Em Conversa: Banking as a Service with NovoPayment

Em Conversa tries to uncover the secrets of Latin America (LatAm) which has caused fintech market to boom, from being worth less than $50 million in 2016, to $2.1 billion in 2022. This week we spoke to Anabel Perezpresident and CEO of Miami-based, NovoPaymentto understand the importance of Banking as a Service (BaaS) in a growing region.

NovoPayment, a BaaS platform organization across the Americas, enables digital financial and transactional services to support diverse use cases. The company’s banking-class solutions use APIs and other flexible delivery models to help banks, financial institutions, merchants, networks, marketplaces, neo-banks and other financial service providers leverage their existing systems to generate new deposits, transaction flows and customer experiences. Anabel Perez, the company’s CEO and president, is a member of Forbes Finance Advicean entrepreneur, and the first Latin American woman recipient of the Paybefore Industry Achievement Award for her contributions to the payments space and financial inclusion, Perez is relentless in her pursuit of finding ways to bring financial services to new places and moments in people’s homes.

She has expanded NovoPayment’s reach to six countries and more than 72 distributions, reaching +10,000 enterprise platform users and 2.5 million end users across the Americas.

To further understand how the platform can benefit LatAm, as well as the impact BaaS has had on the region more broadly, Perez sat down with The Fintech Times:

Can you tell me about the company and your role in it?

I am Anabel Perez, co-founder and CEO of NovoPayment. We are a bank as a service provider, which makes it possible for both incumbents and disruptors to build and distribute new finance and payment cases. Typically, our customers are large financial institutions, small banks and neobanks. We serve buyers as well as businesses that are very interested in the concept of embedded finance. We have a range of services that make us unique: we have data banking, payments and infrastructure solutions so you can build an entire neobank with us, or we can help anyone in the room complete their technology stack so they can compete and/or enter a new segment or expand into a new geography. The company serves the US and LatAm – with our platform fully integrated in 14 markets.

All payments or neobanks looking to expand to the US or Latin, we make sure we find the right partner to complete payments faster and more efficiently while complying with regulations.

How has banking as a service evolved in Latin America?

Banking as a service, as a sector, plays a crucial role in creating neobanks and in turn fintech unicorns across the region. We build financial APIs into critical business processes – not only in banks, but also in the customers the bank serves. So banking as a service has become the invisible engine, and the great enabler of new innovation models.

Of course, the markets have adopted it differently. Certain markets are more familiar with the concept of externalizing IT components, especially when it comes to the cloud. Other markets are following the movement in a very progressive way, adopting the formula of complementing traditional technology stacks with cloud-based finance and payment technology stacks.

What are some trends you’ve seen in the LatAm market?

There have been different trends. The most important has been, many fintechs have built innovative solutions to fill gaps left by the traditional incumbents, across different verticals: in data lending, including Buy Now, Pay Later; In acquiring new customers, many new banks have focused on capturing the underbanked and unbanked population; financial super apps, offered by lifestyle apps or merchant apps where you can find not only financial products, but also other types of services, including entertainment.

There has also been a lot of use of remote, secure commerce, thanks to the hard work of many payment processors. The LatAm market loves to buy online, so we have seen a lot of expansion and adoption in data transactions and also in the payment space. Many markets have adopted NFC – proximity payments were generally more for typical transit cases, but today it has been extended to almost all types of transactions.

What have been some of the biggest challenges NovoPayment has faced when expanding?

Since its inception, the company’s goal has been to go global and quickly digitize America. We were born in a big moment, the conversion to cloud technology, API technology and mobile technology gave us the opportunity to expand.

I’ve created an expansion playbook where our customers are the driving force behind expansion. We have a policy that we do not enter new markets unless we have a customer there or we work with a partner. Then from Miami we expanded to Peru, to Colombia, to Mexico, Venezuela and more. We are also active in the Caribbean and Central America.

Part of the hard work in what we’ve done is that it’s very difficult to implement, not only the platform in 14 markets, but we also have to do a lot of localized integrations. So, for example, if you’re an EU, UK, fintech or bank looking to expand into LatAm or the US, when you connect to NovoPayment, you’re connected to the entire region. And this is not a marketing phrase. It is a fact: we have been able to integrate with a local financial payment ecosystem in each of the markets where we currently provide services.

So in terms of challenges, as I mentioned, the LatAm market is very fragmented with different regulations. Regardless of this, financial services follow best practices in terms of data security, data integrity and availability and reliability of services. We have followed the highest standard since our inception. That is why we have been able to get regulatory approval in the majority of the market. The challenge has always been how to maintain growth while following best practices and standards.

What does NovoPayment’s roadmap and growth plan look like?

Nonstop work in our existing markets! There is still room for us to improve. In the markets, we have already done all the integrations, our customers love us, so they want to work and grow their business with us. We are now dedicating additional resources to support a key strategic account, help our customers navigate their journeys and of course expand here in the US, where there is also a tremendous opportunity, particularly within the community banking and credit union segment.

Part of the reason I visited the UK and London recently was that we want to start expanding into that market as well. I wanted to introduce NovoPayment as a reliable partner, for those fintechs who are ambitious to go global. You do not need to replicate what you have done in your country abroad because you can use our platform as an extension of your original platform to be able to reach new markets and segments.

What needs to happen to ensure that the LatAm boom is not a trend, but continues to see ongoing success?

I think that will be a continuing trend because, as I mentioned, we are a population that is fully connected to the internet, which is a demographic that also represents a huge opportunity. Many remote workers are based in LatAm and provide services to global companies, also exposing them to our players.

We have more cities in LatAm with more than one million inhabitants compared to the US, so as you can imagine, the opportunity for many models to flourish, especially in the gig economy, or delivery, urban mobility. These are facts that will enable the region to continue to grow and innovate.

Convenience and time savings are extremely strong drivers for the adoption of converging technologies, especially in the financial services and payments space, so you will continue to see more than before. More technology inclusion, more financial inclusion and more examples of innovation from LatAm to the rest of the world.