FINANCIAL SERVICES ADVISOR a PUBLICATION of the DIALOGUE April 23-May 6, 2020

LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org April 23-May 6, 2020

BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión Will the Pandemic Banco Santander Pablo Barahona President & COO, Sees 82% Plunge in Global Retail Markets West, Liberty Mutual Group Speed the Region’s Profit, Increases Felipe Carvallo in Americas Units Vice President - Analyst Latin America Banking Adoption of Fintech? Spain-based Banco Santander Moody’s Investors Service said its overall profit declined 82 Richard Child percent in the first quarter. How- CEO, ever, profit rises in units including Mattrix Group Mexico and Brazil helped offset Michael Diaz Jr. losses due to higher provisions. Partner, Page 2 Diaz, Reus & Targ Ernesto Fernández Holmann REMITTANCES Chairman of the Board, Ayucus Mexicans Abroad Rich Fogarty Managing Director, Send Record $4 Bn Alvarez and Marsal Home in March Desiree Green Stay-at-home orders have led consumers in Latin America to turn to technology for conducting Mexico received $4 billion remit- Vice President, financial transactions. // Image: Priscilla Du Preez via Unsplash. International Government Affairs, tances in March, a record level Prudential Financial that beat analysts’ expectations. Earl Jarrett As residents of countries throughout Latin America and the Page 3 Chief Executive Officer, Caribbean stay home due to quarantine orders designed to The Jamaica National Group slow the spread of Covid-19, more consumers are turning to BANKING Thomas Morante Chair, Insurance Regulatory & Q technology to conduct financial transactions. In one case, Brazilian Banks Transactional Practice Group Argentine mobile payments start-up Ualá saw a 20 percent jump in its Kaufman, Dolowich & Voluck May Need $13 Bn issuance of prepaid cards since the country’s lockdown began. To what Manuel Orozco to Face Provisions Director, extent will stay-at-home orders across the region accelerate the adop- Migration, Remittances & Development, Brazilian banks may need as much Inter-American Dialogue tion of fintech? Will the pandemic significantly change the way most res- as 70 billion reais ($13 billion) in additional capital to face higher Adalberto Palma-Gomez idents of the region conduct financial transactions? Do traditional banks Senior Partner, need to change how they do business in order not to be left behind? loan-loss provisions due to the Proxy, Gobernanza Corporativa Covid-19 pandemic, according to Rodolfo Pittaluga stress tests conducted by the cen- Adjunct Professor, Lindsay Lehr, senior director at Americas Market Intelli- tral bank, which Roberto Campos Florida International University Neto heads. gence in Oakland, Calif.: “Adoption of digital payments has College of Law Page 2 Fabian Saide lagged in Latin America because cash payments have always Founder, CEO and President, been the preferred payment method of a large segment of Paykii A the population, and because they are always available. However, under Roberto Teixeira da Costa Founder & Board Member Emeritus quarantine, in many cases the option to pay in cash has been taken away. CEBRI As Latin Americans are forced to stay home, buying online is the only way Mario Trujillo CEO, to shop, and more Latin Americans than ever are wanting to participate DolEx Dollar Express in the digital economy to keep themselves busy during this time; video streaming, online gaming, video conferencing and use of social media skyrocketed during March and April. This increased demand for digital goods and e-commerce is driving the underbanked to use a digital payment method for the first time. If these payment methods provide suf- ficient value and convenience, this habit is likely to stick in the long run. Governments are also playing a part. The Brazilian government has made Campos Neto // File Photo: Brazilian Central Bank. Continued on page 3

BANKING NEWS 82 percent as compared to the same quarter NEWS BRIEFS a year earlier. The bank said the decline came Brazilian Banks May after it incurred a net charge of 1.46 billion A.M. Best Revises Outlook euros, mainly due to overlay provisions of more for Bolivia’s Insurance Need $13 Billion to than 1.6 billion euros because of the coronavirus pandemic. The bank said profit growth Industry to Negative Face Loss Provisions in most of its markets in the Americas and U.S.