The "growth for the region", indicated in the report "Connected: Digital technologies for inclusion and growth", of the World Bank points out that the salvadoran economy will grow 2.8% in 2023 and 2.3% in 2024.

Technology is driving solutions to accompany financial institutions in adopting a more agile approach to become more inclusive with their users globally. This goal is today one of the most important in the sector, precisely to meet the needs of people in the use and access to financial tools to strengthen the economy.

In this regard, a Harvard Business Review Analytics survey on opportunities in financial services highlights that 39% of respondents were looking to improve customer satisfaction as one of the main business objectives in terms of digital transformation in 2022. The study also forecasts that in the coming years, technology investments will focus on business process automation (61%), artificial intelligence and machine learning technology, digital assistants/bots (39%) and digital automation to manage IT operations (33%).

Thus, the incorporation of Web3 technologies such as blockchain and asset tokenization are growing within the financial system precisely because of their ability to make financial institutions more agile, efficient, reduce operational costs and improve profitability. This is especially important when it comes to developing innovative products and services to reach previously unexplored or underserved market segments, as well as to boost interoperability, an aspect that appears in models such as Open Banking and Open Finance.

"In El Salvador there are banks that use tokenization of different assets through blockchain technology in order to make transactions more agile. This represents a better tool for banking operations as it eliminates the friction of the different languages within the system. In Central America, there is a great opportunity to grow through this channel due to the great economic activity in the region, especially now that transfer methods are expanding", said Carlos Alfaro, head of Business Development at Koibanx, a leading company in asset tokenization using blockchain technology.

The financial world becomes more agile  

Heading into 2024, some trends focused on Web3 and the banking sector are already on the horizon:

Diversification of Tokenized Assets: More asset types will be tokenized, not just limited to real estate or art, but also assets such as private company shares, debt, commodities, and even intangible assets such as intellectual property rights.

Evolution of DeFi: Decentralized finance (DeFi) will continue to mature with the emergence of new protocols, scalability solutions and greater integration with traditional financial products.

Crowdfunding: has become more accessible thanks to Blockchain technology. This offers transparency, security and global access by allowing the issuance of tokens representing participation in a project. Thus, more people can invest by dividing assets.

Loyalty 3:0: The evolution of loyalty programs towards what has been called "Loyalty 3.0" integrates technologies such as Blockchain to improve speed and personalized user experience. We will see gamification campaigns to dynamize the transactionality of loyalty points and that loyalty points can be used in a wider network of affiliated merchants or programs without closed data restrictions.

Democratization in remittances: financial institutions will bet on this technology to reduce settlement time to minutes or even seconds and facilitate access to financial services, opening up opportunities for underserved or underserved communities.

Integration of Emerging Technologies: The integration of artificial intelligence and data analytics will transform the way financial institutions deliver services, further personalizing the customer experience.

Smart Contracts: Finally, this is one of the most exciting innovations in the Blockchain space because of the great potential to streamline banks by automating and guaranteeing the execution of agreements in a transparent and secure manner.

"The Fintech ecosystem in the region is actively growing. Banks are increasingly defining themselves as participants in an ecosystem in collaboration with fintechs and not as traditional buyers or customers of technology products. These factors show a scenario where having Blockchain solutions that provide an interoperable, transparent technological layer that guarantees the issuance and management of different assets without altering the power relations or competition between financial product providers is becoming increasingly important. There is no doubt that blockchain and Web3 are already becoming a strategic pillar in the dynamics of the financial system and its strategy for the coming years, as are identity and data management", concludes Leo Elduayen, CEO of Koibanx.

The outlook for the country's financial sector innovation through Blockchain is positive, taking into account the current economic cycle and new emerging market trends.

Translated by: A.M