Latin America Embraces Mobile but Culture Questions Present Challenges

The biggest challenge for companies in Latin America engaged in digital transformation may not so much be one of technology as one of culture.

The number of people subscribing to mobile services in Latin America hit 436 million in 2017, and is expected to jump to 517 million by 2025, according to the GSMA Mobile Economy 2018 report.

The contribution of mobile to Latin America’s gross domestic product was $270 billion, or 5.2%, in 2017, GSMA reported. It’s expected to grow to $320 billion, or 5.6% of GDP, by 2020. That puts growth of mobile in the region ahead of mobile's global percentage of GDP, which was 4.5% in 2017 and is projected to rise to 4.8% in 2020.

The economic and social benefits of finding ways to engage on mobile are obvious for companies, but the region's entrenched cultural beliefs--and a series of corruption and political scandals the last several years--make it difficult to bring about the changes needed for business to keep pace with the rapid rate of change, said Yoab Bitran, head of Latin American operations for LRN.

When judged by the criteria the World Economic Forum said will be needed to achieve success in the coming fourth industrial revolution--human capital, innovation capacity, business agility, resilience--Latin America is outperformed by almost all other regions except sub-Saharan Africa.

This distrust impacts the ability of established firms to innovate their business models, and to take advantage of the availability of information to better satisfy their stakeholders, he said.

“There are deep cultural traits--historical, sociological, religious--that need to first be identified and acknowledged and then worked on to be changed,” said Bitran. “This needs collaboration between the public and private sectors.”

One cause for hope is the growth of mobile, as mobile connections comprise about 60% of all connections in Latin America. GSMA reports mobile internet penetration in Latin America at 50%, and sees it rising to 66% by 2025--that’s ahead of the global penetration rates of 43% in 2017 and the projected rate of 61% in 2025.

This growth provides an opportunity to leapfrog some stages of the digital transformation evolution, said Bitran. “The potential for big data and the Internet of Things to improve efficiency, productivity and sustainability in the region, particularly in the mining, agricultural and fishing industries, is huge,” he said.

And mobile penetration offers openings for ethics and compliance in terms of accessibility to resources and data collection and analysis.

“As the region advances toward global best practices, the organizations that innovate in their compliance programs to make them more accessible, effective and engaging will lead the way,” said Bitran.

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