-based credit ratings agency A.M. Best growth in consumer volumes helped it achieve has revised its outlook for Bolivia’s insurance Brazilian banks may need as much as 70 a 1 percent year-on-year increase in underlying industry to negative, Commercial Risk reported billion reais ($13 billion) in additional capital attributable profit in the first quarter, to 1.98 April 24. A.M. Best previously had a stable to face higher loan-loss provisions due to the billion euros. The figure increased 8 percent outlook for Bolivia’s insurance sector, the pub- coronavirus pandemic, according to stress year-on-year on a constant currency basis, the lication reported. At the same time, A.M. Best tests conducted by the country’s central bank, bank said. In the Americas, Santander’s loans maintained its negative outlook for Argentina’s Reuters reported April 29. The worst-case and funds increased by about 15 percent, insurance industry. Both decisions were largely scenario was contained in a financial stability though growth was slower in Europe. “Santand- due to the coronavirus pandemic, the ratings report that the central bank compiled. The er’s unique geographic diversification and agency said. amount that the banks could need amounts scale continued to support greater stability and to approximately 7.2 percent of their total predictability in the bank’s earnings in the quar- capital. Brazil’s banks also may need up to ter,” with Europe contributing 41 percent of the three years to return to previous levels of bank’s earnings, South America contributing Bradesco Posts $693 Mn profitability and capital, the report said, adding 38 percent and North America contributing 21 in Q1 Recurring Profit, that court and legislative decisions to suspend percent, the bank said. Santander’s operation Misses Analysts’ Estimates credit payments present another risk factor in Brazil continues to represent the largest Brazilian lender Banco Bradesco posted for banks. Factoring in the types of companies proportion of the group’s underlying profit, con- recurring net income, excluding one-off items, likely to experience the greatest losses due to tributing 29 percent, Santander added. Its Mexi- of 3.75 billion reais ($693 million) for the first the pandemic, in addition to losses incurred by co unit contributed 10 percent of Santander’s quarter, Reuters reported April 30. The bank’s their employees and suppliers, the report says profit in the first quarter. In Mexico, Santander’s profit was down nearly 40 percent from the banks’ loan-loss provisions could reach 395 profit increased by 22 percent to 249 million same quarter last year and below a Refinitiv billion reais. Among the companies expected euros “driven by solid growth in income and estimate of 5.98 billion reais. Bradesco added to be hardest-hit are ones in the power, trans- the increase in ownership following successful that it is setting aside 2.7 billion reais to cover portation, manufacturing, retail and services acquisition of 16.7 percent of Santander Mex- expected loan losses caused by the coronavi- sectors, according to the report. The pandemic ico’s minority interests,” the bank said. In the rus pandemic. Bradesco’s loan-loss provisions could push up defaults by consumers and bank’s Mexico unit, loans increased 13 percent, soared 86 percent from a year ago to 6.71 small businesses past their peaks from 2016 while consumer funds rose 10 percent. The billion reais in expectation of higher loan and 2017, respectively, the central bank said. It unit’s digital customers also grew 38 percent delinquencies by consumers and companies added that recent government measures to pro- year-on-year, to 4.45 million. In South America, struggling with the fallout of the health crisis. vide aid to banks, companies and consumers Santander’s underlying profit amounted to 928 will alleviate some pressure on the country’s fi- million euros in the first quarter, an increase nancial system. [Editor’s note: See related Q&A of 15 percent year-on-year. Total income from in the March 26-April 8 issue of the Financial the bank’s units on the continent increased 8 Brazil Bank Lending Services Advisor.] percent “with the bank continuing to capture Spreads Hit Narrowest business opportunities, synergies and improv- ing integration across the different countries Level Since Late 2018 Santander Reports in the region in payments methods, auto Brazil’s bank lending spreads in March hit their 82% Plunge in Profit, financing, consumer finance and microfinance,” narrowest level since the end of 2018, the Santander said. The bank’s Brazil unit had 694 central bank said April 28, Reuters reported. Mexico Unit Sees Rise million euros in underlying profit in the quarter, In March, lending spreads narrowed to 27.5 an increase of 10 percent, which was driven by percentage points, a decrease from 28.9 Spain’s Banco Santander on April 28 reported lower costs and provisions. Santander Brasil’s percent in February. Also in March, Brazilian an attributable profit of 331 million euros number of digital consumers increased 13 banks’ 90-default ratio remained unchanged as ($360.9 million) for the first quarter, a drop of percent in the first quarter to 13.8 million, and compared to the month before, at 3.8 percent.

