It’s Saturday night and you and your girlfriends finally decide to try that new restaurant in town. Just as you’re being seated, Sarah realizes she forgot her wallet at home.
“No problem,” you tell her, “You could just Venmo me!”
It comes as a surprise to no one that this verb, completely unheard of only a few years ago, has embedded itself into the daily vocabulary of thousands of millennials nationwide.
By linking your credit and debit card accounts, the digital app allows for the transferring, receiving, and requesting of payments. Long gone are the days of struggling to split restaurant checks, bar tabs, utility bills or even scrambling to find the nearest ATM. With the touch of a fingertip, debts can be settled and payments can be made.
In January 2016, Venmo consumers transferred a total of $1 billion, two and a half times the volume from January 2015, and ten times the volume from January 2014.
Impressive right? Well Venmo only represents a fraction of today’s booming FinTech industry, a movement whose effects extend far beyond financially facilitating the average millennial’s social life. FinTech has been growing on a global scale to revamp traditional and often inefficient financial services. This means applying technology to replace corporations that rely less on software.
The existing social and economic conditions have fostered the rapid development and popularity of FinTech in Latin America. As a region with a history of heavy colonization, the emergence of social classes and political corruption have long dominated the distribution of wealth. Consequently, millions of individuals have been excluded from the services of traditional financial institutions, with one in two people being left unbanked. The incorporation of technology, such as mobile money services, has gradually bridged these gaps in coverage. Thanks to falling mobile costs, mobile phone penetration in Latin America now exceeds 100% according to the World Bank, and those who were once underserved are being provided with a new realm of financial opportunities just by owning a phone. In developing countries, access to ATMs is often limited and cumbersome. Now, it is no longer necessary to go through an intermediary to access one’s account, because mobile apps eliminate middlemen. As a result, financial inclusion in a financially divided society a is a central contributor to the rise of FinTech in Latin America.
On the government’s behalf, support for the digital revolution has also catalyzed its success. The facilitation of money transfers and the widespread accessibility to digital devices delivers the promise of economic growth to the country. Over 35 Mobile Money services have been introduced into Latin America to date, and governments are reforming policy on digital finance to promote its growth. In Colombia, for example, the government is distributing subsidies via Mobile Money while the Ecuadorian government lowers VAT rates for purchases made with a Mobile Wallet as an incentive to the public.
When it comes to promoting these new money ecosystems in Latin America, digital marketing and social media have been driving forces behind advertising techniques. With the ready availability of mobiles and the vast popularity of social media in the region, being able to reach individuals on their mobile devices is more important than ever. The average Latin American has 18 applications on his or her phone and spends an average of 10 hours on social media a month (five hours more than the world average), with the five most frequently used platforms being Facebook, YouTube, WhatsApp, Facebook Messenger, and Google+, respectively. With an estimated 180 million Latin American smartphone users connecting with their social media networks on their phones, companies easily reach masses anytime and anywhere, and the outlets to do so are abundant. Social media serves as a powerful and multifaceted advertising service, encompassing the qualities of traditional print, TV, and radio all in one. The presence of visuals, videos, photos, and constant updates on a single platform engages the audience in a direct and efficient manner. Consider the example of promoting a sweepstake, special deal, or other event that is to take place on a specific day and time. When it comes to reminders and last minute marketing, company updates via tweets or Facebook statuses can be made single handedly in a fraction of the time compared to print, television, or radio announcements. The result is an interconnected and transparent relationship between the business and the consumer.
In an increasingly mobile-centric society, digital marketing has allowed for companies to reach a wider audience, while simultaneously connecting with consumers on a more personal level. Among its most noteworthy qualities is the way in which social media’s interactive features have revolutionized traditional customer service methods. What was once more of a one-way discussion between a business and its customers has become a highly dynamic interaction. Consumers can message, comment, tweet or connect with live virtual assistants to voice questions, concerns and opinions on a variety of social media platforms. While the customer base gains a more active voice through openly discussing their experience with a service, the company can gain both long and short term benefits. Firstly, receiving feedback in a real-time manner allows businesses to immediately work on improving any issues that may arise. Over time, companies are also able to monitor the effectiveness of their services ads by analyzing data to identify strengths and weaknesses in their practices. Gaining insight into what audience they are reaching, and what changes they want implemented gives companies the chance to adjust their marketing strategies to tailor to an audience they want target or retarget. With more companies going digital, there is higher competition and stronger pressure to deliver quality customer service. In a report published by Texas Tech University, studies found that brands with active social media profiles who engaged in conversation with their audience had more loyal consumers than those without a social media presence. Timely assistance and rapid improvements are no longer something viewed as special, but something standard that consumers are expecting.
By meeting customer needs in a personal manner, brands foster a relationship of trust, respect and loyalty with their customers. Consumers want to feel acknowledged, and having their needs met with urgency and attention equates directly to building brand awareness. Ultimately a strong brand reputation is a business’s most valuable asset because it translates to profit levels, and with a positive user experience, a company can be sure to enjoy high success.