What are the leading financial solutions, and how can your business benefit by offering them?

Published on Oct 10, 2023.

14 minutes reading

Technological evolution in recent years, in conjunction with advances in regulation in the financial sector in Latin America, have led to an interesting period of expansion of financial solutions.

And not only that: in addition to the hot market, which is experiencing a boom in new products and financial servicesmore and more players are finding new opportunities in this sector.

This is because – thanks to Embedded Finance – companies from different segments can now offer financial solutions and benefit by joining that ecosystem.

In this article we lay out everything you need to know about financial solutions: what they are, what the main solutions entail, who can offer them, and what the advantages are of becoming a part of that ecosystem. Check it out!

What are financial solutions?

“Financial solution” is the generic term commonly used to reference financial productsand services. More specifically, the concept encompasses all services related to moving money, thus optimizing management of finance and business, such as: payments, receipts, generation of payment vouchers, transfers, loans, etc.

Furthermore, financial solutions are also Products that are sold with the objective of raising funds or facilitating financial movement are also financial solutions, and include products such as digital accounts, credit cards, digital cards, CDs, savings accounts, etc.

Finally, the definition also includes payment technologies that are behind financial products and services, such as acquiring.

Banks and fintechs have traditionally been responsible for offering financial solutions to the public. However, as access to technology has become widespread, and with the changes in regulation in many Latin American countries, companies from other segments can do the same thing.

The main financial solutions

Latin America is a diverse region replete with both challenges and opportunities, where cash is still heavily used (in 70% of transactions), and a large part of the population is still unbanked, as we found in the study entitled Land of Opportunities.

There is enormous unmet demand for financial solutions, whether due to the high cost of financial services, mistrust in financial institutions, or the great difficulties with transactions and documentation.

Banking

The region has undergone a true regulatory revolution, allowing movements such as Open Banking to advance, and facilitating the appearance of fintechs and digital banks.

This gradual opening is not only creating space to expand bankarization of the population; it is also making access to banking services in general feasible.

These recent changes were also sparked by the dramatic growth in use of the Internet for transactions in Latin America, most markedly when smartphones became widespread, and also due to the COVID-19 pandemic.

In this environment, offering banking services is an interesting competitive strategy for several business models beyond banks, such as Retailers which often have broad reach and scope in remote regions.

Cards

With the growth in electronic commerce, mainly after the social isolation caused by the pandemic, in 2022, cards were the most-used means of payment in online purchases throughout Latin America.

Even in countries with low rates of banked populations, such as Colombia, credit cards captured a significant share of e-commercetransactions. Debit cards lag behind a bit, but they also are highly relevant in the percentage of purchases made by virtual consumers.

Acquiring

Purchases made at physical establishments at POS, using debit and credit cards, are also two of the main means of payment, right behind cash.

Among the countries researched by Dock in the Land of Opportunities study, only in Mexico is cash still the preferred means of payment, being used more than credit and debit cards combined. In other Latin American countries, acquiring services are what are most heavily used in most transactions. See the following graph:

Acquiring, also known as “accreditation,” is behind all of these transactions, playing a fundamental role in the process of card purchases. Acquirers or sub-acquirers intermediate between the merchant, the card networks, and the banks, capturing the payment, transmitting it, processing, and finally clearing it.

Through Acquiring as a Service, companies that would like to enter the acquiring market have a white label platform to operate as an end-to-end payments player.

Credit

Credit can be extended in several ways. When the bankarization rate is relatively low, such as in Mexico, the Buy Now Pay Later (BNPL) model tends to grow as an alternative for offering this type of financial solution to clients.

This allows people who find it difficult to prove their income to start to have access to credit. Additionally, people unable to provide a residential address can open digital accounts so they can conduct transactions and request credit. And finally, small businesses have collection solutions that help them accelerate their sales, among other advantages.

The advantages of offering financial solutions

As underlined throughout the study, the high demand for bankarization in Latin America is not only with respect to the potential increase in financial transactions, but also to the evolution and well-being of society as a whole.

With democratization of financial solution technologies, in addition to modernization of the legal tax framework that led to the boom in fintechs in Latin America, new products and financial services are popping up all the time.

Still need more reasons why your company should start to offer financial solutions? The two main advantages in offering financial products and services to your audience – clients, partners, providers – are:

Creation of new revenue streams, not just because of diversification, but also because of lower brokerage costs, such as card fees, for example.
Greater loyalty and knowledge about the habits, needs, and preferences of your audience, expanding your relationship and leaving a more visible and present mark on their day-to-day.

Who can offer financial solutions?

By now it’s probably clear how much you can expand your earnings, and the competitive advantage you can obtain with your target audience by offering financial solutions. But what types of companies can offer financial services?

With advances in technology and regulation, in some countries companies from other segments can now offer several types of financial services. This phenomenon has become known as Embedded Finance <span style="color:#fff">now</span>.

