Bancarization is Exploding in Latin America
Latin America is the fastest-growing banking market worldwide, and growth is only expected to continue. Forecasts are anticipating 10 percent increases across all Latin American banking sectors through 2022.
Bancarization refers to both the amount of access and the degree of usage of financial services in a country or region. Both of these numbers have been increasing throughout Latin America, with more recent converts to institutionalized banking following the lead of countries like Mexico, Colombia, and Brazil.
Why Is the Banking Industry Growing?
Both historically and culturally, individuals in Latin America have not put much trust in banks. However, that sentiment is changing, especially due to improvements in internet access throughout Latin America, a young population, and ultimately sped up by COVID-19.
COVID-19 dramatically accelerated the migration to digital services as banks and other storefronts were closed and governments distributed aid through digital systems. For instance, online card payments in Chile more than doubled in March 2020 compared to March 2019, just as social distancing was taking full effect.
Despite this growth, bancarization numbers are still comparatively low. According to a McKinsey report, “in several Latin American countries, 30 to 50 percent of the population over age 15 have an account with a financial institution, compared to more than 90 percent in countries like the US, UK, or Spain, or roughly 80 percent in China.”
Cyber Attacks and Security in Banking
The same McKinsey report also notes several areas of improvement that banks – not only those in Latin America – could put more focus on, including core IT processes and cybersecurity.
The report notes that few banks have focused on improving their core IT processes, infrastructure, and architecture in their digital transformations, and instead prioritized front-end user experience and design. These efforts, like easy-to-use apps and convenient online features, have been critical in attracting customers and users, but some worry that security processes were put on the back burner.
However, banks around the world typically have strong cybersecurity practices in place, which Latin American banks could replicate. Key focus areas for these newer banks include protecting critical information, securing trading partner connections, and defining lines of defense to rebuff cyber-attacks.
Recent Cyber Threats
The banking and finance industry is well-known as the most impacted by cyber threats, and Latin America hasn’t been excluded from this number. The growth of online banking and commerce has opened new opportunities for hackers.
Some experts propose that Latin American banks and financial organizations may suffer from cyber threats in the months and years to come due to the growth of online banking and commerce.
The first potential cause is the rapid transition to online services. This speed may have resulted in a lower focus on security as systems were implemented. The second is that the population is unused to the sophisticated social engineering and phishing methods hackers have honed in markets that adopted online banking earlier. However, the very lessons learned by those other markets, and the regulations and systems they’ve implemented, could bolster Latin American banks and their customers against cyber threats.
Related Reading: The State of Financial Services Cybersecurity
Thus far, Brazil, Mexico, and Colombia have made up nearly 90 percent of all cyber-attacks in Latin America. Despite this, no Latin American country is in the top 20 list of countries of high impact cyber-attacks between 2006 and 2020. However, this is likely due to less lucrative targets and smaller numbers breached, since individuals and organizations have only started adopting web-based services broadly in recent years.
The Silver Lining
Despite facing the greatest threat, the banking industry tends to be the best prepared for and hardened against threats. While the industry as a whole reports the most attacks, it also reports proportionally fewer successful data breaches.
This means that, even as experts anticipate a rise in threats to Latin America’s growing banking industry, lessons learned by other markets could safeguard the region’s expanding banking efforts.
Latin American Data Security Regulations and Requirements
The finance and banking industry isn’t the only one at risk: technological development in the last several years has made everyone, from everyday internet users to the government, a target for cybercriminals.
While there’s no one requirement that covers the majority of the continent, like the European Union’s GDPR, countries throughout Latin America are focusing on protecting consumer data privacy rights via data privacy requirements like Brazil’s Lei Geral de Proteção de Dados (LGPD), Argentina’s Personal Data Protection Act, or Mexico’s Federal Law on Protection of Personal Data Held by Private Parties, among others.
Related Reading: What is the LGPD?
Protecting Your Bank’s Processes
A recent report conducted by Clearswift found that financial sector CISOs will be focusing their efforts and investments in three key areas:
- Protecting remote workforces
- Data loss prevention
- Secure file transfer
Financial organizations face strict requirements to protect the sensitive information they gather. Solutions that help improve visibility, user access, and security are essential. And solutions like managed file transfer (MFT) that can do all of the above, plus helping adhere to compliance requirements, are indispensable when it comes to your financial organization’s cybersecurity.
Latin America, with its network of core banking systems and central banks, has found MFT to be beneficial when it comes to integration. Many Latin American banks have to integrate huge amounts of private data from different offices into their core banking system, such as BANTOTAL, Datapro, Cobis, and Fiserv.
On the other side of the coin, many send information to their country’s central bank; BCRA (Argentina), Banco do Brasil (Brasil), Banco de la República, DNP, and DIAN (Columbia), Banxico and SAT (Mexico), Sil (Chile), SUNAT (Peru), and others.
Files may also need to be transferred securely into provincial or retirement systems, such as ANSES (Argentina), IPS (Chile), IMSS (Mexico), and INS (Costa Rica).
Related Reading: Achieving Secure, PCI-Compliant File Transfers for Banking & Finance Organizations
Case Study: Banco Bolivariano
Banco Bolivariano, one of the most important financial institutions in Ecuador, had been using a custom-developed tool to transfer files to clients, banks, credit card processors, and within the bank itself. However, they needed a tool that could better support their increased volume of transactions.
When they found GoAnywhere Managed File Transfer, they knew they’d found a winner. With GoAnywhere, Banco Bolivariano now:
- Automates thousands of file transfer processes
- Reduced file transfer times and increased simultaneous file transfers
- Improved encryption and auditing for all data sent to internal and external stakeholders
- And much more!
Cybersecurity for Your Financial Organization
Discover how you can secure, streamline, and centralize your organization’s data movement with one easy to use tool: GoAnywhere. It’s a flexible, scalable solution that can meet you where you’re at now and grow with your business processes into the future, all while safeguarding your data from common cybersecurity risks.
