Mobile is beginning to take center stage in financial services in Latin America.
After addressing hundreds of IT and banking executives from throughout Latin America gathered for their annual meeting in Panama last week, several executives brought up the issue of who will dominate mobile payments in the future.
There are numerous mobile payment schemes underway in the U.S. market. These include Google Wallet using NFC (Near Field Communication), PayPal and Square, which just raised $200 million, among others.
In the U.S., the launch of Isis — the joint venture with Verizon, AT&T and T-Mobile — was delayed this week while the executives at the three-day CLAB Banking IT Conference in Panama looked to determine the role of carriers there. The annual conference was sponsored by the Latin American Federation of Banks.
But unlike some markets, parts of mobile in Latin America are developing somewhat differently.
Mobile penetration in Latin America is relatively high, exceeding 107% of the population — although markets differ, with Panama’s mobile penetration at 204%, as one example. Some other examples, according to the International Telecommunications Union (ITU):
- Brazil: 251 million mobile phones, 203 million people
- Colombia: 45 million phones, 43 million people
- Argentina: 57 million phones, 42 million people
- Chile: 22 million phones, 17 million people
- Venezuela: 29 million phones, 28 million people
By the end of last year, 20 countries in Latin America had more mobile subscriptions than total inhabitants and 20 countries accounted for 98% of all mobile subscriptions.
But the key stat in relation to mobile is that Latin America households with Internet access number only 29%, according to ITU.
This means that a significant number of people will have Internet access through mobile devices rather than computers, with huge implications for the bankers at the Panama meeting.
During a discussion forum, many expressed a fear that the carriers would get involved in mobile payments, to which the carriers answered that they would not. Their main argument was they were too busy running and growing their own businesses to want to wade into the bankers’ space.
Many financial services firms are focusing on the developing markets in what they refer to in Spanish as ‘Bancarizacion’ — getting more people to choose banking services rather than non-banking services.
This is why mobile payments are of such significance in the region, since whoever dominates the payments space can potentially become the first financial services (or banking) experience for millions of people. The bankers are working to ensure they fulfill the coming market capabilities.
We noticed some other differences in markets while in Panama. For example, a large number of people in the audience use Viber, the app reportedly used by 100 million people around the world to make free international mobile calls.
BlackBerry still commands a significant presence in some of the countries, for various reasons. And only a small number of people used Twitter during the conference, unlike many mobile conferences in the U.S. where Twitter is more heavily used.
There also are several noticeable similarities in mobile usage in Panama. At the Panama Canal, most visitors from various geographies used their phones to take photos and videos of massive ships making their way through the canal.
Handing both my iPhone and my Samsung Galaxy Nexus to total strangers to take a photo at the canal, no one needed any verbal directions in any language to know what to do.
Some parts of mobile are instinctive, by anyone anywhere in the world — no matter what the business market situation.