operating expenses at the unit decreased 2 FEATURED Q&A / Continued from page 1 percent in real terms. In Chile, Santander had 125 million euros in profit for the first quarter, a headlines with its ‘coronavoucher,’ a subsidy aid citizens during the pandemic, the lack of 2 percent decline year-on-year. In Argentina, the of 600 reais paid out to informal workers efficient payment distribution capabilities in bank had underlying profit of 59 million euros, and self-employed people. To receive the particular to the low-income population has a 745 percent increase year-on-year “thanks voucher, it is obligatory to download an app become a hurdle to get the money to people to the greater net interest income, efficien- that state-owned bank Caixa Econômica most in need. Fintech companies have cy improvements and a strong decrease in Federal created for this purpose and receive stepped up here, too. In Colombia, banks are provisions,” the bank said. Elsewhere in South the funds in a digital account. Withdrawing building a new real-time payment system America, profit grew 14 percent in Uruguay to the funds in cash at an ATM is possible but using the infrastructure supplied by a fintech 35 million euros, profit in Peru grew 33 percent, restricted, while recipients are encouraged company. The government is now working to 12 million euros, and in Colombia, profit to use the funds to pay bills online, make with the banks and fintech companies to more than tripled, to 6 million euros. peer-to-peer payments and other digital distribute welfare. Wallet adoption rates payments. Inevitably, a large portion of these have grown tenfold in the past months. Not recipients—the most under-digitized—will only do they allow users to receive welfare REMITTANCES NEWS revert back to cash once business is open payments, but they also allow them to pay as usual. However, this program is expos- their bills, top up their cellular phones and ing them to digital payments that could transfer money to relatives without leaving Mexicans Abroad become a habit in the medium and long the house. Associated payment cards are Send Home Record terms. Certainly, at this time, banks that can used to order food and groceries online offer instant and digital account opening and buy movies and games. In Brazil, the $4 Bn in March and rapidly deploy a debit card (physical or government is working with some of the virtual)—a capability much more prevalent country’s large and small fintech companies Mexico received a record $4 billion in remit- among neobanks than traditional banks—will in merchant acquiring and small business tances in March, a far greater amount than take advantage of this trend.” lending to distribute subsidized small busi- expected following shutdowns of restaurants ness loans. We are witnessing several years and other businesses in the United States in an Kai Schmitz, partner at Cres- of digital transformation in financial services effort to slow the spread of Covid-19, Mexico’s tone Venture Capital and board happening in a couple of months.” member of Colombia-based fintech start-ups Movii and David Ross, global fund manag- The significant accel- A Minka: “Stay-at-home orders have increased er at La Financière de l’Echi- eration of remittances demand for a range of digital services, from quier in Paris: “While fintech in March is difficult digital media to food delivery. Most of these A adoption has been accelerating, to square with labor services are only available to those who can the fintech industry was undergoing strong market conditions and pay electronically. However, Latin America growth even prior to the Covid-19 crisis. sentiment in the U.S.” lags not just developed markets but also Starting as an outgrowth of the need for other emerging regions such as Asia in us- digital payment solutions for e-commerce, — Alberto Ramos age of electronic payments. Payment cards a need that has only grown in a quarantined and digital wallets are still rarely used in the world increasingly reliant upon e-commerce, central bank said May 4, The Wall Street Jour- region (with the exception of high card pene- it was the financial crisis a decade ago that nal reported. Remittances from Mexicans living tration in Brazil). Infrastructure for electronic truly spurred the region’s fintech revolution. abroad rose 36 percent in March as compared payments and real-time payment systems Global banks, in an effort to shrink their to the same month last year, and they rose are fragmented and underdeveloped. Over balance sheets, left the region. In response, 18 percent in the first quarter, year-on-year, to the past few years, several digital issuers of large local players focused on serving the $9.3 billion. “The significant acceleration of electronic payment instruments and systems biggest companies, creating opportunities in remittances in March is difficult to square with have sprung up in the region and are fortu- serving underbanked consumers and small/ labor market conditions and sentiment in the nately now able to fulfill the need. Govern- medium enterprises. It is this small/medium U.S.,” Goldman Sachs’ chief economist for Lat- ment aid distribution has become another enterprise market that is leading the Latin in America, Alberto Ramos, said in a note. “We critical use case for electronic payment American fintech industry to develop beyond speculate that perhaps fearing a significant systems. As governments have stepped in to just the payments business and into lending, deterioration of the employment and income Continued on page 6