This possibility arose from connections via APIs in the “plug and play” model, and it was driven by two important movements:

Popularity of high-quality smartphones, which allowed the devices to be heavily used to conduct financial transactions as well.
Modernization of the regulatory framework, especially starting in 2015, which facilitated not only the creation of fintechs focused on APIs, but also the creation of new means of payment, offering banking services for companies (“banking as a service").

The most common example of companies outside the financial sector offering financial solutions, without abandoning their main activity, are Retailers. But the trend is not restricted to just that sector.

Financial solution use cases

By way of example, the following are some segments that have already embraced Embedded Finance, and that are using financial solutions in their growth strategy.

Agribusiness

Companies in the agribusiness sector have a huge opportunity to offer financial solutions to rural producers that are still unbanked, adding value to their business and meeting an unmet demand of providers, clients, and partners.

E-commerce

The ability to offer financial products and services directly on their sites allows companies to reduce expenses, such as card fees and generating payment vouchers, and to offer new means of payment to facilitate cash payments in e-commerce.

Telecommunications

Offering financial solutions is a strategy that can make one stand out with consumers in a highly competitive market, such as telecommunications. It is an opportunity to use the extensive client base and differentiate oneself from competitors, offering exclusive services and conditions.

Transporters

Guaranteeing the safe movement of valuable merchandise, especially in highway transportation connecting remote regions of Latin America, has always been a challenge for the segment. By offering their own financial solutions, transporters eliminate this difficulty, ensuring peace of mind for their drivers and partners.

Retail

In addition to the advantages we already know about, offering financial solutions in the retail sector means contributing to financial inclusion of the population, and ensuring more security for your establishment by dispensing with the use of physical currency in transactions.

Direct Sale

Two major difficulties in the sector can be overcome by providing financial solutions: bankarization of resellers and clients, and greater safety by eliminating cash in your operations.

White label platforms to offer financial solutions

Regardless of your business segment, you can be sure that not having the structure or technology necessary to implement financial solutions is not a relevant barrier. Your business does not have to recreate the wheel.

There are now business-ready platforms that can be connected via APIs that you can personalize according to your brand and needs.

The so-called white label platform is simply a turnkey platform that is ready to be used by companies that want to diversify their operations, without having to start from square one.

After all, developing an adequate and efficient platform yourself requires a huge investment of time and money. This type of undertaking often means you risk taking your focus off your core business, and losing market share to the competition.

By contracting a white label platform, companies from various segments can offer financial solutions just by connecting to them via APIs. Besides being fully developed and ready to use, it is highly flexible: it can be customized to guarantee your brand’s identity, and to meet the specific needs of your public.

How can Dock help your business offer financial solutions?

A financial services technology leader in Latin America present in seven countries, Dock helps companies become competitive players in the means of payment sector. Our financial solutions are organized into four pillars:

Banking: “Banking as a Service,” so you can elevate the experience of your clients and partners, creating the ability to offer services such as digital accounts, cards, PIX, generation of payment vouchers, etc.
Cards & Credit: a solution to launch your own branded credit, debit, benefits, or consignment cards, without having to worry about the operational side.
Acquiring: a technological, licensing, and integration solution so you can be your own acquirer, allowing you to save on fees, and processing and settling payments with full support.
Fraud Prevention: anti systemfraude to guarantee complete security in all steps of every transaction, with a lower initial investment, and the ability to communicate with clients for validation, in the event of suspicious transactions.

All of this is offered on the Dock One global platform, which combines the most modern and secure financial services with a very short time to market. By using this solution, your company can remain focused on its core business and competitive strategy, while Dock handles all technology development, compliance with regulatory requirements, other types of compliance, treasury, reconciliation, and security.

Learn more about our platform:

Financial solutions: summary

Offering financial solutions is now something your business can do, regardless of business segment.
“Financial solution” is the generic term commonly used to refer to the group of financial services and products related to obtaining credit and moving money, in order to optimize business and financial management.
There is still huge room for growth in Latin America for banking services and means of payment – the population is still largely unbanked, and cash is used in 70% of transactions. This scenario is beginning to change with the recent advance in the regulatory framework, which led to the boom in fintechs, the appearance of digital banks, and the growth of e-commerce.
Among the advantages of offering financial solutions are deepening the relationship with the client (competitive advantage) and diversifying revenue streams for your company, as well as reducing middleman costs.
Fintechs appeared as financial solutions technology evolved, paving the way for companies in other segments to also offer various types of financial services by means of Embedded Finance.
White label platforms can be connected via APIs, offering all the technology necessary to offer, process, and provide secure financial solutions to partners. They are highly customizable according to each company’s brand.
Dock’s platform can help your business offer financial solutions in banking, cards, acquiring, and fraud management , helping not only technological development, acquiring, treasury, and processing, but also ensuring that regulatory requirements are met, and that there is end-to-end anti-fraud security in every transaction.