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Imagine a bustling street in São Paulo, where street vendors are not just selling local snacks but also accepting digital payments on the go. A few miles away, a small business owner in Rio de Janeiro collaborates with her team over a high-definition video call, seamlessly connecting from her home office. This isn’t a glimpse into a distant future, but the current reality in Brazil —a country undergoing a digital revolution at an unprecedented pace.
In the last decade, Internet penetration in Latin America jumped from 43% to 78%, even reaching 90% in Chile, surpassing China’s penetration, driven by the inclusion of the middle and lower-income classes. This data, from the Latin America Digital Transformation Report 2023 by Atlántico, now places Brazil and Mexico among the top 10 countries with the largest digital populations, cumulatively accounting for 282 million users in 2023.
Post-COVID, five major trends have emerged and that will continue or speed up in 2024 – and need NSP’s full attention.
Digital trend #1: Digital Shift in Business
According to the Recovery Insights: Small Business Reset report by Mastercard Economics, digital integration among both small and large companies in Latin America witnessed an unprecedented increase of over 200% in 2020, with sustained growth observed through 2021-2023. The concept of remote work, previously a rarity in this region, has now gained widespread acceptance, evidenced by 85.6% of companies implementing remote work policies. This shift towards more flexible work arrangements has led to a surge in the establishment of home offices and the popularity of co-working spaces.
This transition to remote working is not only changing the professional landscape in Latin America but also positioning the region as an attractive destination for foreign investments. KPMG’s latest survey found that 45% of companies and investors believe the opportunity to do M&A in Latin America has never been greater, with Mexico, Brazil, and Costa Rica leading as the top countries for M&A, and technology being the most attractive sector. Latin America’s emergence as a hub of remote working talent is catering to global teams, underscoring its competitive and well-connected workforce, ideal for nearshoring. Consequently, households are evolving into mini-network hubs, each with its own set of connectivity requirements.
Digital trend #2: Digital Shift in Consumption Habits
Latin America boasts an expansive online community, comprising over 543.39 million potential consumers. The e-commerce landscape in Latin America has seen remarkable growth, with the user base expanding from 126 million to 267 million in just five years. In Brazil, the e-commerce market is dominated by Mercado Libre, outperforming competitors from Asia and America. Additionally, the region witnesses a diverse range of services, including education and healthcare, increasingly relying on the Internet as their principal channel for delivery. Specialized platforms like Mattilda, Capim, Fudo, and Vixtra are gaining popularity, underscoring the region’s dynamic digital market. This shift from traditional retail to online business models, previously hindered by significant gaps in digital consumer engagement, is now gaining momentum. The trend further emphasizes the pressing need for enhanced connectivity infrastructures to support this digital transformation.
Digital trend #3: Money going digital
Over the past decade, banking accessibility in Latin America has experienced significant growth, predominantly through digital means. Presently, a staggering 95% of Latin Americans use mobile phones or the Internet for their financial services, a substantial increase from just 36% a decade ago. This surge has been further propelled by the rapid expansion of FinTech, which plays a crucial role in fostering financial inclusion across the region.
This upswing in online banking has triggered a heightened demand for strong and secure network infrastructures. These infrastructures are essential to facilitate safe digital financial transactions and the transmission of sensitive data. Network Service Providers now find themselves in a prime position to collaborate with financial entities, offering secure and dependable network services. By harnessing their technical know-how, NSPs can effectively cater to the unique connectivity and security requirements of the finance industry, thereby supporting its digital evolution.
Digital trend #4: The Rise of IoT and AI
In the United States, the Internet of Things (IoT) sector is rapidly expanding, with the average household featuring approximately twenty connected devices. These devices span a wide range, including laptops, smartphones, smart TVs, and connected personal assistants. Although IoT technology’s application in Latin America is currently less extensive, it is noteworthy that the region had an estimated 996 million connected devices in 2023.
The field of artificial intelligence, which gained significant attention following the rise of ChatGPT last year, is poised to play a pivotal role in the advancement and adoption of IoT. In the context of ChatGPT usage, Brazil is at the forefront among Latin American and Caribbean nations, recording over 70 million visits from January to March 2023, as reported by Statista. Colombia and Mexico are not far behind, ranking them alongside Brazil among the top 20 global users of the platform.
This growing interest in AI is further reflected in the educational sphere, with many universities across Latin America actively incorporating AI into their academic programs. This initiative promises a bright future for AI technology in the region, indicating its potential for significant impact and growth.
Digital trend #5: Entertainment and Social Media Eyeing Latin America
In recent years, the global entertainment industry has been profoundly transformed by the rise of Subscription Video On Demand (SVOD). Latin America, in particular, stands out as the second fastest-growing region worldwide for streaming services. As of 2023, SVOD has emerged as a key player in the region’s digital entertainment sphere, boasting 92 million subscribers. This number is expected to surge to 139 million by 2027, marking an impressive 51% increase. This remarkable growth is driven by the region’s strong cultural inclination towards diverse storytelling and its enthusiastic embrace of digital media. Countries like Brazil, Mexico, and Argentina are at the forefront of this expansion.
In addition to SVOD, Latin American users are also leading the world in their engagement with various social media platforms. Notably, platforms such as Instagram, Facebook, and TikTok enjoy widespread popularity in the region, highlighting Latin America’s significant presence in the global digital landscape.
How can Network Service Providers make the best of the trends?
NSPs in Latin America are uniquely positioned to leverage this digital shift, an opportunity that hinges on strategic investments and innovations. By upgrading to cutting-edge technologies like 5G and expanding fiber optic networks, especially in underserved rural areas, NSPs can provide the backbone for high-speed Internet connectivity. This technological advancement, coupled with affordable data plans, is crucial for increasing digital inclusion across diverse socio-economic segments.
However, the digital shift isn’t just about technology. It’s equally about empowering people. This is where NSPs can make a significant impact through initiatives that promote digital literacy and education, in partnership with governments and educational bodies. This not only expands their user base but also cultivates a more technologically adept society.
In sum, NSPs in Latin America cannot only fortify their business prospects but also play a transformative role in the region’s digital evolution.
Vantiva is uniquely positioned to help Network Service Providers upgrade their products and deliver exceptional service quality, ensuring their customers can fully benefit from the latest technological advancements. Whether you want to offer your customers a premium broadband experience, upgrade your gateways, or simply talk connectivity, we are happy to help. Contact us!