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 3 FINANCIAL SERVICES ADVISOR April 23-May 6, 2020 prospects in the U.S., many workers may have capitalized on a favorable USD/MXN level to ADVISOR Q&A send part of their accumulated savings in the U.S. back to Mexico.” Solid levels of remittances to Mexico have helped to support private Is Mexico Facing More Economic consumption, particularly for low-income families in Mexico, Ramos said. However, he Pain Than its Neighbors? added, “Despite the March upside surprise, the expected sharp recession in the U.S. and spike Mexico is facing a severe percent and 9 percent for Mexico, based on in unemployment are likely to negatively impact recession, with the International Mexico’s GDP elasticity to the U.S. business the flow of remittances to Mexico.” Analysts in Monetary Fund predicting that cycle. Where Mexico’s economy ends up in a Bloomberg survey had expected $2.75 billion Q Latin America’s second-largest 2020 depends on the size and speed of the in remittances for March. economy will contract 6.6 percent this year, policy response. So far, monetary policymak- more than double the 3 percent contraction ers have acted by lowering the price of credit it expects for the global economy. At the and by increasing the quantity of money. POLITICAL NEWS same time that countries around the world However, a defined fiscal response was are bracing for the economic consequences absent until recently when the government of the coronavirus pandemic, Mexico, like announced measures worth about 2.5 per- Brazil’s Bolsonaro other oil producers, is also facing economic cent of GDP, including direct transfers, credit Names De Souza as damage from the collapse in oil prices. How for small firms and families and resourc- well is Mexico’s government responding to es to continue the construction of a few Federal Police Head the rapidly deteriorating economic outlook? infrastructure projects. Fiscal measures not Will President Andrés Manuel López Obra- only have arrived late and in an insufficient Brazilian President Jair Bolsonaro on May 4 dor’s plans, including more loans for small amount, but also they do not represent an named Rolando Alexandre de Souza as the businesses and for housing, meaningfully additional stimulus since they are the result head of the country’s Federal Police, news boost the economy? How long could Mexi- of the redistribution of the federal budget. program Jornal Nacional reported, citing an co’s recession last, and what elements will Those measures will not boost the economy extra edition of the country’s official gazette. be key for its emergence from it? but rather will mitigate the fall by providing Bolsonaro selected de Souza, who was rapidly some help to domestic demand. Without sworn in at Bolsonaro’s office without an Alfredo Coutiño, director for the policy stimulus, the economy’s fall could audience, after the country’s Supreme Court Latin America at Moody’s reach a double-digit rate. The duration of the blocked the president’s move to appoint Analytics: “Mexico will end up recession depends on two factors: the speed Alexandre Ramagem, a family friend, to the A as one of the most affected at which Mexico implements its fiscal stim- position. Bolsonaro had said he would seek countries in the region, mainly because of ulus and the U.S. recovery. In the best-case to appeal the Supreme Court’s move to block its economic anemia, lack of preparedness scenario, the recession will last until the end Ramagem’s appointment. De Souza had worked for the virus outbreak, the delayed policy re- of the year, and the recovery will begin early as a close aide to Ramagem, who headed sponse and the high dependence on the U.S. next year. Once more, Mexico’s economy Brazilian intelligence agency Abin, Reuters business cycle. The fall in oil prices adds will amplify its downturn as a result of the reported. De Souza replaces Federal Police pressure to the country’s foreign income and external shock and the limited countercycli- Chief Maurício Valeixo, whom Bolsonaro fired government revenues, although the country cal power of domestic policy.” in April. The dismissal led popular Justice holds an insurance coverage. The United Minister Sérgio Moro, who as a federal judge States is the main market for Mexico’s ex- oversaw Brazil’s sprawling “Car Wash” anti-cor- ports, thus the economy is heavily subject to EDITOR’S NOTE: More commentary on ruption investigation, to resign in protest. In its neighbor’s downturn. The U.S. economy this topic appears in the May 4 issue of the stepping down, Moro accused Bolsonaro of is expected to contract by around 6 percent, Latin America Advisor. firing Valeixo in order to replace him with a which implies a contraction of between 6 trusted personal contact whom he could call to get information on police investigations. Moro claims as “gossip,” Reuters reported. On May to authorities recordings of conversations that said Bolsonaro wanted access to classified 2, Moro testified to police and prosecutors as he had with the president, an unnamed person information and to curtail police investigations part of an investigation that the Supreme Court with knowledge of Moro’s deposition told of his supporters. Bolsonaro dismissed Moro’s launched into the matter. Moro brought forth Reuters. Three army generals in Bolsonaro’s

