Banks are the lifeblood of your business: fueling your operations, funding new facilities, and bringing M&A and other growth strategies to life. For your customers and supply chain partners, they’re vital to doing business with your company.
When your business spans many regions across the globe, today’s rapidly evolving banking sector spurs many questions, such as:
- What options, digital and traditional, are available in a given market?
- What’s the cost of capital, now and in the future?
- How might a growing array of external factors, from digital transformation to tariffs, trade wars, and related tailwinds— change this picture?
Knowledge truly is power when it comes to navigating the financial landscape. Understanding the banking environment of the markets you do business in will help you manage risk, leverage opportunity, and make the right choices about who to work with, where, when, and how.
Here’s an overview of things to watch, with a focus on Latin America.
A growing array of players, established and online
Latin America is home to some of the world’s largest multinational institutions, including Citi, UBS, BBVA, and Santander, and many of these institutions are expanding their regional footprints. “Banks need to grow, and there’s little room for that in markets such as China or Europe right now,” notes William Trout, director of securities and investments at Datos Insights. Inter-American Development Bank President Ilan Goldfajn declared at Davos that “investing in Latin America makes sense.”
The structured finance sector is anticipated to grow by roughly 5% in the year ahead, which is good news for companies with more complex needs. Meanwhile, mergers, acquisitions and consolidations are shaping the regional banking landscape. The Banker cited Paraguay’s Sudameris Bank and Colombia’s Banco Popular as two standouts for growth due to the former’s merger with Banco Regional and the latter’s acquisition of a controlling stake in Corficolombiana.
At the same time, non-traditional players continue to join the constellation of financing choices. “As we approach 2025, LatAm remains a fertile ground for fintech innovation,” QED Investors noted at the close of last year. “Driven by diverse market needs, regulatory shifts, and technological advancements, the region is poised to continue transforming its financial ecosystem.”
The fintech VC firm cited the following for the months ahead:
- A move to “lock in volume with a verticalized approach” for supply chain financing, by multinationals and regional players alike. “We believe 2025 could be a pivotal year for this trend.”
- The potential of fintechs to simplify credit and FX solutions for exporters, importers, and other intermediaries
- The potential of fintechs to streamline and expand capabilities for cross-border payments
- Regional integration as Brazil, Colombia, and Mexico become hubs for fintech solutions in trade finance
Open banking, where customer data is securely shared among authorized financial service providers, is a trend to watch.
“Within the LATAM region, Mexico and Brazil have rolled out open banking and API rules to increase competitiveness, efficiency, and data transparency,” payment solution provider ACI Worldwide pointed out in a recent blog. “Meanwhile, countries including Colombia, Argentina, and Peru are currently working on regulatory frameworks and creating environments to build, test, and review new products and services.”
Evaluating individual institutions
For a growth-focused global company, banking relationships are often complex, always mission-critical, and ideally long-term. For these reasons, it’s important to find the right fit and align yourself with a strong, stable, and forward-looking partner.
Global Finance highlighted its Latin American “2024 award winners” at the end of last year. In Colombia, for example, Banco de Bogotá stood out amid the economic deceleration and increase in nonperforming loans that hampered many of its peers. Farther south, Banco de Chile exhibited “best in class resilience,” and Argentina had its standouts as well. “By providing stability to clients during this period, Banco Galicia notched impressive growth in all asset categories,” the publication observed.
How can you conduct your own evaluation of banking partners, current and potential?
Delinquency rates, which impact underwriting standards, are one place to start, as are a bank’s service and asset mix. “In Peru, universal banks with a more diversified business model have done better during difficult circumstances,” Latin Finance pointed out. The publication also noted that at Banco Itaú in Brazil, strong performance in its investment banking, asset management, and insurance divisions helped to make up for a conservative approach to credit markets.
Take a look at the main players in a market and what’s driving their growth, such as investment banking at Brazil’s BTG Pactual and proximity to Brazil’s booming economy for Banco Itaú Uruguay and Banco Itaú Paraguay.
“Based on performance, six out of the top 10 best-performing banks overall in Latin America were Mexican,” The Banker noted in its own 2024 roster of top LatAm banks. For institutions such as Mexico’s Banorte and Intercam Banco, nearshoring has been cited as a driver. Will this trend hold in 2025?
“There is much hope that the Mexican economy will benefit from the nearshoring megatrend that is bringing supply chains close to the United States,” Latin Finance wrote in December 2024, citing the perspective of Jorge García, head of financial stability at Mexico’s central bank. “But García warned that factors like protectionism and an economic slowdown north of the border could have a significant impact on the banking sector.”
Don’t overlook the central bank
As the official overseers of a nation’s monetary supply and policy, from interest rates to digital payment platforms, the central banks in your markets of operation will undeniably have an impact on your company’s growth.
At the close of last year, Global Finance published its review of several central banks in Latin America. The details spurred a list of questions for analyzing the landscape and knowing what you’ll be working with:
- How responsive has the bank been to change, both in policy and in new programs and technologies (like the PIXinstant payment system installed by Brazil’s central bank)?
- Are changes signaled and communicated in a clear, timely fashion?
- What’s the health of the bank’s reserves? Conditions like a budget deficit may cause a nation to borrow in excess from their central bank, and problems here can have a chain reaction on exchange rates, debt servicing, and macroeconomic stability.
- Who’s in charge—and for how long? An upcoming presidential election, outgoing leader, or expiring board tenure could bring changes in fiscal policy.
One key area of central bank influence: interest rates. “Most central banks are expected to continue cutting rates this year, with Brazil a notable exception,” America’s Quarterly noted in January 14. Developments since then in the trade and tariff landscape may complicate this picture, however. If a central bank believes that tariffs could have an inflationary effect, for example, even in the short term, rate cuts may be less likely.
Evolving rules of the road
The financial services industry is one of the most highly regulated in the world, and the customers of corporate banks feel the impact in two ways. The first is in higher borrowing costs and fees as banks pass along the cost of compliance to their customers. The second is through the increased confidence that comes with having established, acknowledged, and enforced rules of the road.
In Latin America’s evolving regulatory landscape, “regulators will be busy in 2025 with a backlog of regulatory updates to get discussed, negotiated, and implemented,” QED Investors reported, with priority areas including data protection and privacy, real-time monitoring and reporting, AI, AML/KYC, and fraud management, especially as digital payments grow.
One development that’s been on everyone’s radar has been Basel III, what PwC calls “the next generation of capital requirements” for banks. This incremental set of measures, developed by the Basel Committee after the 2007-09 financial crisis, aims to strengthen the regulation, supervision, and risk management of banks. This year marks Basel III Endgame, when the final suite of rules comes into play.
In fintech, regulations have been emerging on a national level, including Peru’s Financial Portability Bill, facilitating the exchange of data and financial information between institutions to give individuals and businesses more banking options, and Mexico’s Fintech Law, which has covered open banking, crowdsourcing, electronic funds transfer, cryptocurrencies, and more since 2018.
“As these technologies evolve, so do the regulatory frameworks that govern them. For businesses, understanding these regulations is the key to success,” cautions international payment processor Payop. “Get them wrong, and you risk fines, operational shutdowns, or customer distrust. Get them right, and you open doors to new opportunities, smoother cross-border operations, and a broader customer base.”
Specialized consultants can help your business find—and optimize—the best financing sources for your global business. For more information, contact us.