The rate of residents opening a bank account in Latin America has notoriously lagged with
only 342 million adults in the region having a bank account, that’s a 55% average. Instead, this population has
long preferred dealing with cash versus managing money through traditional banking systems for various reasons.
However, since the pandemic when social distancing was the norm, cash has become less common around the world with growth accelerating across e-commerce markets. Therefore, more and more people in this region may consider opening a bank account for the first
time to safeguard their money and create more cashless opportunities for themselves.
But some traditional financial institutions in Latin America don’t always make it easy on people to open an account. Depending on where you’re located, there can be extensive forms of paperwork or multiple forms of identification needed to set up a bank
account. What’s more, requirements are inconsistent across the board as some banks may ask for your social security number or individual taxpayer identification number, and others may ask for a copy of a utility bill or require a minimum deposit.
It’s best practice to look at bank requirements extensively before applying for an account. But what does a person do if they are asked to meet unrealistic application standards like the following 3 shocking requirements?
1. Having a Landline in a World Dominated by Cell Phones
In countries like Ecuador, some
banks require an applicant to provide a landline phone number for a referral to confirm the applicant's identity. While contacting a referral may be common, landlines aren’t, primarily because more
Latin Americans communicate via mobile technology. In fact, boosted by the pandemic,
smartphone sales in the region were estimated at $134.35 million in 2021.
2. Providing a Reference That Has an Existing Account
In addition to a referral having a landline, in some cases, a bank might request 1-2 references from people that already hold an account with that bank. But such a reference may not be as readily available to applicants as many Latin Americans remain under
or unbanked. Contributing to the unbanked cycle.
3. Traveling Long Distances to Conduct In-Person Dealings
Another significant barrier to creating a bank account is accessibility. Financial institutions can be few and far between,
especially for those living in rural areas, requiring many Latin Americans to travel long distances to and from their nearest bank. Rather than conducting business online, some financial institutions require applicants to manage dealings in-person. Rather
than spend hours traveling during inconvenient times of the day to open an account, some people are choosing to remain unbanked.
Digital Banking Solutions Break Down Financial Barriers in Latin America
From distrust in traditional financial institutions to not having enough established savings, there are many reasons for why the unbanked remain as such. But unrealistic requirements from banks should not be a barrier for someone seeking financial opportunities.
With traditional institutions historically deemphasizing its focus on Latin America, fintech companies have recently spurred interest in this
region with the aim of creating greater financial inclusion for underserved communities.
The pandemic caused more people to turn to online banking, digital wallets and transfer options as a means to manage their money as person-to-person transactions lessened. Since, Latin Americans are continuing to seek these more modern money management methods
as they experience a greater wave of opportunity not previously provided. Additionally, Latin Americans are increasingly reaping the benefits of improved security, convenience and more that technology has to offer.
While cash remains king in the Latin American region, we can’t be sure of how long this sentiment will reign true. There’s a growing emphasis on digital transactions across global economies with no sign of slowing down. So, in a digital world, communities,
including those in Latin America, may have a stronger opportunity to break down barriers to financial inclusion through banking technology.