NEWS BRIEFS cabinet, two of whom are active-duty and the the debt, worth nearly $3.6 billion. Without an other retired, witnessed Bolsonaro pressur- agreement, Argentina risks slipping into what Two U.S. Citizens Among ing the federal police, Moro reportedly told would be its ninth default, which would hurt investigators, and could corroborate the former its access to global markets just as it faces a 13 Captured After Failed justice minister’s accounts, the source told the painful and deteriorating recession, Reuters Venezuela Plot: Maduro wire service. On May 4, the country’s top pros- reported. Venezuelan President Nicolás Maduro said ecutor requested Supreme Court authorization May 4 that two U.S. citizens are among 13 to question the three military cabinet members Puerto Rico Asks people captured by authorities in connection in an investigation. Moro’s resignation sparked with what Venezuelan officials have called the most serious political crisis that Bolsonaro Board to Delay a failed plot to invade the country and oust has faced since taking office last year. He was Maduro, Reuters reported. In an address on already facing criticism for downplaying the Austerity Measures state television, Maduro showed passports coronavirus pandemic and doing too little to and other identification cards purportedly of curb the virus’ spread. Brazil has more than Puerto Rico’s government on May 4 said it had Airan Berry and Luke Denman. Maduro said 108,000 confirmed cases of Covid-19 and more asked a federal control board to delay austerity the men, whom he called terrorists, worked at than 7,300 reported deaths due to it. measures for at least two years, warning that Silvercorp, a Florida-based security company Puerto Rico does not have enough money to whose owner claimed responsibility for the pay bondholders as it struggles with the costs failed incursion on May 3. ECONOMIC NEWS of recent earthquakes, the Covid-19 crisis and the aftermath of hurricanes Irma and Maria, Argentina, Creditors the Associated Press reported. Officials said Mexican Gov’t Warns they submitted a revised fiscal plan to the in Standoff as Deal board that oversees the U.S. territory’s finances States Against Jailing as the island braces for billions of dollars in Lockdown Violators Deadline Looms losses as a result of dwindling tax revenue and Mexico’s Interior Department on May 4 issued a drop in tourism, among other factors. In this a warning for state governments not to use Argentina’s government and its largest bond- and the following fiscal years, the coronavirus prison terms to enforce stay-at-home orders to holders continue to be at odds over plans to fight the coronavirus pandemic, the Associated restructure $65 billion in foreign debt, with Press reported. The warning came after the neither side showing signs of budging as the Querétaro state legislature passed a bill es- deadline to reach a deal looms, Reuters report- tablishing prison terms of four to six years for ed. Three major credit groups on May 4 reiter- people who violated the lockdown measures. ated their rejection of the offer the government The Interior Department said the law was presented in April, whose deadline is May 8. disproportionate, possibly unconstitutional and The three groups, which represent some of discriminated against the poor. the world’s largest institutional investors such as BlackRock and Fidelity, had already said Marrero // File Photo: Commonwealth of Puerto Rico. in separate statements that they would reject the deal, with some calling it “unacceptable” pandemic will cost the Puerto Rican economy IMF Approves $643 Mn and not a product of “good faith” negotiations, approximately $6.6 billion, which makes it in Emergency Aid for the Financial Times reported. On May 4, the impossible for the territory to pay its debt, said Ecuador to Face Pandemic groups issued a joint statement to “make clear Omar Marrero, the executive director of Puerto that they cannot support Argentina’s recently Rico’s Fiscal Agency and Financial Advisory The executive board of the International launched exchange offer,” saying the offer Authority, El Nuevo Día reported. “Puerto Rico Monetary Fund has approved $643 million in requires bondholders to “bear disproportionate must be realistic and prudent in conserving emergency assistance for Ecuador to address losses that are neither justified nor necessary.” its resources in preparation for unknown and the Covid-19 pandemic, the Fund said May Meanwhile, the government has been clear unexpected events that are becoming increas- 1. Ecuador had requested the aid under the that it cannot afford to sweeten the deal, ingly inevitable,” the new plan states, the AP Rapid Financing Instrument. The money will which includes a 62 percent haircut on interest reported. The government cited the costs of go toward supporting the country’s balance of payments worth almost $38 billion, as well dealing with recent earthquakes, the latest of payment needs and its most affected sectors, as a 54 percent reduction in the face value of which was a 5.5 magnitude one on May 2. including the health care system.

