Fintech Company R5 Received Capital from Swiss Social Impact Fund

With the purpose of improving the credit life of millions of Colombians, as well as the entrepreneurship, development, and growth of new businesses, and strengthening an ecosystem for social impact investment, the Colombian fintech company R5, focused on offering financial solutions for vehicle owners, received a new round of investment from AlphaMundi.

AlphaMundi is an investment fund based in Switzerland that invests in solutions that generate benefits that are quantifiable for society.

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With this investment, R5 fulfilled one of its objectives, which was to demonstrate the impact it is generating and thus be able to continue working with the help of impact-minded investors

Precisely, one of the social impact indicators that R5 has is focused on the percentage of clients who have been able to help and who have had at least one negative experience of being financially excluded by traditional banks. Therefore, at present, 55% of its loans are granted to people with medium to low incomes, most of whom make use of these products to improve their economy through the purchase of a vehicle or to finance their microenterprises.

“The objective with this investment is to improve our credit product focused on the purchase of used cars and reach more customers, most of whom meet a characteristic of financial exclusion due to their economic activity (self-employed). Through this investment, R5 will continue working to have a significant increase in the percentage of customers who need an ally to make their dreams come true or simply improve their living conditions,” explained Pablo Armida, co-founder of R5.

Similarly, of the total number of clients served since 2019 by R5, 43% corresponds to loans granted to independent clients, to whom the fintech company has been more open to help generate greater financial inclusion, and 60% of women who receive a loan from R5, are in a condition of economic vulnerability.

Within the definition of vulnerability criteria, R5 considers that people who have the income necessary for the economic support of their households are people who generally have a higher probability of crossing the poverty line, so any variation in their income is sensitive to ensure a good quality of life in their homes.

Why is it important for a fintech company to measure its social impact?

The purpose of fintech companies is to use technology to provide faster solutions at lower costs with the objective of improving financial inclusion and the quality of life of people. In this way, investments such as those made by AlphaMundi and other social impact funds are not only measured in economic terms but also in their capacity to generate substantial benefits for society.

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(Featured image by cosmix via Pixabay)

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

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