Reprinted with permission from McKinsey Quarterly

The Pulitzer Prize–winning author and global energy expert sees rising demand from the East spurring innovation.

The recent rise of emerging markets as voracious consumers of energy has established a price point for oil at more than $100 a barrel, injected volatility into energy markets, and changed the economics of massive, complex energy projects such as oil sands, “tight oil” trapped in shale formations, and offshore drilling. Daniel Yergin, chairman of the energy research consultancy IHS Cambridge Energy Research Associates (IHS CERA), sees the tilt in demand from West to East continuing to reshape the global energy landscape. By 2030, he says, the world will be using a lot more energy than it does today, but the mix will still be dominated by oil, natural gas, and coal. In this video interview, Yergin explains how in the years ahead higher oil prices will produce “a great bubbling of innovation” across the energy spectrum, and shares his perspectives on three geopolitical trends that he sees influencing this transformation. McKinsey Publishing’s Rik Kirkland conducted the interview at the World Economic Forum, in Davos, in January 2012. Yergin is the author of The Quest: Energy, Security, and the Remaking of the Modern World (Penguin, September 2011).

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Focusing on exports to the world’s second-largest economy will help the United States generate growth and jobs, says Morgan Stanley Asia’s former nonexecutive chairman.

A year ago, the National People’s Congress enacted China’s 12th five-year plan, which included three main building blocks: a greater focus on jobs, urbanization to boost wages, and financing a social safety net that encourages families to spend rather than save. Stephen Roach, a professor at Yale University and former nonexecutive chairman of Morgan Stanley Asia, says that this document’s implementation is marking a major shift in China’s model, away from exports and investment and toward internal, private consumption. Therein lies a huge opportunity for other nations to benefit from the emergence of the world’s largest consumer population.

China, currently the biggest and most rapidly growing US export market, is well on its way to “create a consumption dynamic that will outstrip the growth of any consumer market in the world,” Roach asserts—“and shame on us if we’re not a part of that.” In this video, Roach explains how China must turn to internal demand to drive economic development and prosperity and why improving the testy China–US bilateral relationship is so critical for the economic future of both countries. McKinsey Publishing’s Rik Kirkland conducted the interview at the World Economic Forum, in Davos, in January 2012.

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The world’s largest social-media market is vastly different from its counterpart in the West. Yet the ingredients of a winning strategy are familiar.

Reprinted with permission from McKinsey Quarterly

No Facebook. No Twitter. No YouTube. Listing the companies that don’t have access to China’s exploding social-media space underscores just how different it is from those of many Western markets. Understanding that space is vitally important for anyone trying to engage Chinese consumers: social media is a larger phenomenon in the world’sa second-biggest economy than it is in other countries, including the United States. And it’s not indecipherable. Chinese consumers follow the same decision-making journey as their peers in other countries, and the basic rules for engaging with them effectively are reassuringly familiar.

Surveying the scene

In addition to having the world’s biggest Internet user base—513 million people, more than double the 245 million users in the United States¹—China also has the world’s most active environment for social media. More than 300 million people use it, from blogs to social-networking sites to microblogs and other online communities.² That’s roughly equivalent to the combined population of France, Germany, Italy, Spain, and the United Kingdom. In addition, China’s online users spend more than 40 percent of their time online on social media, a figure that continues to rise rapidly.

This appetite for all things social has spawned a dizzying array of companies, many with tools more advanced than those in the West: for example, Chinese users were able to embed multimedia content in social media more than 18 months before Twitter users could do so in the United States. Social media began in China in 1994 with online forums and communities and migrated to instant messaging in 1999. User review sites such as Dianping emerged around 2003. Blogging took off in 2004, followed a year later by social-networking sites with chatting capabilities such as Renren. Sina Weibo launched in 2009, offering microblogging with multimedia. Location-based player Jiepang appeared in 2010, offering services similar to foursquare’s.

