Peru’s BanBif has partnered with Finastra to modernize its trade finance services, reflecting Latin America’s rapid digital payments growth and push for more efficient cross-border trade. The move is expected to enhance management and monitoring of letters of credit, documentary collections, and guarantees.
The partnership between BanBif and Finastra will utilize Finastra’s Trade Innovation and Corporate Channels to modernize BanBif’s trade finance offerings. This development comes as Latin America presses ahead in digital payments, although progress is complicated by heterogeneous regulatory approaches.
Latin America, a market of nearly 700 million people with an annual export value of over $1.3 trillion, is advancing swiftly in digital payments. Since 2020, the number of fintechs operating in the region has doubled, and from 2019 to 2023, electronic transactions in the region tripled.
Vinay Mendonca, Vice President of Product Management, Trade, and Supply Chain Finance at Finastra, noted that the digital capabilities from the partnership will deliver simpler, faster, and frictionless solutions as volumes grow to enable smoother cross-border trade. He emphasized the importance of financial institutions in driving international commerce, which they will continue to do.
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The move is part of a broader trend of LatAm financial institutions investing in digital infrastructure. In retail, for instance, by 2025, at least 17 countries in the region had adopted a fast retail payment system to enable real-time or near-real-time payments, and 11 of the 17 explicitly included interoperability requirements in their regulation.
Interoperability remains a significant challenge, with differing approaches to regulatory enforcement across the region. Certain countries such as Chile, Uruguay, and Peru rely on the private sector for fast retail payment system adoption, while others like Brazil and Argentina have opted for public systems.
A 2024 survey by the Inter-American Development Bank and Finnovista found that scalability, access to finance, the implementation of new solutions, product and service commercialization, cybersecurity, and the regulatory environment were the key barriers affecting fintech performance in the region. 38% of surveyed fintechs found current regulation supported their operations, whereas a growing number found them to be too stringent.
Developments in the region’s digital payments foundation lay an encouraging base to build cross-border payments upon. As the region continues to grow and invest in digital infrastructure, it is likely that increased collaboration and innovation in the trade finance sector will occur, potentially leading to more efficient and streamlined cross-border trade.
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Financial institutions across Latin America play an increasingly important role in the global economy. The adoption of digital solutions like Finastra’s Trade Innovation and Corporate Channels will drive international commerce, helping them become more efficient.
The digital capabilities from the partnership will have a positive impact on the region’s trade finance sector, allowing for more efficient and streamlined cross-border trade, which is essential for the region’s growth.
It is a step towards modernizing trade finance services.