Latin America is undergoing a significant digital transformation, with notable advances in various areas, including digital democratization, the digitization of currency, and the adoption of artificial intelligence (AI). This article explores these changes, highlighting the main points and trends, based on the “Latin America Digital Transformation Report 2023,” produced by Atlântico.
Tectonic Shifts: The Five Major Changes
Latin America is emerging as the engine of the world, with a young population and fertile, rich lands that will make it the world’s driving force in the next decade. The region is harvesting hard lessons from the past, turning them into wisdom for the future, and benefits from its neutrality in the relations between the USA and China, reaping rewards from both sides.
1. Latin America: The World’s Engine
- If Latin America were a country, it would be the 3rd largest economy in the world, with Brazil representing 1/3 of that power.
- The post-pandemic recovery is threatened by inflation and high-interest rates, impacting consumer confidence and purchasing power.
- China is becoming a significant partner for Latin American countries.
2. Digital Democratization
Digital democratization in Latin America has evolved to mirror local society, with greater access for the middle and lower classes, accelerating the penetration of e-commerce and financial services, despite the context of expensive and slow data for the poorest (Page 2).
- The internet penetration rate in homes increased from 43% to 78% in a decade.
- Latin Americans spend 8 to 9 hours a day on the internet, mainly through mobile devices.
- The share of e-commerce in total retail sales in Brazil is approaching the share in the USA.
3. Renewal of the Entrepreneurial Spirit
After a challenging year, there is a renewal of the entrepreneurial spirit in Latin America. Founders’ optimism has increased more than fivefold, with stable access to financial and human capital, promising decades of compounded growth in the creation of technological value (Pages 2, 33, 34).
4. Digital Money
Money is digitizing, with instant digital transfers, leaving behind cash and card payments. The digitization of money leads to the formalization of the economy and work, promoting greater inclusion.
- PIX is establishing itself as a major payment method, with 43% of Brazilians using this mode of transfer daily.
- Access to credit is being accelerated by PIX, although Brazilian indebtedness is increasing.
5. AI: The Great Equalizer
54% of Latin Americans believe that the impact of AI will be positive on society, although two-thirds believe that AI could threaten their jobs in the future. AI has the power to transform lives, drastically increasing the ability of children to learn and families to be healthy, contributing to the elimination of poverty and leveling the playing field (Pages 2, 3).
- Customer Service, Marketing, and Sales are the areas that most use AI
- Challenges such as the high cost of technology and the scarcity of talent persist for the adoption of AI in Latin America.
We can conclude that the digital transformation in Latin America is in full swing, bringing both opportunities and challenges. The region is adopting new technologies, such as PIX and AI, which are changing the way people live and work.
However, challenges such as inflation, high-interest rates, and increasing indebtedness are significant obstacles that need to be overcome to ensure that digital transformation benefits all citizens of Latin America.
Source: ATLÂNTICO. Latin America Digital Transformation Report 2023. Atlântico, Aug. 2023. Accessed on: Sep. 28, 2023.
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