70% of Colombian Fintech Companies Will Prioritize Digital Transformation

Currently, the Colombian fintech sector is at a technological and innovation turning point with the arrival of new trends and tools such as open finance and artificial intelligence.

According to the third measurement of the Innovarometer of the Colombian Financial Superintendence (SFC), entities face a more challenging technological horizon than that observed in previous years.

The survey seeks to identify the advances, trends, opportunities and challenges of financial and technological innovation, as well as the implementation of new technologies in the financial system. 256 companies were interviewed, including traditional financial institutions and fintechs, which represents a 45% growth compared to the respondent base in 2021.

The results reveal that six out of 10 traditional financial institutions are at a “developing” level of innovation, while the same proportion of Colombian fintech companies are at an “advanced” stage. Looking to the future, 64% of traditional financial institutions and 68% of fintechs maintain that continuing to work on digital transformation initiatives in the coming years is a priority.

The innovation strategy approaches of the Colombian fintech sector remain the same compared to the measurement made in 2021. The traditional segment identifies the development of products to improve internal processes (57%), financial education (41%) and electronic payments (35%) as an opportunity for innovation. The latter were also the main interest for fintechs, followed by savings products (61%) and financial education (35%).

For the entities participating in the survey, open finance leads the areas identified as opportunities for the sector in the medium term.

Colombian fintech sector: Current and future challenges

One of the objectives of conducting the survey is to identify the current challenges facing the financial system to innovate and, to the extent possible, convert these responses into proposals that enrich the industry in the country.

Thus, the main challenges identified by Colombian fintech companies when advancing their innovation strategy are the regulatory burden (24% of the traditional segment and 32% of fintechs); cybersecurity, data management and information security (17% vs 23%) and low budget allocation and access to financing (13% vs 17%).

Regarding the effects that new regulations could have on enabling innovative products, services or business models, five out of 10 traditional financial institutions and eight out of 10 fintechs responded that the regulation with the greatest impact would be the one related to finance and open data.

Artificial intelligence adopted by Colombian fintech companies

The adoption of technologies such as Artificial Intelligence (AI) in the financial services space has seen steady growth in recent years. As for the most important uses of AI, traditional companies identified improved operational efficiency, customer experience, and greater accuracy in decision-making. In addition to these three, Colombian fintech companies also highlighted innovation in products and services and cost reduction.

Regarding working with third-party service providers to support implementation within the organization, entities highlighted their use in cloud-related developments and models.

Finally, they were asked about the restrictions that most limit the implementation of AI within organizations. The majority in both segments highlighted that the problems are generated mainly by organizational culture, data privacy regulations, and deficiencies in data governance processes. In addition to the above, traditional financial institutions highlighted the barriers related to insufficient talent and capabilities.

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(Featured image by Igor Omilaev via Unsplash)

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First published in DF SUD. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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