Financial products: Definitions and trends for Latin America

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The time where all financial movements for a company or person only went through a traditional checking account is something of the past—also because the current scenario is marked by innovating and renovating the way people and businesses relate to finance. Not surprisingly, the market is going through a moment of great growth in financial product offerings.

The pandemic we have faced in recent years has tokelau email list brought uncertainty, difficulties and new habits to consumers and businesses: the move to online retail and the migration to e-commerce had to happen quickly, brands of different sizes had to rush to to accept new means of payment and several families found themselves in trouble and needed to seek loans or refinance their debts.

The past few years have also brought an evolved Open Banking—a model that has “opened” the banking system and enabled user information to be shared between different institutions—and Open Finance—a system enabling financial institutions to share data on products and services, such as insurance plans and investments.

We also witnessed a consolidated Embedded Finance – phenomenon that enables financial services to be incorporated by companies that don’t directly operate in the financial industry and is driven by Banking as a Service.

That combination of factors—the demand as a result of the pandemic, an open financial system and emerging players in the banking industry—has enabled financial products to grow and develop.



What are financial products?


Generally speaking, financial products are resources, services, toolkits or processes enabling and facilitating financial transactions by individuals and companies.

Those products can also be offered by traditional banks, financial institutions, fintech and other companies incorporating and providing financial services, such as Retailers.

However, before we discuss some of the main financial products those players can offer, it is important to address the importance of financial products in the Latin American context.



Financial products and the banking movement in Latin America


The reason for that is quite simple: the banking movement in Latin America, which historically has always faced a variety of bottlenecks, has shown continuous growth in the past few years. A recent study conducted by the Central Bank showed that the banking movement has advanced the most in the region since 2017. The numbers are really impressive: by the end of 2021, approximately 73% of the Latin American population had at least one bank account, whether traditionally or digitally.

That’s why businesses offering financial products for companies and individuals in that scenario contribute to:

Driving the national and regional economy through services and technologies exclusively designed for companies of all industries and niches;
Promoting financial health of the population and companies with less invasive credit solutions and other financial services that do not require the same bureaucracy as traditional banks;
Strengthening the banking movement in the region as a whole, opening the financial industry to people and small businesses that didn’t find any investment or support from traditional financial institution at that point and, therefore, were at the margins of the industry.

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