This explosive growth shows few signs of abating, a trend that’s at least partially attributable to the fact that it’s harder for the government to censor social media than other information channels. That’s one critical way the Chinese market is unique. As you shape your own social-media strategy, it’s important to fully understand some other nuances of the country’s consumers, content, and platforms.

Consumers

China’s social-media users not only are more active than those of any other country but also, in more than 80 percent of all cases, have multiple social-media accounts, primarily with local players (compared with just 39 percent in Japan).³ The use of mobile technologies to access social media is also increasingly popular in China: there were more than 100 million mobile social users in 2010, a number that is forecast to grow by about 30 percent annually.⁴ Finally, because many Chinese are somewhat skeptical of formal institutions and authority, users disproportionately value the advice of opinion leaders in social networks. An independent survey of moisturizer purchasers, for example, observed that 66 percent of Chinese consumers relied on recommendations from friends and family, compared with 38 percent of their US counterparts.

Content

The competition for consumers is fierce in China’s social-media space. Many companies regularly employ “artificial writers” to seed positive content about themselves online and attack competitors with negative news they hope will go viral. In several instances, negative publicity about companies—such as allegations of product contamination—has prompted waves of microblog posts from competitors and disguised users. Businesses trying to manage social-media crises should carefully identify the source of negative posts and base countermeasures on whether they came from competitors or real consumers. Companies must also factor in the impact of artificial writers when mining for social-media consumer insights and comparing the performance of their brands against that of competitors. Otherwise, they risk drawing the wrong conclusions about consumer behavior and brand preferences.

Platforms

China’s social-media sector is very fragmented and local. Each social-media and e-commerce platform has at least two major local players: in microblogging (or weibo), for example, Sina Weibo and Tencent Weibo; in social networking, a number of companies, including Renren and Kaixin001. These players have different strengths, areas of focus, and, often, geographic priorities. For marketers, this fragmentation increases the complexity of the social-media landscape in China and requires significant resources and expertise, including a network of partners to help guide the way. Competition is evolving quickly—marketers looking for partners should closely monitor development of the sector’s platforms and players.

Crafting a winning strategy

While these unique Chinese market characteristics often create challenging wrinkles for marketers to contend with, they don’t invalidate the principles that underpin effective social-media strategy elsewhere (for more, see “Demystifying social media”). The following few examples illustrate how companies are applying some widespread social-media tenets in China.

Make content authentic and user oriented. Estée Lauder’s Clinique brand launched a drama series, Sufei’s Diary, with 40 episodes broadcast daily on a dedicated Web site. (Viewers also could watch segments on monitors located on buses, trains, and airplanes.) While skin care was part of the story line and products were prominently featured, Sufei’s Diary was seen as entertainment—not a Clinique advertisement—and has been viewed online more than 21 million times. Clinique’s online brand awareness is now 27 percent higher than that of its competitors, although social-media content costs significantly less than a traditional advertising campaign.

Adopt a test-and-learn approach. When Dove China first imported the Real Beauty social-media campaign to promote beauty among women of all looks and body types, Chinese consumers viewed the real women as overweight and unattractive. Dove switched tack and partnered withUgly Wudi, the Chinese adaptation of the US television show Ugly Betty, to weave the Real Beauty message into story lines and mount a number of initiatives, including a blog by Wudi and live online chats. The effort generated millions of searches and blog entries, increased uptake of Dove body wash by 21 percent year over year after the show’s first season, and increased unaided awareness of Dove’s Real Beauty by 44 percent among target consumers. The estimated return on investment from this social-media campaign was four times that of a traditional TV media investment.

Support overarching brand goals with sustained social-media efforts. Starbucks China promotes the same message of quality, social responsibility, and community building across all of its social-media efforts, as well as in its stores. And Durex didn’t just establish a corporate account on Sina Weibo: it built a marketing team that both monitors online comments around the clock and collaborates closely with agency partners to create original, funny content. The company’s approach is designed to interact meaningfully with fans, generate buzz, and deepen customer engagement with the brand.

