Technological advances have allowed the optimization of finances. As a result, Panama knows a new, faster, and more efficient way to manage the banking services of its users. In addition, progress is being made in the fintech sector in Panama.
Financial companies and their new relationship with technology have allowed an immense transformation and generated change forever. Some companies have opted for the new modus operandi known as fintech to manage their services and expand them throughout the country. This new sector, which is proliferating, uses technology to improve and automate financial services and processes, simplify processes without intermediaries, and offer better solutions to people through new technologies.
Fintech Presence in Latin America
In April 2022, the Inter-American Development Bank (IDB) pointed out in its third edition of the ‘Fintech Report in Latin America and the Caribbean’ that the Latin American region increased from 2018 to the end of 2021 from 1,166 fintech ventures to 2,482. This represented an increase of 112% and comprised 22.6% of fintechs worldwide.
So far, the fintech sector in Panama barely reaches 1% with 16 ventures, but, according to the CEO of Cuanto, Felipe Echandi, Panama has the opportunity to continue growing in the financial sector as long as there are “more incentives for the country to be a digital economy hub.” The country has proposals that will help the development of the fintech sector in Panama and the technological improvements that provide ease and speed, whether in the banking sector or others. PayCaddy, for example, offers specialized services to digitize banking and create tailored fintech solutions, and Munily, which digitizes services and payments in residential communities. The Nequi and Visa banking platforms have also allowed contactless payments, among other services.
Speed and agility in the fintech sector in Panama
In a conversation with the newspaper La Estrella de Panamá, the regional leader of Visa Products for the Caribbean and Central America, Allen Cueli, expressed the importance that new technologies such as fintech bring to the country. “It’s all about becoming faster and more agile without intermediaries.”
Cueli has been one of the pioneers in the new “contactless” technology in countries like Mexico and Costa Rica, and now in the fintech sector in Panama.“
Today, 73% of purchases made in the country with a Visa card are contactless. In Central America and the Caribbean, we have 11 markets with more than 50% making payments this way,” he told the newspaper.
“This allowed us to build trust in people who were afraid to touch the payment machines during the pandemic due to the coronavirus contagion.”
Raúl Romero, director of Nequi in Panama, spoke with the newspaper about the importance of fintech in the country and its speed. “We must provide 100% digital solutions. This will allow our users to manage their money at no additional cost in less than 5 minutes.”
Nequi users are between 18 and 35 years. They are millennials who have independence and want to have access to the world autonomously,” he explained. “Surely the user has a first job and a partner with whom they are building wealth, family, travel and more, and are curious to access new things.”
Romero explained that although Nequi users have a specific profile, it is a platform open to everyone who wants financial security quickly, regardless of age.
He added, “We started with a base of zero clients, and today we have almost 200,000 where those people use Nequi because they believe, within those capacities, that they will be able to find better ways to use their money.”
Platforms like this allow the payment of invoices, surcharges, transfers, and more in a single click. “This greatly changes the features of a traditional bank where the procedures can be long and drawn out.”
The director of Nequi added that new technologies allow greater security and speed. “Now everything is linked to our phone, whether it’s a password, fingerprint, or a face ID. This means that only the user can access their accounts. In addition, as the phone changes, the platform will request a new link, forgetting about the previous device.”
Allen Cueli understands that the fintech sector in Panama has several challenges to overcome to continue growing. “Financial inclusion in Panama is essential. But, unfortunately, some people do not have a digital credential to interact with this economy, and something must be done about it,” he told the newspaper.
What we have understood in recent years is that Panama has a high acceptance of new technologies, mainly because of the speed they generate. But you must keep moving forward and reach other people around the country so they understand the importance of fintech.”
In addition, he commented on the plans he expects for Visa and its users in the coming years: “I would like to improve the user experience by providing greater financial inclusion. What I expect in five years is more user participation, more digital experiences, and more payment options,” he said. “I would like to offer the option to send and receive payments. All this has that effect that helps drive and stimulate greater inclusion and improvements among them.
Raúl Romero added that another significant challenge for the fintech sector in Panama is to continue generating trust in people, especially new users. “They should know that they are – the person and their money – in total security, and we work on that daily.”
He also commented that providing solutions in the different banking categories is crucial and that the public is ready to accept them.
However, the director of Nequi admits that Panama may be heading towards being a 100% cashless country. “Panama is a melting pot and brings knowledge from all over the world with super important ethnic and cultural groups for the country, which give you the ability to fluidly digital interactions.”