We wrote about the CFO in crisis mode and the need for better software to be built for the finance suite. If the average CFO is in a crisis, the emerging markets CFO serve are in an even bigger crisis! In LatAm for instance, existing legacy systems are even more fragile, as APIs to extract banking information generally don’t exist, payment methods are more fragmented (across banks, digital wallets and cash), and every market has its own regulation (or lack thereof!) This lack of infrastructure not only makes everyday financial tasks difficult for companies, but adds another layer of complexity to the already challenging tasks of fraud detection and credit underwriting.
I got a glimpse of some of these challenges when a portfolio company of ours operating in multiple countries told me they hired an intern to log in to multiple business bank accounts and manually record the balances in a spreadsheet several times per day. They did this because there wasn’t an API where the company could extract their own financial information across the banks they used in a standardized and real-time way.
Take a more complex case: a payment service provider (PSP) who accepts payments from multiple sources including credit cards, wallets, bank transfers, Cash from Oxxo, and other local processors (e.g., Mercado Pago, Flutterwave). In order to fully verify and reconcile payments across all these sources the PSP created:
A payment operations team where members manually log in to each payment source every 15 minutes to verify the payments have gone through.
An audit team who logs in to each source to perform an offline reconciliation.
An accounting team who logs in to each source to download different formats (PDF, OFX, TXT) required for audit.
Support teams who would often need to also log in to verify data for customer issues.
And finally an operations team would need to log in to ensure each account was running correctly!
We wrote about the CFO in crisis mode and the need for better software to be built for the finance suite. If the average CFO is in a crisis, the emerging markets CFO serve are in an even bigger crisis! In LatAm for instance, existing legacy systems are even more fragile, as APIs to extract banking information generally don’t exist, payment methods are more fragmented (across banks, digital wallets and cash), and every market has its own regulation (or lack thereof!) This lack of infrastructure not only makes everyday financial tasks difficult for companies, but adds another layer of complexity to the already challenging tasks of fraud detection and credit underwriting.
I got a glimpse of some of these challenges when a portfolio company of ours operating in multiple countries told me they hired an intern to log in to multiple business bank accounts and manually record the balances in a spreadsheet several times per day. They did this because there wasn’t an API where the company could extract their own financial information across the banks they used in a standardized and real-time way.
Take a more complex case: a payment service provider (PSP) who accepts payments from multiple sources including credit cards, wallets, bank transfers, Cash from Oxxo, and other local processors (e.g., Mercado Pago, Flutterwave). In order to fully verify and reconcile payments across all these sources the PSP created:
A payment operations team where members manually log in to each payment source every 15 minutes to verify the payments have gone through.
An audit team who logs in to each source to perform an offline reconciliation.
An accounting team who logs in to each source to download different formats (PDF, OFX, TXT) required for audit.
Support teams who would often need to also log in to verify data for customer issues.
And finally an operations team would need to log in to ensure each account was running correctly!
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