The sheer number of the more than 300 million social-media users in China creates unique challenges for effective consumer engagement. People expect responses to each and every post, for example, so companies must develop new models and processes for effectively engaging individuals in a way that communicates brand identity and values, satisfies consumer concerns, and doesn’t lead to a negative viral spiral. Another problem is the difficulty of developing and tracking reliable metrics to gauge a social-media strategy’s performance, given the size of the user base, a lack of analytical tools (such as those offered by Facebook and Google in other markets), and limited transparency into leading platforms. Yet these challenges should not deter companies. The similarity between the ingredients of success in China and in other markets makes it easier—and well worth the trouble—to cope with the country’s many peculiarities.

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Reprinted with permission from McKinsey Quarterly

Innovation in energy technology is taking place rapidly. Five technologies you may not have heard of could be ready to change the energy landscape by 2020.

Recent breakthroughs in natural-gas extraction highlight the speed with which game-changing technologies can transform the natural-resource landscape. Just over the horizon are others—such as electric vehicles, advanced internal-combustion engines, solar photovoltaics, and LED lighting—that are benefiting from the convergence of software, consumer electronics, and traditional industrial processes. Each has the potential to grow by a factor of ten in the next decade.

Placing rapidly evolving technologies such as these on a resource cost curve, however, is difficult: their impact could be very big or very small. And that’s even more the case for technologies that require significant scientific and engineering innovations to reach commercial scale at viable cost. This article describes five technologies that could start arriving in earnest by 2020 or so: grid-scale storage, digital-power conversion, compressorless air conditioning and electrochromic windows, clean coal, and electrofuels and new biofuels.

Not all of these will succeed in the market; they will earn a place only if they can outperform the rising bar defined by other rapidly advancing technologies. But even if only some of them pan out, those could transform the energy landscape. It’s possible, in fact, that the development of energy technologies is approaching a tipping point that will generate increases in energy productivity on a scale not seen since the Industrial Revolution.

Grid-scale storage. The large-scale storage of electricity within electric power grids allows power generated overnight to meet peak load during the day. Today, this kind of grid storage costs about $600 to $1,000 per kilowatt hour (kWh) and can be used only when the local geology supports pumped-hydro or compressed-air storage systems. Innovations using flow batteries, liquid-metal batteries, flywheels, and ultracapacitors could reduce costs to $150 to $200 per kWh by 2020 and make it possible to provide grid storage in every major metropolitan market. At these prices, by 2020 the United States alone would want to build more than 100 gigawatts (GW) of storage (the capacity equivalent of the current US nuclear-generation fleet).

That much storage capacity would be transformative: currently, our power grid tends to use only 20 to 30 percent of its capacity because we build it to meet very high demand peaks. With storage, we can flatten out those peaks, reducing capital requirements for transmission and distribution and making power much cheaper to deliver. Power companies also could use storage to smooth variability in the supply of weather-dependent renewables, such as solar and wind power, thereby converting them from intermittent power sources into much more reliable ones.

Digital-power conversion. Large-scale high-voltage transformers, developed in the late 1880s, set the stage for the widespread development of the electrical grid. Virtually the same technology is still in use today. A typical transformer costs $20,000, weighs 10,000 pounds, and takes up 250 cubic feet. High-speed digital switches made of silicon carbide and gallium nitride have been developed for high-frequency power management for everything from military jets to high-speed rail. They use 90 percent less energy, take up only about 1 percent as much space, and are more reliable and flexible than existing transformers. Today’s advanced applications include consumer electronics and variable-speed industrial drives for manufacturing. As such applications expand and the major semiconductor manufacturers begin to produce these technologies at scale, they could replace conventional transformers in the utility industry (at less than one-tenth the cost) by 2020. China is particularly well positioned to benefit from adopting digital-power electronics because of the scale of its planned grid expansion.

