COVID-19 pandemic accelerated Financial Inclusion in Latin America says Mastercard

By Pavithra R

A joint research conducted by Mastercard with Americas Market Intelligence has revealed that 40 mn people in Latin America have been banked in the last 5 months. 

The lack of financial inclusion became more evident in the wake of the COVID-19 pandemic. The situation has prompted people to adopt digital behaviors and to “go digital” by banking online. The pandemic has clearly created an unprecedented opportunity to transform the state of digital finance in Latin America, providing new possibilities for the region’s vulnerable population.

LATAM has witnessed many non-traditional players such as neobanks and digital wallets emerging to help close the inclusion gap in Latin America. Neobanks encourage the use of digital financial services by reducing and exempting fees, facilitating bank account opening requirements, and offering a complete mobile experience.

The new study “Accelerating Financial Inclusion During the COVID-19 Pandemic” reveals how banks, FinTechs, and governments must make a collective effort to consolidate the region’s growing digital finances. Mastercard’s study highlights how developing financial inclusion means increasing the value of products and services to consumers, greater digital and financial education, removing barriers such as high fees and restrictions, as well as improved overall user experience to build a foundation of trust for the future.

“Financial inclusion helps people thrive by providing them with the tools they need to achieve financial security, be more productive, and live more stable, healthy, and fulfilling lives. In the long term, it can mean the difference between prosperity and poverty,” said Kiki del Valle, Senior Vice President for Digital Alliances, Latin America and the Caribbean, Mastercard.

Americas Market Intelligence research shows that early government subsidies have been critical to increasing access to the banking system. The Coronavoucher program (Brazil), Ingreso Solidario (Colombia), and Ingreso Familiar de Emergencia (Argentina) forced users who previously used only cash to open a bank account. The study states that thanks to the social benefit programs during COVID-19, the unbanked population throughout Latin America will have been reduced by 25%.

The pandemic and quarantine has resulted in a change in people’s consumption habits and stimulated e-commerce. LATAM consumers adopted the various payment options within digital banking and wallet applications, such as bill payment, e-commerce, mobile reloads, and especially person-to-person payments, which have doubled since the lockdown began. It has also resulted in changing attitudes toward long-term planning. 

Established since 1966, Mastercard is a global technology company in the payments industry. The firm is committed to building a more inclusive digital economy that works for everyone. It is also making Environmental, Social, and Governance (ESG) central to its business model.