Have fintechs redefined the relationship between consumers and financial institutions?

He Fintech ecosystem in Colombia has achieved significant growth, redefining the relationship between consumers and financial institutions. According to the VII Finnovista Fintech Radar Colombia, the number of companies ‘The number of local fintech companies has increased to 394 in the first four months of 2024, reflecting a growth of 6.8% in the last year.

In addition, it is estimated that there are more than 169 foreign startups operating in the country, bringing the Colombian market to more than 560 companies.

(Can read: Fintechs are expanding their business model to attract cheaper and more stable financing).

Artificial intelligence (AI) is the fastest growing technology among Colombian fintechs. About two-thirds of these companies use AI to optimize decision-making (68.3%) and process automation (65.9%). It is also used to improve customer service (51.2%), financial analysis (50.4%) and fraud prevention (43.9%). Companies such as RapiCredit, a company dedicated to 100% online loans, are at the forefront of implementing these technologies.

Likewise, studies by Colombia Fintech point out direct benefits in terms of financial access and inclusionhighlighting that loans help households cope with emergencies and smooth out their income, and allow SMEs and self-employed workers to make investments that would not be possible without access to creditIn addition, fintechs improve the quality of service, reducing the time and costs of evaluating and disbursing credits, providing greater resources and liquidity for users.

(We recommend: The new strategy of digital banking to face the ‘rate war’).

“Fintechs are profoundly transforming the relationship between consumers and financial institutions in the country. At RapiCredit, we see how the implementation of advanced technologies, such as artificial intelligence, allows us to offer more agile and personalized solutions. This change not only improves the efficiency of processes, but also expands access to financial services for previously underserved groups, fostering greater inclusion and financial empowerment throughout Colombian society.”, he commented Daniel Materón, CEO of RapiCredit.

Colombia ranks as the third largest fintech ecosystem in Latin America, behind Mexico and Brazil. According to a report by Asobancariaone of the fintech segments with the greatest growth potential is digital credit, with RapiCredit playing a leading role. New technologies and algorithms make credit processes more agile and accessible, promoting financial inclusion, especially for population groups with restrictions on access to credit.

On the other hand, the Colombian fintech ecosystem is eagerly awaiting the new Open Finance law, with 83.3% of fintechs anticipating that it will allow them to offer more personalized and improved products to users. “Consumers in general, as owners of their information, need regulation to define the framework under which Open Finance and, at some point, open data operate. This will allow all Colombians to share our information so that, within the framework of commercial transactions, suppliers can make informed decisions; and consumers can improve their commercial and negotiation position when acquiring a good or service. In addition, it will help reduce the information asymmetry that financially unincluded populations have, for example, and achieve access to the services they require.“.

Fintech

iStock

(Read also: Fintech market creates digital wallet aimed at independent workers).

In the last year, there has been a notable increase in solutions for underbanked people, which now represent more than a quarter of the Fintech offer in Colombia, rising from 17.8% in 2023 to 28.7% in 2024. Solutions focused on already banked SMEs have also grown, from 15% in 2023 to 18.5% in 2024.

BRIEFCASE