Let’s start this article with a pop quiz.
Name the country that had the highest digital engagement in 2023. You get to pick from a list of 11 countries that includes the U.S.; the U.K.; Australia; the five largest EU economies, France, Italy, Spain, Germany, and the Netherlands; two Asia Pacific countries, Japan and Singapore; and one Latin American country, Brazil.
Now, unless you guessed Brazil, you’d be wrong. Yes, Brazil. It’s the only developing economy on that list. But it’s just one of the many surprising insights from “How The World Does Digital,” a landmark study of the digital behaviors of 67,000 consumers in those 11 countries representing 817 million people and roughly half of the global GDP. The study was conducted quarterly in 2023 by PYMNTS Intelligence and released on June 24.
We’ve been doing this study each year since 2021, but 2023 was the report we were most anxious to see. It was the first full year that consumers everywhere reentered the physical world, giving us a chance to see how they use digital to conduct 40 core activities, including how they pay, bank, shop, live, work, have fun, stay well, communicate, travel and eat. It has insights to be gained for the here and the now of digital transformation, and more importantly for what business leaders and innovators can do to pull more consumers across every generation into the digital economy.
To start that discussion, PYMNTS CEO Karen Webster gathered a panel of experts who bring firsthand knowledge of the country, the culture, the dynamics and the economic impact of going digital. The panel included Ruben Salazar Genovez, president of cross-border payment enabler TerraPay; Odilon Almeida, managing principal of AJ Holdings and operating partner at Advent International; Cyril Chiche, CEO and co-founder of Lydia Solutions; and David Evans, economist and chairman of Market Platform Dynamics, who designed the study’s methodology and analytical framework and served as its senior economic adviser.
One of the key findings — outside of the country-by-country ranking — is that although the digital transformation varies from nation to nation, the key conduits of doing more online are in place. Genovez said that there’s been impressive penetration of mobile devices across all of these 11 markets, so much so that digital content can be consumed anytime and pretty much anywhere. Beyond the personal consumption of media, games, and, of course, social interactions, it’s become possible to run one’s business with a device held in the palm of one’s hand.
A full embrace of digital possibilities and multi-tasking, remarked Evans, requires older generations, especially business managers in Generation X and even boomer generations, to realize the productivity tied to moving more processes online. Evans pointed out that this creates a stark divide between these generations and their millennial and Generation Z counterparts.
Evans argued that this gap is significant because older workers often occupy decision-making roles that influence a company’s digital strategy and adoption of new technologies. Their level of digital engagement can either accelerate or impede the implementation of productivity improvements across organizations.
Evans further noted that while younger workers tend to be more digitally adept, a large portion of the workforce, especially in senior positions, consists of Gen X and younger baby boomers. Their digital proficiency, or lack thereof, can significantly impact a company’s ability to roll out new digital initiatives effectively.
“If you have a workforce that is not accustomed to using digital,” he said, “that’s going to slow things down.”
Indeed, as the data shows, boomers engaged in the fewest number of “activity days” per month, at 160, while Gen Z logged more than 413 days.
But with the right tools in hand — both for digital infrastructure and mobile apps — and even a top-down approach to digital engagement, all generations of consumers can be part of the digital transformation.
It’s part of the dynamic at play in Brazil. Across the 11 countries surveyed, Brazil stands out as a beacon of digital engagement. According to the data, Brazil’s digital activity days overall stood at 361, the highest tally among all nations in the study. Gen Z members showed nearly 411 activity days, but even Gen X (at 335 days) and boomers (at 272 days) far outpaced the respective averages of 257 and 161 days.
With the proliferation of what Genovez termed “device dependency,” consumers, two-thirds of whom own smartphones, are demanding that everything be done in real time and online.
“The developer community,” he told Webster, “knows about these traits, and they continue to create apps that we did not know we needed … until we start using them.”
The introduction of Pix, an instant-payment app launched by Brazil’s central bank in 2023, was a force that “lit up” Brazil, according to Genovez.
“In many ways, Pix is the enabler for this impressive digital adoption in Brazil,” he said. “The gig economy, content creators, gaming, streaming services like Netflix or marketplaces like Mercado Libre, all of them need efficient payment infrastructure. So Pix is the backbone of this digital adoption in Brazil today.”
Pix, said Genovez, also allowed more businesses and consumers to engage across digital marketplaces and to open up the field to FinTechs and other digital-only innovators — so much so that the country’s been home to 45% of FinTech revenues in the region as neobanks such as Nubank have gained ground.