Compressorless air conditioning and electrochromic windows. Today, it costs about $3,000 to $4,000 a year to run a high-efficiency air conditioner in a hot region, and even the efficient windows now commonly used allow 50 percent of the cooling energy to escape. New compressorless air conditioners dehumidify the air with desiccants rather than the traditional “compress/decompress” refrigeration cycle. Electrochromic window technologies change the window shading, depending on the temperature difference between outside and inside. These technologies offer the potential to cut home-cooling bills in half. Advanced windows also could slash heating costs by half, allowing the sun to warm houses while keeping the cold out—the new windows are often better than the standard attic insulation in cold-climate homes today. These technologies are expensive now, but by 2020 they should cost only about half as much to install as current state-of-the-art cooling and window technologies do.

Clean coal. Today, carbon capture and sequestration (CCS) costs $8,000 to $10,000 per kilowatt (kW). Innovative processes now under development could help coal-fired generators to capture more than 90 percent of their carbon dioxide, at a cost of less than $2,000 per kW. If the technology is viable by 2020, it would be possible for nearly 70 percent of the roughly 200 US coal plants currently slated for closure in that year to stay open for decades. The same goes for similar plants in China and Europe. Without supportive carbon regulations, though, we are unlikely to see clean coal deployed at scale. Coal without carbon sequestration will always be cheaper than coal with it. On current course, though, coal with carbon sequestration could become cheaper, more reliable, and more widely deployable than many renewable technologies.

Biofuels and electrofuels. With crude-oil prices approaching $100 a barrel, market shares for biofuels such as cane and corn ethanol are rising rapidly. Although second-generation cellulosic biofuels have proved harder to make than many had hoped five years ago, innovative start-ups focused on cellulosic and algae-based biofuels are starting to create high-margin specialty chemicals and blendstocks, generating cash now and suggesting a pathway to deliver biofuels at $2 a gallon or less by 2020. At the same time, biopharmaceutical researchers are developing electrofuel pathways that feed carbon dioxide, water, and energy to enzymes to create long-chain carbon molecules that function like fossil fuels at one-tenth the cost of current biofuels. The key question is whether these new technologies can be scaled. If they can, today’s constraints on biofuels—the declining quality of available land and “food for fuel” trade-offs—may diminish.

Many other technologies could play a major role further out in the future, such as small, modular “Gen IV” nuclear reactors; next-generation fusion technology; small, shrouded wind turbine designs; solid-oxide fuel cells; and low-cost ground-source heat pumps. Not all of them will come to fruition, but some will—and those that do could change energy markets dramatically. The rate of change in the underlying technologies is much faster than the market currently expects. Leaders of companies and countries who neglect what is happening on the margins today risk being pushed to the margins themselves in the not-too-distant future.

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Availability of FDA Publications Translated into various Languages

April 11, 2012

Dear International Colleague:
I am writing to inform you that the U.S. Food and Drug Administration’s (FDA) Office of International Programs (OIP) is making available FDA publications translated into various languages to enable our foreign counterparts and industry to better understand FDA’s laws and practices.

In June 2011, we announced the launch of FDA’s special report, Pathway to Global Product Safety and Quality. The report identifies the rapid changes regulators face due to globalization and discusses FDA’s efforts to develop an international operating model to ensure global product safety and quality. OIP appreciates the vital role our foreign counterparts play in helping the Agency build and strengthen the product safety net worldwide.

OIP is committed to supporting the Agency’s efforts to become a regulatory agency with a truly global reach. To this end, we are making FDA publications available in Arabic, Chinese, French, Portuguese, and Spanish to serve a broad international audience. These translations are accessible at www.FDA.gov/translations.

Translated FDA publications cover a cross section of product categories, including regulatory drug guidances, food guidelines (including food and dietary supplements labeling), medical device guidelines, and field inspection/ investigation manuals. You will also be able to access a central OIP Translation Inventory database, which can be sorted by product type or language to serve as a quick and easy reference tool to determine what FDA documents are available in which languages.

