Fintech in Colombia: Credit Where Credit’s Due

The current global conjunction can perhaps best be summed up in the single word: disruption.

We are witnessing disruption of once unassailable global balances through economic adventurism from the East. Disruption to uneasy peace on the doorstep of a Cold War adversary, and disruption to working practice from a crown-shaped virus. Yet, disruption has a different face. One today spoken of glowingly for its promise of breaking molds, ditching stale practices, and sharing possibilities. And in this camp sits fintech.

From Testbed…

A champion of experimentation, Colombia established Latin America’s pioneering sandbox where start-ups in the financial sector got to play with business models without the requirements of a traditional financial services license. All under regulatory supervision. Decree 1234 of 2020 then took the step of authorizing controlled testing of cryptocurrency operations.

Colombia has notched up its own startup Unicorns, but there’s vibrant activity, too, below the billion-dollar valuation mark, including fintechs. In March local name Avista bagged a USD22.5 million debt facility from Accial Capital, an EM-focused investor in asset-backed fintech lending portfolios. Avista’s services provide wider financial accessibility to credit. The debt facility will allow the fintech to expand its loan originations geared at the retiree, teacher, and law enforcement segments.

Disruption Through Lessons Learned

Fintech is a prime commercial example of standing on the shoulders of giants. As Diego Rios, Co-founder & CEO of Veci explains to TBY, “The way fintech can be competitive is by learning something from the traditional banks, such as how to make smarter decisions, and manage risk and reputation, for instance.” Their advantage is, “…leveraging operational speed.” Rios notes, too, how the firm’s “…strategies are fully digital […] which spells low operational cost.”


In Latin America, SMEs are the lifeblood of local communities and a major contributor to GDP. In Colombia, they account for 99.6% of all formal businesses, while generating roughly 40% of GDP. They also provide 65% of employment, notably to the lower income population.

Yet such businesses across the EM universe have traditionally faced challenges in securing credit for expansion, in turn curbing growth of the registered economy and tax revenues. Traditional banks have been reluctant to extend credit due to SME’s general lack of financial transparency. Additionally, in many cases these are businesses merely surviving, hence meagre prospects for conservative lenders.

And this is precisely where the fintechs have stolen the march. Veci, which had notched up 5,000 users by the end of 2022, allows SMEs to sell and obtain credit on a single app. It appears that the denizens of Latin America are averse to cramming endless apps on their phones.

More than a Store

In the words of Andrés Albán, the CEO of Puntored, a Company that processes alternative payment methods facilitating financial inclusion in Latin America, in many small or remote towns and villages humble mom-and-pop store is anything but humble. Indeed they, “…become the bank agent, bringing many services to the community [which delivers both] a reputation and an income,” from commissions charged per transaction.

All Invited to the Party

Geography, compounding regional disparities, was shrunk by the arrival of the digital era.
Inclusion remains the name of the game in the fintech (r)evolution. And the Colombia’s rise in access to financial services has been nothing short of vertiginous.

Albán recalls how, “Sixteen years ago, only around 35% of adults in Colombia had financial products.” Today, the country leads the regional bankarization stakes with close to 90% of adults utilizing a financial product through innovations like the mobile wallet.”

The nation’s women have also been a key beneficiary of digital banking. Often the heads of their families, women have been making financial decisions that impact a large number of relatives. And finally moving on this, in 2012 Colombian state launched the Familias en Acción program that today, “…reaches three or four million women nationwide, especially in underbanked regions. We…” Albán notes “…were the drivers bringing these benefits to the population.

And each month Puntored caters to the financial transactions of 11 million citizens out of total a population of around 58 million, processing roughly 300 million transactions each year. In brief, the company forms a bridge between, “…around 100 institutions, such as the government, insurance companies, banks,” and the underbanked.

Expanding the Matrix

FinTech services that assist the citizen and enhance the digital infrastructure itself solve universal problems. This translates into scope for international expansion. Puntored has, “… an operation in Puerto Rico […] our step into the migrant U.S. market.” And for its wider roster of “…prepaid and content products, the top-ups, and prepaid film and TV services, we are launching our service in 36 countries,” across Latin America.

Fintech investment is estimated to have scaled USD616 million in 2022, setting a new Colombian record. Hardly surprising given its innovative contribution far beyond financial inclusion.

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