Latin America is the second
fastest-growing market in the world for mobile subscribers, behind Sub-Saharan Africa.
Of the region’s population of roughly 640 million people, there are already 415 million
mobile phone users- over half
of which (more than 200 million) are current smartphone users.
Recent predictions say that by 2020, 63% of Latin America’s population
will have access to the mobile Internet. These findings are crucial for both large international mobile providers as well as local tech companies, as the region’s demographic has proven itself to be highly adaptable (Nathan Lustig
Back in 2015 when only 32% of Latin Americans had a smartphone, Wharton published an article
naming Latin America “the next big mobile battleground”. The article predicted that up to 50% of the region would have access to the Internet via mobile devices by 2020. By 2018, this metric was surpassed, with research confirming that over half
of the region’s mobile users were accessing the Internet via smartphone.
This surge in mobile accessibility is largely the result of the declining price of smartphones. Tech giants like Samsung and Huawei have successfully driven the price of smartphones down to just $30 or $40 for a low-end model, effectively “democratizing
access”. Samsung is the biggest provider of smartphones in Latin America, capturing between one-fourth to one-third
of the market in the six largest mobile markets – Brazil, Mexico, Chile, Argentina, Colombia, and Peru.
“Latin America’s mobile market is one of the most lucrative in the world. In 2016, the mobile industry contributed US$260B
or 5% of the regional GDP. By comparison, the mobile industry only provides 2% of yearly GDP in the United States” (Nathan Lustig
Despite being the region’s second largest mobile market, only 90.3%
of Mexico’s population has access to mobile broadband connections- making it the only major economy in Latin America with a mobile connection penetration totaling less than 100% of the population. This disparity is a product of regulations that lowered competition in the country’s telecom services market, allowing America Movil’s Telcel
to dominate roughly 70% of the market
. Until recently, the lack of competition has created a barrier to entry for many Mexican consumers who could not afford mobile services.
Until recently, the majority of mobile money platforms were designed for “feature” phones rather than smartphones; based on the false assumption that the unbanked population could not afford smartphones. In Latin America, however, smartphone penetration has grown at 12%
per year, while the banked population statistic remains at a mere 2% growth rate per year.
“While Latin America’s fintech market shows promise for regional financial inclusion, the reality is that the majority of Latin Americans are still not using credit cards. As a result, app providers have not been able to monetize apps in the same way as they did in the United States” (Nathan Lustig
As the demographics of Latin America’s unbanked population change, there is now a large populace of unbanked, tech-savvy Millennials. While startups like Nubank
, and Latin Fintech
gain traction, mobile money efforts in the region may be on the rise.