents said they checked their bank balance daily through applications or a browser.

For the secretary general of Felaban, the trend is so strong that he asserts that “no young person will go to the bank office unless he is kidnapped or something. They will have to do everything over the phone or on their portable devices. In addition, account executives or business officials are not consulted by young people, they usually consult on social networks, and they explain and go around the solutions ”.

In the same way, he estimates that we are far from a parity between the physical and the digital, to the point that the relationship between the concentration of services to the user will be in a relationship of 80/20, because it advances very fast to the digital .

However, it warns that in general terms, to date, the offer of this type of banking services is still above demand. “The theory says that the user is the king, the demanding one, who wants to have 7×24 information, immediately and online, but also the research we did reached an interesting conclusion. The offer is. Customers have a digital service in general with products, platforms, portals, etc. But demand still does not reach supply. This means that even customers prefer to go to the office network very much ”.

This is mainly due to a generational issue, marked by people 35 years of age and older who still prefer the banking network, their executive and do not want to talk to a phone, online or with a chatbot. “I think we are reaching a point and, in the end, the offices will not disappear; there are always going to be clients who will want an executive to serve you, people who want a network, but we do go there and at full speed”.

Regional Alliance Against Bank Fraud

But, just as the financial industry is moving forward with new developments, fraud is also innovating. Security, in fact, is one of the issues that are leveraging these advances, for example, incorporating blockchain solutions.

The impact of large cyber attacks on banking in 2018 is only a reflection of a constant. According to Trettenero, the Latin American Committee on Banking Security of his organization recorded that five years ago, 97% of bank fraud was physical. Now, 98% is digital.

This is how the Regional Fraud Concentrator project arises, a Felaban initiative that is defined as a monitoring system that centralizes, analyzes and consolidates the fraud information of the debit and credit cards of the Latin American financial system. This will allow to establish coincidences or patterns of fraud to detect and alert the banks in a timely manner about the shops that present information leaks and their respective window of copying time.

Detecting, preventing and anticipating are part of the pillars of the objective of this initiative that Trettenero shares exclusively with AméricaEconomía: “This has never been done, it is a collaborative scheme and will eliminate barriers to fraudulent transactions at the level of complications such as geographies or absences of consolidated systems and predictive transaction availability”.

The manager acknowledges that in the industry in general it is thought that sharing information is to stop competing, but in the case of security, it is the reverse: the more we collaborate with fraud information, the more protected the industry will be.

This consensus among 19 countries will start with the concentration of fraud, since October, but aims to expand to more intelligence systems. It will collect the information of the banks to cross it with the data at the country level, as well as with information from the shops at the regional and world level. “We will have the effects of immediate response actions, so customers will be much more protected”, concludes Giorgio Trettenero.

Also published on Medium.

Published inFintech

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