Buenos Aires — Argentina has the lowest penetration of digital banking services among the four largest economies of Latin America, according to a survey published Thursday by Rapyd, a global Fintech-as-a-Service company.
- How many Argentines use them? 89% of Argentine banking customers reported using them regularly, compared with 98% of Brazilians, and 94% of Mexicans and Colombians.
Despite the region still having a large ‘unbanked’ population, the survey, carried out among 1,000 active banking customers in Mexico, Colombia, Argentina and Brazil, revealed “a strong and growing preference for digital services, setting the bases for continuous growth in all of Latin America.
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Payment Apps and Social Commerce
The trend toward digitization at a regional level also reflects the growing number of non-banking payment apps. Ninety-six percent of Mexicans and Brazilians, 87% of Colombians and 84% of Argentines regularly use apps such as PayPal, Modo and MercadoPago, among others.
The survey also found a rapid adoption of social commerce, with the use of social networks such as Facebook, Instagram and Twitter as platforms for promoting and selling products and services, and a notable increase in purchases. More than 50% of consumers surveyed reported having made social commerce purchases, 40% identified a greater variety of payment methods as an important factor that led them to make such purchases.
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When making social commerce purchases, bank transfers are the dominant method in Colombia and Mexico. In Argentina, bank transfers are tied in first place as the most-used method along with cash payments in convenience stores. Only in Brazil do bank cards continue to dominate, with credit cards the most popular, with 67%.
Although social commerce continues to lag behind traditional e-commerce, with more than 55% of consumers in Latin America expressing their preference for traditional channels of e-commerce, it is likely that that statistic will change as social media broaden their acceptance of payment methods to include cash vouchers and digital payments, according to the study.
- Analysis: “Latin America is rapidly emerging as one of the markets with the broadest digital knowledge of financial services,” according to Eric Rosenthal, Rapyd’s vice president for the Americas. “Whether you are a company already operating there or prepared to enter the market for the first time, it would not be wise to ignore the changes in consumer behavior. Our data strongly indicates that companies with an eye on LATAM should find their customers where they are most operational - digitally.”
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Confidence in Banks Declines
The study also shows the growing importance of digital and mobile financial services, with consumer confidence in them increasing, and much more so than in traditional banking channels.
Latin Americans’ willingness to desert traditional banks in favor of exclusively digital ones is high and growing, and which is reflected in the success of Nubank in Brasil. Eighty-three percent of Brazilians, 65% of Mexicans and 67% of Colombians expressed their willingness to make the shift, while only 34% of Argentines are willing to do so.