FEATURED Q&A / Continued from page 3 FINANCIAL SERVICES ADVISOR is published biweekly by the Inter-American Dialogue, Copyright © 2020 creating what may prove to be an example attracted to the prospect of joining a long of disruptive innovation as the fintechs line in a physical bank to do some trivial Erik Brand create a new market and value network transaction that could otherwise be done on Publisher [email protected] and then scale up to compete directly with the web, even assuming that social distanc- established financial institutions. Aiding ing is strictly enforced. However, like most Gene Kuleta Editor these new players has been the innovative Covid-19-induced change, the open question [email protected] regulatory scheme in leading countries is whether these behaviors are temporary or Anastasia Chacón González such as Mexico and Brazil, lowering the permanent. Population demographics and Reporter & Associate Editor barriers to entry for these new players in the length of the emergency will both play [email protected] the lending markets. At the same time, the significant roles in answering this question. Covid-19 crisis has forced the incumbent And then, of course, there is ‘la banca.’ Will

players into remote working, which often has it embrace the change (like lower costs Michael Shifter, President meant using digital resources to replicate from fewer branches) or resist it (because Rebecca Bill Chavez, Nonresident Senior Fellow the traditional bank branch and lending it is being disintermediated by more agile Sergio Bitar, Nonresident Senior Fellow processes while out of the office, instead of fintechs)?” Joan Caivano, Director, Special Projects undergoing a digital transformation to enter Michael Camilleri, Director, Rule of Law Program these newer, but lower margin, markets. As Fabrice Serfati M., managing Kevin Casas-Zamora, Nonresident Senior Fellow such, Covid-19 is providing a tailwind for director and partner at IGNIA Héctor Castro Vizcarra, Nonresident Senior Fellow fintech challengers and also is hindering the Partners: “The pandemic has Julia Dias Leite, Nonresident Senior Fellow incumbents from meeting their challenge.” A significantly increased the Ariel Fiszbein, Director, Education Program usage of payment solutions. The impact on Peter Hakim, President Emeritus Wally Swain, principal consul- business-to-consumer fintechs has been Nora Lustig, Nonresident Senior Fellow tant for Latin America at Ovum: quite relevant and, in many cases, has Margaret Myers, Director, Asia and Latin America Program “Perhaps no commercial insti- improved the unit economics by increasing Manuel Orozco, Director, Migration, A tution typifies Latin America’s the average balance per account holder as Remittances & Development conflicted relationship with the past and well as the number of monthly transactions Xiaoyu Pu, Nonresident Senior Fellow the future as much as the banking industry, per user, both important drivers of revenue Jeffrey Puryear, Senior Fellow often referred to in Spanish as a monolithic for these companies. Some fintechs have Mateo Samper, Nonresident Senior Fellow (and singular) ‘la banca.’ Bank branches reacted to this evolving situation by improv- Tamar Solnik, Director, Finance & Administration cluster around street corners, credit- and ing their product offerings. For example, Lisa Viscidi, Director, Energy Program debit-card penetration are low, and the use Mexico’s Fondeadora has continued to Denisse Yanovich, Director of Development and of cash is widespread. The latter habit is acquire customers by providing them with External Relations hard to change because of Latin Americans’ a digital card. Not sending them a plastic Financial Services Advisor is published low level of trust of individuals and govern- card has increased the profitability per user. biweekly, with the exception of major holidays, ments. Cash is thought to be more secure The increase in electronic payments has by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 and certainly harder to trace. At the same also affected business-to-business fintechs Washington, DC 20005 time, there is also a growing and vibrant fin- that enable payment services for digital www.thedialogue.org tech sector, vigorously opposed—or aggres- platforms. That has been the case of Arcus, ISSN 2163-7962 sively coopted—by ‘la banca.’ The pandemic which has seen its number of client trans- Subscription inquiries are welcomed at should be the ideal vector for change—espe- actions grow significantly. Mobile payments [email protected] cially for reducing the use of paper money, are all about transparency and convenience which is a significant transmitter of the for the end user. This pandemic has accel- The opinions expressed by the members of the Board of Advisors and by guest commentators do not necessarily virus. Automatic teller machines are also a erated the adoption rate of digital services, represent those of the publisher. The analysis is the sole potential source of infection. Pre-paying for including payments. This trend will not be view of each commentator and does not necessarily represent the views of their respective employers or firms. my lunch by credit card means I do not have reversed. There are areas in which traditional The information in this report has been obtained from to interact with the delivery person, except to banks can complement fintechs in providing reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have receive the bag of food. With deadly airborne services to customers rather than trying to any questions relating to the contents of this publication, particles floating about, I am even less compete with them.” contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permis- sion from the publisher.