Just over half of the people in Brazil were online in 2013, compared with 8.4 per cent in the US
Latin America is moving online – and quickly. Strong growth in the region’s internet user base is set to continue thanks to the growing popularity of smartphones, according to HSBC Global Research.
These shifts in behaviour are opening up opportunities for businesses. Consumers are increasingly willing to make purchases online and use internet and mobile banking services. They have also developed an appetite for social media: Brazilians are among the most avid users of Facebook in the world.
The expansion of digital and social channels has created new ways for companies to communicate with the region’s growing middle classes. In 2012 Twitter chose Latin America for the launch of its first region-wide platform for businesses advertising on the social media site.
Online and mobile banking services are becoming popular as consumers seek more convenient ways to manage their finances. According to a report by Febraban, the Brazilian banking association, 47 per cent of all banking transactions in Brazil in 2013 were completed via internet or mobile banking, compared with 31 per cent in 2009. There was particularly strong growth in the use of mobile banking, although this was from a low base.
The expansion of digital and social channels has created new ways for companies to communicate with the growing middle classes
The importance of these channels in Latin America is likely to increase further as more people use smartphones, consumers become more confident about the security of online transactions and banks continue to improve online banking platforms and mobile applications.
The increasing willingness of consumers to bank online has been mirrored by a growing appetite for internet shopping. E-commerce is growing as people take advantage of its convenience and range of products and services. One online market place, which allows people in 13 Latin American countries to buy and sell goods and services, reported nearly 121 million registered users at the end of December 2014.
Brazil is the regional leader in e-commerce with sales totalling BRL35.8 billion (USD11.5 billion) in 2014.
It is outpacing other major Latin American countries, including Argentina and Mexico. Only 20 per cent of internet users in Mexico buy goods online, according to AMIPCI, the Mexican internet association. The majority of transactions in the country are still made in cash and consumers prefer to have a physical receipt as evidence of purchases.
Online retailers face a number of difficulties. In Brazil the country’s transport network makes logistics a real challenge. Mobile networks will also need to keep pace with the rising demand for data. In Argentina the government introduced new restrictions on online purchases from overseas websites in January 2014 as one of a number of measures to protect declining foreign currency reserves.
Despite these challenges, there is room for expansion. Many people have yet to access the internet. Just over half of Brazil’s population was online in 2013, compared with 84 per cent in the US, according to the International Telecommunication Union, the United Nations agency for information and communication technologies. In Mexico, the region’s second-largest economy, the equivalent figure was 43 per cent.
More people are expected to use smartphones and other mobile devices as 3G and 4G coverage improves. The GSMA, the mobile operators’ trade association, forecasts that smartphone connections in Latin America will reach 605 million by 2020, compared with 154 million at the end of 2013. In turn, this trend is helping to underpin the adoption of mobile banking services. HSBC Brazil customers are carrying out more than 130 million mobile banking transactions a year, and in October 2014 mobile transactions surpassed those made in branches.
Use of online shopping, banking and social media platforms has developed at varying rates in Latin American countries. But with more and more consumers moving online, the popularity of these services is expected to continue growing.