Connectivity democratises society, and non-connectivity is a new form of poverty: digital poverty. The pandemic has highlighted this inequality and governments across Latin America are looking at digital infrastructure to bridge the gap.
Businesses are also seizing on this opportunity – for the first time the most valuable company in the region is not a mining or oil company, but rather an e-commerce platform: Mercado Libre.
Traditional industries are being forced to adapt to this digital shift, or face growing irrelevance. For example, the 107-year-old Colombian bank Banco Caja Social has been working with Backbase, a fintech software provider, to accelerate their digital transition.
The Head of product expansion at a Mexican bank believes technology will drive accessibility to banking in Latin America, “Digitalisation will make the industry more inclusive, to begin by minimising costs, maximising scalability and minimising risk because the risk indices in the financial sector get much smarter when you use artificial intelligence and algorithms. You can have large-scale risk analysis at low-cost.”
“Digitalisation will make the industry more inclusive, to begin by minimising costs, maximising scalability and minimising risk.”
Head of product expansion, Mexican Bank
Other firms are exploring new collaborations as a way to capitalise on digitalisation. A Director at Telefónica Movistar explains the rationale for their collaboration with Banco Sabadell to offer credit to Movistar’s clients, “2020 has left us with greater digital adoption, which is a unique opportunity to accelerate [Mexico]’s ‘bankarisation’. With Banco Sabadell, our priority is to innovate new relationship models with the support of strategic partners.”
Democratisation of digital services could accelerate economic recovery, but the government has to be aligned with business and that is not always easy in Latin America. The Head of technology at a Mexican bank explains his frustrations, “We see all kinds of opportunities for international partnerships and collaboration but there are numerous legal barriers in each geography. Banking the entire population is hard because it goes into issues of legality, taxation and informality – it cannot be achieved without the right government policy.”
“Banking the entire population is hard because it goes into issues of legality, taxation and informality – it cannot be achieved without the right government policy.”
Head of technology, Mexican bank
The pandemic has accelerated digitalisation but to truly capitalise on this jump-start there now needs to be investment in digital infrastructure and modernisation of government policy. After all, the main barrier to the widespread adoption of digital services remains the capacity for countries to provide high quality internet connectivity at affordable prices.