Traditional banking has been the cornerstone of global financial management for centuries. From its inception and until very recently, it operated with physical structures and manual processes that required customers' presence at branches. Globalization and digital technologies marked a turning point with the advent of digital banking, automated processes, and online services. Thus, a new era began where agility, convenience, and innovation became fundamental pillars.
These advances accelerated with the rise of fintech, companies that challenged traditional methods by offering disruptive, flexible solutions focused on enhancing the customer experience. And contrary to what one might think, this evolution brought great opportunities for strategic collaboration so that banks can remain relevant and evolve.
As a Deloitte report points out: “The mutual benefit of collaborating is becoming more evident: fintechs bring innovation and freedom, whereas banks have the experience and resources to scale.” And “the symbiotic relationship that is developing seeks to leverage the strengths of each party.” Therefore, this new collaborative model allows banks to leverage fintech technological solutions to enhance their offerings, modernize operations, and launch products to the market faster.
One of the key aspects in the evolution of banking is the digital transformation of their systems. To maintain their relevance in a market where new players and more competition emerge, banks need to update their technology and adopt modern, cloud-native solutions that provide greater flexibility and rapid time-to-market.
Cloud-based technological infrastructures not only offer greater scalability but also improve cybersecurity. A good example is the adoption of agile technology for card processing, which allows banks to migrate from their outdated systems to more agile and secure platforms for real-time processing.
Moreover, the new systems eliminate dependence on data centers and physical servers from previous generations, ensuring greater stability, scalability, and faster response times. These easily integrate via APIs with any existing business, facilitating their expansion into new countries or industries in an agile manner.
Lulo Bank, Colombia's first 100% digital bank and one of the country's most important, launched innovative cards in a record time of just 4 months, thanks to its collaboration with Pomelo. By adopting our modern infrastructure, it achieved:operational flexibilityimproving customer experience with new physical cardslaunch virtual cardsCMF: the Argentine capital corporate bank was in search of a partner to innovate its credit offering for its clients, with a flexible and scalable solution. Together with our top-tier infrastructure for card issuance and processing and the corporate expense management solution offered by Mendel, CMF took its credit solution to the next level, achieving the forefront of corporate banking solutions.The incorporation of digital solutions not only modernizes processes, but also opens the door to new business units. For example, through embedded finance, prepaid cards can be quickly integrated into accounts or virtual wallets, creating a business unit designed for young audiences. This type of card:
Is easy to issue as it requires fewer licenses than debit cards, ensuring a rapid time-to-market.Encourages banking and the creation of individuals' credit history, as it gives banks the opportunity to offer additional products, such as loans, credit cards, and insurance.Through strategic alliances with fintech or digital solution companies, banks can incorporate even more services or products, in addition to cards or accounts: with embedded finance, they can integrate additional tools for security, fraud prevention, or to enhance users' digital experience:
3D Secure and dynamic CVV solutions offer greater protection against cyber threats, mitigating potential data breaches in virtual transactions and associated monetary losses.And when it comes to security and user experience combined, tokenization is the ideal solution. This technology allows users to use Apple Pay and Google Pay to make secure payments through cell phones or smartwatches, without needing to carry the physical version or display card numbers.It's very easy to incorporate these functionalities in partnership with modern infrastructure providers, and it's key to attracting and retaining clients in the digital era!
The future of banking is deeply tied to its ability to leverage new digital trends, optimize its infrastructure, and quickly offer innovative products. Banks that adapt to this new digital ecosystem will be better positioned to remain competitive and stay relevant in a constantly evolving market.
According to a recent report by Boston Consulting Group, banks must redefine where to compete, whom to partner with, and how to deliver value amid a multifaceted disruption in the global financial ecosystem. Those who adopt a strategy of collaboration with fintechs will not only be able to update their infrastructure but also improve their product offerings: instead of developing technological solutions internally, which can take months or years and large monetary investments, they can leverage partnerships to integrate ready solutions at an API's length. This will help them take their value propositions to another level and improve operational efficiency.
The Latin American market is in full expansion. In the coming years, the use of virtual cards, tokenization, and infoless physical cards is expected to grow exponentially, providing greater security and ease in payments. Additionally, digital wallets and virtual cards will continue to establish themselves as one of the main options for younger users, who seek simple, intuitive experiences integrated into their lifestyle.
We are a team of specialists in the payments industry behind the voice, or rather, the Words of Pomelo. We will tell you everything about the industry, trends, products, methodologies, best practices, and Pomelo stories in the first person.
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