We asked the world’s Most Innovative Companies in Latin America to map out how business will change there in the next five years.
Here’s what they had to say.
Car-hailing apps are ubiquitous in the U.S., but big data and the sharing economy have yet to catch on in Latin America. Andrés Gutierrez–cofounder of the popular taxi-hailing app Tappsi–says change isn’t far down the road. Since it can still be dangerous to hail a taxi in many capital cities in Latin America, safety will be key. “Brands that already have consumer trust will start making inroads into this new transportation feature,” says Gutierrez. Tappsi screens every driver and provides a secure chat interface that allows drivers and passengers to communicate without sharing phone numbers, and lets users’ family and friends track their taxis. And by analyzing user data, Tappsi can recognize which passengers have similar destinations–allowing them to pair up and improve efficiency in an industry where cabs are only utilized for 60 percent of the time they spend on the road.
Plus, Gutierrez says that the varied cultural landscape of Latin America means that successful travel apps will have to think locally rather than globally. “While a passenger hailing a cab in São Paolo might be looking to find the quickest cab, a passenger in Lima is surely hustling the price with the driver–not to mention how a passenger in Quito is not looking for price or quickness, but just that the driver is legit and he is not going to be robbed,” says Gutierrez. “That’s how diverse the consumer needs are from market to market.”
Due to spiraling inflation and widespread distrust in banks, many people in Argentina still keep cash under their mattress. Add to this the stiff financial regulations in Latin America and the huge amount of paper money still in circulation there, and Latin America may seem like the last place for a financial innovation boom.
But Banco Galicia is trying to give consumer finance in the region a digital makeover. “Millennials have new ways of socializing and relating to banks,” says Emiliano Porciani, a marketing manager at Banco Galicia. “They think that banking is one of the sectors with more disruption opportunities. In order to acquire and retain these customers, banks will constantly have to innovate through new technologies.”
Take, for example, Galicia MOVE–Argentina’s first all-digital banking services suite that’s targeted to university students. Launched last spring, the service counts 35,000 clients across Argentina, and allows users to send and receive money, track their spending, and more. Porciani predicts that mobile payment systems already permeating the North American financial space, like Square and Apple Pay, will accelerate innovation in Latin America, forcing big banks to finally adapt.
Luis Arnal’s Mexico City-based consultancy Insitum has worked magic for more than 50 public and private-sector companies across Latin America, spotlighting where design thinking and improved processes could better impact citizen experience. (Insitum is responsible for nearly 200 innovation projects in the region.) From that unique vantage point, Arnal sees an opportunity for the private sector to correct some of Latin American’s governmental shortcomings.
“Due to lousy, bureaucratic, and corrupt governments, private companies and entrepreneurs will take over a lot of government functions, sparking huge opportunities to profit from a vast population that won’t mind paying to get the service they deserve–mostly in health care, education, energy, and finance,” he says.
Arnal also predicts Latin American governments will finally take steps toward forming a single trade bloc that includes Venezuela and Cuba, allowing Latin America to compete with other regions. This includes a pan-legalization of marijuana to reduce criminal activity and provide better conditions for medium-sized businesses to prosper, he says.
Latin America has the fastest rate of smartphone adoption in the world, and the first computer many in the region will ever have access to will be a smartphone. As the suburbs of megacities like Mexico City and Buenos Aires continue to grow, Tambero founder and CEO Eddie Rodríguez von der Becke says a newfound access to technology and the Internet could cause the popularity of local apps to skyrocket.
“These new suburbanites will have access to technology and Internet through mobile but will not be accustomed to the formal economy or traditional financial systems,” he says. “[Streaming services] PopCorn Time and Cuevana were local piracy inventions which became massive because the majority of the population does not have credit cards to pay for Netflix or iTunes, or they were considered expensive in relation to the local incomes.” Plus, a new generation of mobile users could create an ideal environment for a new digital currency, he says.
Meanwhile, smartphones will help even the most remote farmers connect with their land. Developed in rural Argentina, Tambero is the first free, web-based global system for agriculture. Used in more than 150 countries, it helps farmers everywhere improve yields by enabling them to manage animals and see comparative reports through a phone or tablet. While farms in Brazil and Argentina act as “massive production machines,” von der Becke says poor, small-scale farmers in Bolivia and Ecuador will be able to harness new ideas and techniques from the Internet as well as access a new market for delivering their goods.
Latin America is ready for its own Occupy movement, says Jose Manuel Moller–the founder of Algramo, a startup that makes affordable staples like rice and detergent available to poor, remote communities in Chile via vending machines. A large millennial population and a trend toward consumer empowerment in the region are about to create fireworks for Latin America, he says.
Millions of Latin American families live on less than $5 a day, which has contributed to a culture of intense effort and resilience. That combined with the momentum created by a new startup mentality in the region will lead to thousands of local solutions to everyday challenges that are able to scale up, predicts Moller.
“Because LatAm is one of the most unequal places in the world, we have stopped believing in the solutions that only look for economic growth, and we are aware that it’s time to find solutions to the inequality problems,” he says. “This will change the idea that the maximization of shareholder utilities is the priority, and will put first the solution of social and environmental problems.” As a result, Moller sees plenty of B corporations and social-good companies cropping up in the region’s near future.