Significant portion of the population in Colombia is not part of the traditional banking system, leaving a great deal of opportunity for fintech startups. Colombia now ranks third among Latin American countries with the most fintech startups. What sets Colombia’s fintech sector apart from other fintech hubs in Latin America is its focus not only on developing solutions for consumers who have been left out of the traditional financial system but also for small and medium-sized enterprises (SMEs). In fact, 45% of Colombian startups in the fintech sector are focusing on this segment. Colombia’s fintech sector grew 60% between 2016 and 2017, or approximately 20% faster than the regional average. Here’s a look at what is making Colombia’s fintech sector stand out in Latin America.
Cell phone penetration in Colombia is 105% and banks like Davivienda, one of the largest banks in Colombia, are taking advantage of the fact that Colombians are well-connected. With its app Daviplata, consumers in Colombia can make and receive national transfers between Davi users, receive international money orders, add credit to their mobile phones, pay their bills, and much more. Consumer reception and adoption of Daviplata is significant. The platform has a government contract to distribute government-to-person payments to more than 900,000 families involved with Familias en Acción, a social program that helps Colombian families with children.
Overhauling Colombia’s financial sector isn’t without its challenges. However, with the growing backing of fintech innovations from the government, banks, and investors, entrepreneurs are more easily finding the support and financial backing they need for their ideas and efforts. As a result, more unbanked and underbanked consumers and businesses of Colombia are entering the system and pushing Colombia forward as a fintech leader.