In the coming months, additional translated publications will become available. We hope that you will find this information useful and share it with industry and other organizations that would benefit from it. Should you have any questions or wish to provide user feedback, please contact OIPweb@fda.hhs.gov .

Sincerely,

—/s/—

Mary Lou Valdez, MSM
Associate Commissioner for International Programs

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Reprinted with permission from Deloitte.

Because 2012 is an election year, the U.S. health system ─ and the respective advocacy posture taken by its varied special interests and trade associations ─ will be even more visible. Health reform will likely be one of two major news items, second only to the economic recovery.

The U.S. health industry is highly regulated, highly dependent on capital for technologies and facilities and labor intense. For U.S.-based hospitals, ambulatory providers, plans, bio-pharma and device manufacturers, the future is complicated. The industry should anticipate contending with three major forces: (1) the Affordable Care Act legislates fundamental changes in the financing and delivery of care, (2) U.S. economic recovery and deficit reduction means cuts in health and (3) demand for health services soars as a result of consumer expectations and the aging population.

In 2012, the critical trends likely to impact the industry will be:

• Do more with less: According to the Congressional Budget Office (CBO), health costs will increase 6 percent overall, though government payments may slow, forcing tough negotiations in the industry’s supply chain and with third-party payers. As a result, margins will shrink, consolidation will increase within sectors and offshore contracting for talent will likely accelerate to reduce operating costs. Opportunities for innovative, low cost/high value/technology-enabled delivery and financing solutions will increase.
• Go big: The health system in the U.S. is highly fragmented: 4,500 biotech companies, 6,000 device manufacturers, 5,800 hospitals, 700,000 physicians, 1,300 health plans and so on. Most providers operate locally; most manufacturers seek regional market penetration to achieve solvency and sustainability. The year ahead will likely witness significant integration of physicians with hospitals, plans with physicians, bio-tech with pharma, traditional and nontraditional medical models, pharma with physicians and others. Consolidation in each sector is likely to accelerate, and there will be winners and losers in each. Bigger is better.
• Follow the money: The U.S. economic recovery has been slower than desirable. As a result, health industry stakeholders should grow revenue in new, sometimes risky, sometimes unconventional markets. Manufacturers will likely pursue direct contracting via gain sharing models with providers, increase global market growth and offshore core operating functions to cheaper labor markets. Health plans will likely pursue risk-based contracts with providers, diversifying into wellness and healthy living services for employers and individuals and monetize data to assist in the transition to information-driven health. Hospitals may consider augmenting clinical services, adding allied health, long-term care and physician services, and some will develop health plans to get closer to the premium revenue stream. And the role of consumers will likely increase because they may be paying more out of pocket ─ transparency, technologies and timing suggest increased activism by consumers seeking more effective health and lower costs.

According to the CBO and the Deloitte Center for Health Solutions’ study “The hidden costs of U.S. health care for consumers,” at the end of 2012, health care will likely make up 24 percent of the total federal budget, 21 percent of the average state’s budget and 20 percent of the average household’s discretionary spending. The cost of the U.S. health care system is projected to increase by 6 percent, while the economy overall will see a 2.5 percent improvement in gross domestic product (GDP). It cannot be avoided; it’s a “big deal.”

Paul Keckley, Ph.D., is executive director of the Deloitte Center for Health Solutions, Deloitte LLP, and John Bigalke serves as vice chairman and U.S. national industry leader of Deloitte LLP’s Health Sciences & Government practice.

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Reprinted with permission from McKinsey Quarterly.

As consumers increasingly interact digitally with companies, competitive advantage lies in understanding the range and complexity of those touch points.

The past 15 years have created a very different business environment, which has empowered consumers, commoditized many products and services, and dramatically compressed margins. Not surprisingly, these changes have forced businesses to operate differently. But exactly what kinds of companies have successfully transitioned to the digital age? How have they regained and retained competitive advantage at a time when location is no longer a barrier to transactions, brands alone aren’t a proxy for quality, and pricing is increasingly transparent?

