For over a decade, Olga has served as the trusted lottery ticket seller in the Mercado Gran Colombia neighborhood in Guayaquil, Ecuador, earning a steady income through cash transactions. The challenges posed by the pandemic in 2020 compelled her to swiftly adapt for the survival of her business. Olga promptly embraced digital solutions, leveraging alternative channels provided by her bank to facilitate digital payments and minimize cash transactions. Her story is a testament to the remarkable surge toward digitalization among microbusinesses across Latin America, reshaping both the banking landscape and local livelihoods.
Digital financial services are now part of doing business as usual. The pandemic definitively altered consumer behaviors and accelerated the move to digital. Latin America’s financial services sector is experiencing one of the largest digital transformations in the world.
In Ecuador and across Latin America, digital banking levels have notably increased, leading to exponential growth in financial transaction volumes and the frequency of interactions between customers and financial institutions. According to the Global Findex 2021, 73 percent of adults in Latin America had accounts at financial institutions in 2021, an increase of 18 percent from 2017 — the largest increase among developing regions. Additionally, the Global Findex found that 40 percent of adults made digital payments to retailers, and 14 percent of adults made these digital transactions for the first time during the pandemic, evidencing the growing importance of digital payments in the region.
What we’ve learned about embarking on a digital transformation journey
Digital transformation is not just about implementing new tools, but about working and thinking differently. Accion’s Digital Transformation Framework identifies four dimensions that every institution must consider in their digital transformation journey: business model, customer experience, people and processes, and technology and data (enablers). Using this framework, Accion Advisory surveyed 18 financial institutions in Latin America, including Colombia, Ecuador, Perú, Guatemala, Paraguay, Mexico, Honduras, El Salvador, Nicaragua, and Bolivia, in 2022 and 2023 to assess their digital maturity. We identified people and processes and customer experience as the main challenges for institutions in the region, followed by the lack of availability and integration of technology and data, and the absence of a business model focused on digital.
How people and processes propel transformation forward
The digital maturity study indicated that 47 percent of financial organizations still depend on manual processes and that employees who interact with customers only have basic digital skills. They have difficulty using digital tools and do not make digital payments themselves. This underscores the crucial importance of upskilling employees to improve their digital skills and capabilities and create efficiencies
The transition to a digitally transformed organization requires structured training plans along with policies and processes that enable the new way of working. The need for a culture of innovation becomes even more necessary considering the significant limitations in digital skills and the dependence on manual processes in many organizations. A culture of innovation recognizes the importance of digital transformation and creates an environment that encourages adaptability and proactive adoption of new technologies. Investing in training and development programs to improve the digital skills of employees who interact directly with the end customer is a fundamental pillar. By fostering a culture that values and promotes innovation, organizations can overcome resistance to change, allowing for a smoother transition to automated processes and advanced technologies. This change-oriented mindset will not only drive operational efficiency but also strengthen the workforce’s ability to fully take advantage of the opportunities offered by the ever-evolving digital environment.
Our study also found that 29 percent of institutions have multifunctional teams and automated processes, indicating that institutions are betting on a transformation that comes from the inside out, where human talent and process organization play a very important role. The combination of these elements improves productivity and quality of work while supporting the cultural change needed for institutions to quickly adapt to market changes and remain competitive. Integrating diverse skills and perspectives into teams encourages collaboration, drives innovation, and accelerates problem-solving and decision-making. Additionally, automating processes streamlines operations, reduces errors, and increases overall efficiency.
Implementing policies and processes that build operational efficiencies and empower employees to work and think differently will automatically improve the customer experience. Customer-facing teams who have experienced the efficiencies that digital tools offer and are skilled in using these tools can provide more effective customer service. They also have a greater ability to encourage end customers to use digital products and services.
According to Prosci, converging people, culture, and strategy is expected to continue trending in the change management discipline over the next five years, meaning more emphasis on the human side of change. Organizations will likely witness a more concerted effort to align the workforce with overarching strategic objectives. This involves cultivating a culture that supports the desired strategy as well as understanding and addressing the needs, concerns, and motivations of employees throughout the change process. By focusing on people and processes first, organizations will not only achieve cost savings through operational efficiencies but also elevate service quality to stay ahead in an increasingly competitive environment. Meanwhile, customers like Gloria can realize the benefits of using digital tools and grow their own businesses.