“We have to work to increase the full scope of financial education”

Lina Vargas Vega – [email protected]

The products created by fintech and microfinance entities are key to generating financial inclusion and, thus, allowing more Colombians to access banking.

However, these companies face a great long-standing enemy to meet this goal: drop by drop.

That was one of the central themes of the LR Forum ‘Fintech-Microfinance’, which had the participation of Jorge Castaño, financial superintendent; Javier Ichazo, leader of Credicorp’s Microfinance Business line; María Clara Hoyos, president of the Colombian Association of Microfinance Institutions (Asomicrofinanzas); Germán Rueda, vice minister of digital transformation of the Ministry of Information and Communication Technologies; and Giovanni Vellojin, founder and manager of Payments Way.

During the event, Ichazo Bardales assured that there are two great challenges to combat the drop-by-drop phenomenon: the first is to work on financial education, multiplying its scope, and is the creation of efficient, fast and timely models to counteract it.

Hoyos emphasized the importance of microfinance to avoid these informal loans, especially in the business sector. “It is necessary to go to the microentrepreneur so that they not only obtain access to the financial service, but also so that they can take the step and use it.”

According to the panelists, a solution to this problem is the inclusion of new players in the financial sector, which are more technological. Vellojin assured that fintech companies can collaborate so that people enter the financial system. “We can help a lot so that people, especially the informal ones, enter the system with access to services such as collection or shipments.”

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The financial superintendent agreed and spoke of the entity’s efforts to integrate new players into the market under the cybersecurity parameters and quality standards required by the entity. He even pointed out that the agency has just approved two licenses to strengthen the sector.

All this must be accompanied by the Government. Rueda revealed the launch of the Digital Citizen Folder, in which Colombians will be able to find information such as tax records, transport data, health and work, among other information, that will help them improve their credit score.

Licenses approved

Superintendent Castaño affirmed that the new disruptive actors, such as neobanks or crowdfunding, came to complement the traditional methodology of accompaniment to the microentrepreneur, hand in hand with technology. “This week, in the advisory council of the Superintendency, two new licenses were authorized that will allow the promotion of payments and the formalization of small businesses, without offices, all in the cloud, in digital banking,” said the panelist; however, it did not disclose the names of these new companies.

Poverty and finances

For Hoyos, microfinance consists of bringing financial services to the population at the base of the pyramid, offering everything from financial solutions to support in technological services, but with financial education. The directive stressed that part of the characterization of the poor population is that they are excluded from financial systems. Also, he explained the need to make companies formal, since 80% of microentrepreneurs are informal.

“It is necessary to work with the Government”

The panelist expressed that, at this juncture, it is very important to strengthen microfinance, since “they will be an escape valve for the thousands of people who have lost jobs as a result of the pandemic and who seek through this means to generate a source of income that allows them to support their families ”. According to Ichazo, this should be a shared task between the public and private sectors. Regarding drop by drop, the expert highlighted that when Credicorp arrived in Colombia it was looking to expand the market, which meant competing against this phenomenon.

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Connectivity on the rise

The vice minister spoke about the goal of the National Government to connect 70% of the country to the internet, to provide greater access to all Colombians. According to Rueda, at the beginning of the mandate the figure was in the order of 50%. Regarding the actions of the portfolio to avoid the lack of information, the vice minister said that they are training 140,000 community leaders in financial education, so that they are in charge of replicating that knowledge. In addition, he spoke of support for digital-based entrepreneurship by iNNpulsa.

Inclusion and fintech

The businessman highlighted the way in which fintech companies can collaborate so that people enter the financial system, taking into account that they are an attractive complement for banking, since it facilitates the development of simpler and more accessible applications for certain niches of the population to which the bank does not reach. For Vellojin, the financial support of the microentrepreneur is key to ensure that, through education, they can protect their company, collect and sell autonomously.

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