The Fintech Ecosystem in Colombia Exceeds 322 Companies

The evolution of the Fintech industry in Colombia is growing by leaps and bounds. The rise in recent years has been satisfactory for this business that currently continues to open possibilities to Colombians who do not have access to the traditional financial system. In fact, Colombia’s fintech ecosystem is one of the most dynamic and exceeded 322 companies, ranking third in the region, after Brazil and Mexico, according to the Fintank 2020 Sector Report.

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The figures are showing that the overall growth of the sector in terms of the number of companies was 36% since 2017

The president of Colombia Fintech, Erikc Rincón Cárdenas, argues that the annual growth in that number, between 2019 and 2020, was about 2%, however, in 2020 entrepreneurship initiatives were identified, given the pandemic that drové the creation of technology-based business models, many were not necessarily formalized the same year, so this year could see a new boom.

According to the latest Colombia Fintech study, around 9,300 jobs have been created in the sector and between 2019 and 2020 there was a 38% increase in this figure. In addition, a growing demand for digital financial services was evidenced and this generated the need to strengthen business capabilities with human talent.

Another point where the revolution that these companies are creating in the country is evident is in the sales they generate, which in 2019 totaled $540 million, presenting an average increase of 24%, based on the data found in 2017.

So far, these companies focus on the business of providing digital loans, of national origin, and mostly to microenterprises, in addition to creating different platforms to improve other services, such as virtual wallets or platforms for remittances.

According to Fintank 2020: 30% of the sector is credit; followed by digital payments with 26% of ventures, while the corporate finance segment accounts for 13.04%.

Among the giants that are revolutionizing the payments market are Puntored, which connects companies in the financial sector with individuals; Movii, the largest Sedpe in the country, about to reach 1.8 million people; there is also Tpaga, a Fintech of payments for temporary employees; and Rapicredit that provides digital credits. Others with great growth have been Mercado Pago; a2censo of the Colombian Stock Exchange; Sempli, dale!, sepde of Grupo Aval, among others.

José Manuel Ayerbe, vice president of Corporate Marketing of Grupo Aval, said that this ecosystem is expanding and is positioned as one of the most important in the race for innovation in Latin America, presenting itself as a major driver of development in the country, especially in the last year in which the digital banking sector has experienced a growth of 59% over the previous year.

Regarding the startups participating in the business in Colombia, Colombia Fintech showed that 67% of the organizations are micro-enterprises, 19% are small companies, 8% are medium-sized and 6% are large corporations.

Users as the winners of the fintech revolution

Currently, there are more traditional and disruptive players that in some scenarios compete, in others they target different audiences, even generating synergies to add talent. According to Colombia Fintech, this means that the winners of this revolution are the users who can now choose from a wider range of options to satisfy their financial needs.

Lina parra, A2censo Product Manager at the BVC, points out that the pandemic has been an opportunity for this ecosystem to continue to strengthen and develop. “Many of them turned to offer platforms that will allow them to make their transactions through electronic means, service payments, pensions, government subsidies, among others, which has generated an expansive effect in the sector. In fact, the BVC is one of the players that is playing a leading role as an agent of change, offering solutions to a public that we had not reached before”, he concluded.

Financial inclusion

Diego Navarro, director of Mercado Pago, said that the results have been outstanding, due to the fact that financial services have been modernized, with the massification of technological alternatives, on digital payments, becoming a key tool for financial inclusion. “In 2020, a triple-digit increase in the use of this technology was presented and in the first quarter of 2021, the growth of online payments continues in triple digits. In addition, in the case of QR codes, growth of up to five times in transactions was recorded.”

Andrés Albán. CEO of Puntored, added that “the fintech industry has an immense potential to support economic recovery, this can be given from digital payments in small businesses in rural areas; embedded financial services, that is, that other companies can incorporate financial services in their applications; in addition to digital credits.’

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(Featured image by GRAPHICALBRAIN via Pixabay)

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