Of course, the answers to these weighty questions vary by industry and company. But I want to advance an idea that can help just about all executives concentrate their thinking. Whether you know it or not, your company operates as two businesses: a core that sells products and services (as it always has) and what I call the software layer (exhibit). This permeable layer comprises the technologies through which customers interact with your company, and vice versa.

To compete successfully, you must run your core business and your software layer as rigorously as possible. That means building an effective experience for people who use digital media and technology to interact with your company, investing to make such interactions a reality, and adopting a product, marketing, and sales approach that integrates the core business and the software layer into one compelling offer. In the digital age, optimizing the performance of both core operations and the software layer is mandatory. You can’t choose one or the other.

Understanding the software layer

For most companies, the software layer includes a corporate Web site, mobile applications, and a presence on Facebook, LinkedIn, or other social networks. It also includes e-mails sent to consumers, contributions to online communities such as discussion boards, digital advertisements on third-party Web sites, or touch screen installations in public venues or stores. Less visible interaction points include the application-programming interfaces through which computer programs connect and communicate with each other, digital marketplaces, and the order-management systems that facilitate business-to-business transactions. Fundamentally, any way someone or something uses technology to interact with your company is part of your software layer.

The need for companies to have a software layer has been driven, not by the digital revolution itself, but by the changes in consumer behavior it has enabled.¹ More and more people prefer to do business with companies online instead of in stores. They stream movies rather than find something on television, and pay bills online rather than mail a check. This exponential growth in the number of virtual consumers, upending decades of ingrained business behavior, will only increase as people born after the Internet’s advent become the primary consumers and business decision makers. A company’s digital touch points—the avenues through which it interacts with consumers, such as Web sites, mobile devices, and social media—are in the ascendant, and the software layer is critical to attracting and winning digital-first consumers.

Individual companies recognize this. The retail-banking operation of JPMorgan Chase, for example, ensures that as many aspects of the banking experience as possible can take place through mobile devices, from depositing checks to sending friends money. The software layer can also dramatically change the way industries operate.

Consider the advertising business. To buy a television ad, for example, I must get in touch with a sales representative, negotiate a rate, and go through many manual steps to ensure that the ad gets on air. To buy a search ad on Google, I interact only with its software layer and buy the ad through its Web site; the ad runs within minutes. Or I can write my own software that interacts with Google to place ads. Obviously, there are trade-offs for convenience. Google is a more frictionless, quick, and simple transaction, but the company’s prices are set in an automated way. Television has more fluid, subjective pricing, often the subject of fierce negotiation. Google’s product is standardized, with ads created by filling out an online form; television ads are unique on many levels and require massive human effort to create, with almost every product sale one of a kind. This example shows that operating a software layer isn’t just about running technology—it’s about a completely different way of managing your business.

Operating the software layer

The software layer is meant to streamline transactions so that people and organizations can interact with a company in a more automated and efficient way. This usability is the key determinant of the software layer’s success: the more frictionless and enjoyable an interaction, the more likely users will engage in it and in new ones, bolstering the broader organization. By contrast, confusing Web sites that, for instance, repeatedly crash frustrate users and drive them to competitors.

At Huge, we studied the operations of the Fortune 1000 companies² and found dramatic differences in the efficacy of their software layers. Retailing, for example, was the most proficient of the industries we surveyed, but even within this group large variances were apparent. One major grocery brand, for instance, scored poorly in part because it hadn’t implemented many digital-media elements that would help it connect with and service users.

My sense is that the biggest challenge companies face when operating a software layer is precisely that it involves software. While technology companies are created from the ground up to build and operate great software, most others aren’t. And most companies can’t live with this ingrained disadvantage: as more consumers default to digital interactions, companies must become great technology organizations or at least build such organizations within their walls. In my experience, successful software layer operations require a mix of centralization, user focus, and integration.

