Using mobile to reach the Latin American unbanked
As I’ve discussed here before, a key challenge we face in Latin America is our low rate of banking penetration. Common barriers for unbanked consumers include high fees, long distances for those in remote cities to the nearest bank branch, and lack of proof of income or a fixed address. And while these barriers aren't going away, new technologies are making them more and more obsolete, most notably with the growth of mobile payments.
A recent Nielsen survey indicates that Latin Americans stand out in terms of their willingness to use mobile phones as payment tools. Some 17% of Latin Americans would use their phones to make purchases at stores and restaurants if the device allowed it. That’s more than twice the 8% who felt the same in North America and Europe.
That sentiment certainly seems to hold true in Brazil, where we're seeing the rapid expansion of the smartphone market translate into a growth in mobile banking services. While 36% of Brazilians still do not have checking or savings accounts, Febraban (the Brazilian Federation of Banks) notes an explosion in mobile banking between 2010-2011, growing by a whopping 50% with more than 3 million new user accounts. Febraban anticipates that this number will continue to grow quickly, with the number of mobile banking customers matching those using internet banking within the next 5 to 7 years.
This trend offers a huge opportunity for Latin American lenders. I encourage you to read the post by fellow blogger Paul Swyny on how banks can leverage smartphone growth to improve customer communications and service, while decreasing costs. In retail lending, we are seeing increased use of mobile channels for product marketing and even payment scheduling and debt negotiation. Now more than ever, demand is high for geographic information systems, SMS response analysis algorithms, and mobile strategies and technology to best exploit this quickly growing channel.