“None of this happened by chance,” Almeida said. The central bank in Brazil (and, similarly, in India) has made participation in instant payments mandatory for banks and other financial services firms so that gig economy workers, content creators and marketplaces have access to efficient payments infrastructure. Payments speed, panelists said, has been a key way to counter the impacts of hyperinflation, because money received today is worth more than might be seen tomorrow.
Even in countries lagging behind Brazil, digital transformation among younger users is apparent.
France, for example, has seen Gen Z participation stand at 465 digital activity days per month. Chiche said that companies like Lydia, operating as a mobile payments company with more than 700,000 users across millennial and Gen Z users, has taken a cue from Kenya’s M-PESA money mobility service.
As a financial services market, France has been dominated by big banks, but a government-led digital initiative — as part of the European Union’s 2030 “digital decade” program — has broadened the competitive landscape. Lydia, Chiche said, “started on university campuses and then spread like wildfire.” Those same consumers, he said, will be the ones leading companies in the near and longer term, so the cycle of digital innovation is firmly in place.
What’s happening in Europe and Latin America, said the panelists, stands in stark contrast to the United States, where Almeida believes the digital revolution will be merchant-led. Here, the Federal Reserve is not able to mandate that all financial institutions connect to faster payment rails. The private sector is taking the initiative to shift consumers and businesses to those rails — and billers, by way of example, are offering discounts for customers who embrace pay-by-bank options.
The banks will have to follow suit, revamping their offerings and competitive playbooks, Chiche predicted. The digital upstarts, he said, “are coming up with new products, better products at a cheaper price,” while banks are still constrained by capital requirements and dividend policies. Lydia, he said, has been offering interest on checking accounts at 4%, which has helped lure users.
Evans chimed in that there’s still ample opportunity for digital engagement to make inroads across most of the countries surveyed. He noted that connected home devices have not been used by a staggering 75% of individuals, chiefly because the technology and user experiences have been disappointing. Banking, health care and even shopping still are ripe for a greater pivot to digital channels.
“One of the interesting observations from the study is how many opportunities there are for digital entrepreneurs to come up with better ways of engaging people,” Evans said. “Why are people not using voice-activated devices at home? Well, my conjecture is probably because they’re not very good. But there are a lot of opportunities now with AI where that’s gonna change. I think you have the same situation with telehealth. It makes a lot of a lot of sense that that would be successful, but it hasn’t been successful yet because people haven’t come up with the right business model.”
Almeida said that AI will change financial services, including cross-border remittances, eliminating some of the frictions of the correspondent banking system; Chiche said his company is harnessing advanced technologies to create “network of networks” for digital wallets to move money instantly. As Genovez told the panel, across all 11 markets continually monitored by PYMNTS, “you’re seeing tons of opportunities for cash displacement — and digital money movement will support the inclusion of billions of individuals who still remain under-served.”
In summary, the panelists came back to the basics of driving digital transformation either within their financial ecosystem or within their own companies. For example, Terrapay’s Genovez is focused on other emerging markets to use technology to displace cash and drive financial inclusion in the process. Consequently, the adoption of digital remittances is important to his company, as are partnerships with digital wallet providers.
Chiche called the continued acceleration of digital transformation is “unstoppable.” He illustrated this point with examples from France, noting a significant shift in consumer behavior over the past five years. He described how contactless payments, once met with resistance, particularly among older demographics, have now become so ingrained that their absence causes frustration.
Chiche also emphasized the pandemic’s role in accelerating the displacement of cash, particularly in traditionally cash-heavy economies like Germany. He noted that the pandemic achieved a level of change in cash usage that neither technological advancements, political initiatives, nor public preferences had previously accomplished.
In Chiche’s view, while the adoption rates may vary between countries and can be influenced by various factors including market conditions and technological advancements, the overall trend toward digital financial services is irreversible. He suggested that unforeseen events can sometimes serve as powerful catalysts, rapidly advancing digital adoption beyond what might have been achieved through planned initiatives alone.
For Evans, it comes down to how the world does business models and innovation. He stressed the tremendous entrepreneurial opportunities detailed in the study and made improvements on behaviors that are already in their early days. He noted that the study originally put forward 70 activities, for example, but settled on 40 that had the highest levels of engagement. The remaining 30 hold the clues for Evans’ vision of the future.
“We’re at a very early stage in digital transformation, with a lot of opportunities for improving what we currently already have, but also lots of opportunities to come up with new things,” he said. “Maybe that’s monetizing attention with transactions, but I suspect that, more of it is improving and perfecting these business models.”
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