Centralization

The most effective organizations consolidate the software layer’s management and operations in a central technology group, whose leaders understand what it takes to build successful digital businesses. Such a group must meet the user’s needs, maintain a focus on profitability and technical feasibility, and have the power to make broad-reaching decisions that can affect the entire company. Most important, it can’t be an “internal agency” whose client becomes whatever intramural group hires it, as that will increase the risk of creating a software layer that only adds friction between a company and the lion’s share of its users. To create a coherent digital experience for an entire company, it’s important to break organizational silos and to integrate features and content that would normally reside in very different parts of the organization. The way Facebook and other tech companies—such as Burbn (which developed the iPhone photo-sharing program Instagram), Tumblr, and Twitter—connect with their user bases demonstrates this approach, which creates a standard experience millions of people use.

User focus

A mix of qualitative and quantitative research, market insights, and intuition is central to identifying consumer needs and devising ways to satisfy them. Different companies approach this imperative differently. At one end of the continuum are Apple and the late Steve Jobs, who was famous for putting himself in the shoes of users and intuiting their experience. Google is at the opposite extreme: iterative testing and lots of data.³ Either method has distinct advantages and disadvantages. The Google strategy often produces a series of small, gradual improvements, while the Apple approach is riskier and takes bigger leaps in the user experience and product design. But no matter which style fits a company’s culture and assets, management must dedicate resources to investigating user needs and consider them when making any decision about the software layer.

Integration with the core business

The software layer, at its best, will evolve from a communications or operational tool into an actual digital product or service. Dish Network, for example, has made its analog television service much more desirable by adding streaming video to it through the acquisition of Blockbuster. Nutrisystem has turned a food delivery offering into a powerful online dietary service by providing weight loss tools. Converse, New Balance, and Nike all allow consumers to design their own sneakers through Web-based programs. Integration such as this doesn’t happen magically: the same central technology group that’s responsible for thinking through a company-wide software layer can boost the odds of creating competitive new business models and offerings by focusing on the relationship between digital experiences and a company’s existing analog products and services.

It’s perhaps easiest to envision how consumer-facing companies, such as retailers and financial institutions, can use the software layer. Yet any and all businesses that intend to survive the digital revolution should build a centralized, user-focused, and integrated software layer—or risk being left behind.

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Mobile Banking

Insights from Argentina, Brazil, and Mexico

Reprinted with permission from Deloitte.

Mobile technology offers an unprecedented growth opportunity for retail banking in Latin America. As these economies continue to prosper, increasingly affluent consumers and underbanked¹ segments may create demand for new financial products and services. Many consumers in Latin America have mobile phones, but not bank accounts. The mobile channel therefore provides an effective way to attract them into the financial services marketplace.

These favorable attributes represent new opportunities for banks operating in Latin America. According to Deloitte Center for Financial Services² analysis, within the next several years mobile banking will be more of a necessity than a choice and it will likely become an integral component of a bank’s business strategy. Realizing this, many banks in the region already have developed basic capabilities. Institutions behind the curve may wish to act soon or risk being left behind, and even market leaders may benefit from re-examining their strategies to fully integrate mobile banking into their operations. Those who accelerate their plans and develop innovative strategies could shape the mobile landscape to their advantage.

This paper addresses the current climate, future prospects, and possible challenges to the growth of mobile banking in the region, focusing on Argentina, Brazil, and Mexico. Though the final form may vary locally, we expect a rapid transformation in mobile banking and payments in Latin America throughout the next several years.

The full report can be downloaded from here.

1 In this document, the term “underbanked” refers both to those with limited access to financial services and those with no access at all.

2 As used in this document, “Deloitte” means Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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According to the travel search site Skyscanner.com, following are the top 15 perceived rudest countries for travelers.

1. France
2. Russia
3. UK
4. Germany
5. China
6. USA
7. Spain
8. Italy
9. Poland
10. Turkey
11. India
12. Switzerland
13. Greek
14. Croatia
15. Austria

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