Smartphones' strong potential in Latin America will give further rise to fintech solutions
Smartphone adoption is consistently strong across Latin America and according to a new report from GSMA continues to see rapid growth despite affordability challenges. In light of the region’s smartphone popularity and its large unbanked population it’s no surprise that fintech is filling the gaps of financial inclusion in the region.
The facts from GSMA report
According to “The Mobile Economy – Latin America and the Caribbean 2018” report smartphone adoption’s growth continues at a regional level with rapid rates. While at the beginning of the decade smartphone adoption was only 5%, at the end of 2017 it represented 62% of total connections and smartphone connections reached 417 million. In the first half of 2018, adoption has increased a further 2 percentage points, reaching 64%.
Smartphone adoption is consistently strong across the region and is set to accelerate in key markets including Chile, Colombia, Argentina and Peru. In the region’s largest market, Brazil, smartphone connections stood at 171 million in mid-2018 – 40% of the region’s total smartphone installed base.
Smartphones represent three quarters of total connections in the country, and are forecast to reach 86% by 2025. From a regional perspective, a further 189 million smartphone connections are expected to be added in the period out to 2025, boosting the adoption rate to 78%.
Smartphone penetration goes hand in hand with fintech market
While mass-market adoption of smartphones is a relatively recent phenomenon in LatAm, the region has grown to one of the highest rates globally and especially among younger generations. At the same time, mobile financial services meet great demand in the region, due to various reasons, such as the volume of underserved population or the general distruct of banks especially after the financial crisis of 2007-2008. Fintech in Latin America is flourishing with much activity concentrated on segments like payments, lending, personal finance and remittances. Furthermore, services like handset loans lead to multiple benefits. They can push smartphone penetration forward, making the acquisition of a device more affordable and as a result more people can have access to digital highways.
Latin America is another example of emerging markets, where individuals turn to mobile- and digital-first products and services that are better tailored to their circumstances.
However, there is plenty of room for further progress as the region still holds one of the biggest percentages of unbanked population worldwide. According to G2 Ground’s latest report, almost 250 million adults in LatAm (65%) remain unbanked.
Both smartphone penetration and fintech in Latin America are not without their challenges and there is still a great deal of work to be done to achieve their goals. One of those challenges is common for both sides. A flexible policy framework designed to provide certainty and predictability, ensuring that companies continue investing in networks and services and that users can access the benefits of digitization.
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