Central American banks have experienced a major structural transformation in recent years. A more leading-edge system is in place, full of opportunities but also with some challenges.
The big changes in the region's banking services have been brought about to a great extent by the new practices that emerged from the 2008-09 world financial crisis, as well as the influence of new players that have arrived to invest in the industry since the beginning of this decade.
Past crises and the example of more integrated financial systems prodded Central American regulators to align themselves with the standards and demands of Basel in terms of capitalization and supervision, Rubens Amaral, CEO of Bladex, explained in an interview with Latin Trade. The wave of Colombian investments "has no doubt transformed the competitive banking and business environment in the region," he added.
Rodolfo Tabash Espinach, CEO of Grupo BAC Credomatic--controlled by Colombia's Grupo Aval emphasized that the presence of new investors, combined with "significant efforts by local banks to broaden and strengthen the scope of their operations, have brought a new competitive dynamic that has resulted in an improvement in products and a more efficient business model in which priority is given to omnichannel services and scale of operations to achieve higher efficiency."
The adoption of a universal banking model has been the most important transformation in the sector in recent years, Aimee Sentmat de Grimaldo, president of Banistmo, controlled by Grupo Bancolombia of Colombia, told Latin Trade in an interview. "The region's banks are no longer focusing on niches. Now they serve the base of the pyramid and the high-net worth client, as well as small businesses and large corporations," she said.
INNOVATION AND BANCARIZATION
Competition in Central American banking is made more intense with innovation and new technologies that broaden access to financial services. Sentmat de Grimaldo emphasized the importance of new digital options including apps and e-wallets.
Central America's high rates of mobile telephony penetration are helping to expand the use of technologies applied to banking services. "The challenge for banks in these circumstances is to make access to banking easier, regardless of the level of technological development of the country in which the services are offered," said Tabash.
Alternatives such as multifunctional automatic teller machines and nonbanking...