THROUGH THICK & THIN
Colombia’s recent economic and political climate has fostered a degree of uncertainty within the finance sector. The economy’s performance has worried stakeholders as inflation soared to double digits during 2023 and GDP slipped into the negative during the last quarter of the year. However, the companies we spoke with for this chapter have worked on new strategies to reach a wider client base and improve trust with existing partners.
Manuel Arévalo, President of CESCE, told TBY; “In this situation with the current economic difficulties, my main advice has been to remain close to the clients to truly understand their real situation.”
In the insurance sector, education and information campaigns have been deployed to boost penetration rates. Carlos Vélez Mejía, President of Nacional de Seguros, told us that; “I believe that insurance penetration is closely related to people’s banking exposure,” which could spell good times ahead as Colombia’s online banking penetration rate continues to grow—the rate could hit over 16% by 2029, according to Statista.
The growing adoption of online banking is just one aspect of growing digitalization in the finance space in Colombia. Indeed, a wide range of fintech firms are working to lower barriers and facilitate access to finance products.
“Initially focusing on remittances between Colombian and Venezuelan immigrants, we transitioned to a corporate setup for international payments a year ago. Our growth has been remarkable, with 70,000 customers initially averaging USD100 per payment, now serving 70 customers with an average payment of USD 50,000”, said Esteban Villegas, CEO and Co-Founder of fintech Zulu, during an interview with TBY.
Additionally, the devaluation of the peso compared to the US dollar has also opened up new opportunities for Colombians to work remotely for international companies. While in 2014 USD1 was worth COP1,800, it was worth COP5,100 by the start of 2023, meaning remote workers vastly increased their purchasing power within Colombia. However, accessing their assets posed a challenge that fintechs like Littio are willing to take on. Littio’s Co-Founder and President, Christian Knudsen, explained to The Business Year that, “many users in Colombia, including freelancers, remote workers, and digital nomads, face difficulties receiving their US salaries due to high transaction fees from services.” Littio, a global multi-currency wallet, is a local solution aiming to grow its user base off the back of this reality.
The financial industry in Colombia is ripe with opportunities despite the economic climate. Companies are increasingly aware of the challenges this implies and are actively seeking ways to stay resilient and make their customers feel like they are closer and more attentive to their needs than ever before.