The incorporation of innovation in the corporate culture, investments in high technology and solid collaborations are shaping the digital landscape in a region where consumers consider that convenience, personalized service and new technologies are differentiating factors.
The Visa Innovation Center has published The State of Innovation in Latin America, the first report of its kind to examine the indicators, trends and benchmarks of the most innovative companies in Latin America. and the Caribbean from the perspective of payments and financial services.
Conducted by Americas Market Intelligence (AMI), the study measures the level of innovation in companies in the region’s main markets, such as Argentina, Brazil, Mexico, Chile, Colombia and Peru.
“We are seeing that innovation in our region comes from surprising places: retail businesses are becoming providers of financial services; online markets are providing banking services; and banks are using more open platforms to facilitate payments, all in an effort to retain loyal consumers, “explains Vanesa Meyer, Vice President of Innovation and Design of Visa for Latin America and the Caribbean.
“Consumers are demanding faster, smoother and more convenient shopping experiences, along with new forms of payment. Innovative companies are offering them these experiences, and this study gives us a solid orientation as to how we can continue to work with our partners in the region to accelerate innovation in payments. ”
The study focused on different types of companies, including financial institutions, shops, payment gateways, aggregators and fintechs. To assess their degree of innovation, AMI and Visa evaluated companies based on four key pillars, which include internal support for innovation, execution capacity, the use of new technologies and the ability to enhance solutions.
Among the companies that achieved the highest levels of innovation are native digital companies and leading banks, as well as some businesses with traditional physical stores. When analyzing its innovation approaches, the study indicated that the most innovative companies in Latin America share several key characteristics:
• A center, team or department dedicated to innovation
• Innovation laboratories and open spaces within the offices to promote collaboration between departments
• Adoption of innovation both internally and externally, with an average of more than 140 APIs and partnerships with 15 startups per year on average
• 80 percent use industry-leading technologies, such as artificial intelligence (AI) and machine learning
• Successful ability to take your solutions internationally to more than five markets
• Execution of an average of 57 concept tests in the last three years
• Solutions developed in less than five months
The study presents a panorama of disparate levels of innovation in the region, which vary according to the industry and the country. Here are some conclusions broken down by country:
• Brazil can be considered the leader in technological innovation in the region, as well as the regional pioneer in the adoption of new technologies such as blockchain, machine learning, AI, big data, biometrics and other state-of-the-art high-tech tools. Payment innovation has been reinforced by the country’s robust local payment ecosystem, which includes world-class business groups, forward-looking regulatory agencies that ordered the interoperability of cards almost a decade ago, as well as millions of venture capital investments in Fintech: the new Brazilian companies attracted almost 90 percent of the $ 570 million invested in Fintech companies in 2017.
• The Mexican market is a leader in terms of business model innovation by expanding access to banking, developing omnichannel solutions and alternative payment methods for consumers who do not have access to financial services. Mexico is also home to more than 300 prosperous fintech of new creation. Recent Mexican legislation is serving to strengthen the fintech environment, while omnichannel solutions for financial services and prepaid credit cards are expanding access to banking with new ways that will help ensure a prosperous future for the country’s digital economy. , the adoption of innovations and financial inclusion.
• In Colombia, aggregators, digital platforms and financial institutions are making digital payments more accessible and improving access to electronic payments, especially in pre-registered card payments, digital wallets and acquiring by shops. The country also has one of the few Latin American unicorns valued at more than one billion US dollars: the Rappi online delivery services platform, which is rapidly expanding to several countries in the region and has launched its own digital wallet, RappiPay. Other Colombian digital payment platforms are following suit.
• Argentina, home to one of the region’s strongest software development industries and a talented workforce, has boosted the success of the region’s largest e-commerce sites, such as MercadoLibre, the e-commerce site number one of Latin America by number of visitors. Payment innovation is expected to increase significantly this year, given the measures taken by the government and the central bank, which promote payments in real time and a digital wallet developed by the government, as well as changes in the private sector, with a significant opening in the retail industry as acquirers.
• Chile leads the region in penetration of contactless card payments, modernizing the experience of point of sale terminals (POS), and is also home to a large number of newly created companies. The merchants have equaled and even surpassed the banks in terms of card issuance in Chile and have a strong presence in electronic commerce. On the regulatory front, a 2017 law that allows prepaid electronic payments and a greater dynamism in card processing should lead to greater financial innovation in the coming years, including greater access to prepaid cards that allow the purchase of cards. digital goods and services on international websites.
• The rapid growth of Peru’s economy depends to a large extent on cash, so the adoption of new technologies has been less than in other markets. The digital transformation is still in its early stages, and Peruvian companies are focused on creating applications and enabling e-commerce. However, both established financial institutions and startups and businesses are constantly increasing access to digital payments.
In general, the Visa-AMI innovation study indicates that Latin America is heading towards a paradigm in which open-source and open-platform programming models are becoming the standard. It is evident that innovation in payments and financial services is already happening throughout Latin America and the Caribbean, accelerating the adoption of digital payments in the region and incorporating more people into the financial system.
At Visa, we continue to foster collaboration, expanding our presence in the region with a new Innovation Study in Mexico, which has just opened its doors this week. This is the third Visa innovation space dedicated to Latin America and the Caribbean, after São Paulo and Miami. The new study offers a creative environment that uses proven methodologies for customers, partners and fintechs to jointly develop the next generation of payment and commerce solutions.
Also published on Medium.