While is true that digital services like Netflix have pushed the adoption of financial services in the region by the need to access them, not in all cases. Cash is still king in the region.
In Latin America, almost 80% of subscribers access Netflix through gift or prepaid cards, which are obtained at convenience stores and work the same as prepaid cell phone services, he pointed out. Hernando Rubio, CEO and co-founder of MOVII Colombia, within the framework of the 4th Latin American Congress of Innovation, Digital Banking and Technologyheld in Mexico City.
But the wallets (digital wallets) they are getting the unbanked to access digital products and services, and therefore, changing the negative figures of financial inclusion.
Although the startups that offer wallets still have a big task if you consider that today 1 out of 10 people in Latin America has a wallet, while in Asia the figure is 8 out of 10.
In all of this, cash is not the enemy, said the CEO of MOVII, the enemies are the lack of financial education and the lack of inclusion in Latin American countries.
Do Latinos love cash or are they out of options?
“Wallets are helping people to move their money in the digital world, which is where the good, pretty and cheap things are mostly found, which can cost around 35% less,” Rubio calculated.
“Financial inclusion is the gateway to the formality of businesses and that is a treasure for productivity,” said the entrepreneur who already has 4 million users in his wallet.
Electronic wallets are being a first access channel for financial inclusion. And they make the process much easier to do it in a few minutes without having to go to a bank branch, Rubio stressed.
According to recent projections published by ResearchLab, digital wallet spending is expected to grow from $5.5 trillion in 2020 to $10 trillion in 2025 globally.
However, adoption is still low in Latin America. Panama is the country that leads the adoption with 33%, followed by Colombia with 24% and Peru with 19%. And despite being the second largest economy in Latin America, Mexico occupies only 3%, Rubio said, citing a recent study.
Although access is important, the use of wallets is what really defines inclusion, that for it to be truly inclusive, a minimum of one transaction per month must be carried out.
The opportunity for financial inclusion is enormous if one considers that more than half of the population in Latin America has a smartphone and an internet connection, so they have the possibility to see options for products and services online, but they do not have the means to pay for them. Rubio lamented.
“With financial inclusion, a person in a remote town can access education by paying for online courses on Platzi or Coursera”exemplified the entrepreneur and assured that the next steps after having a digital wallet is that people can save and access credits.
In short, Rubio stressed that: “We’re not saying don’t use cash, keep using it for whatever is useful in the physical world, but also use it to shop online.”
Cash will continue to be necessary until businesses accept digital payments, which according to Rubio is only around 8% of formal ones in Colombia, the country with the lowest percentage accepting digital payments.