Andrés Albán

TBY talks to Andrés Albán, CEO of Puntored, about the evolution of the company, financial inclusion, and leveraging data gathering.

What has been the evolution of Puntored over the past 18 years?

We were probably one of the first fintech companies in Colombia, even before the word itself existed. There was no concept at the time of financial service companies backed by technology. Since the beginning, our aim, and where we saw the greatest opportunity, was to bring financial services to people in remote regions of the country and the outskirts of cities who lacked access to financial services. Sixteen years ago, only around 35% of adults in Colombia had financial products. Financial institutions faced challenges in delivering products and services to certain regions and those areas lacked bank branches and ATMs. Even the state financial apparatus had difficulties reaching every region. We perceived a way to bring many financial services to these unserved people. Using a network of small agents and stores as bank agents, we could bring these financial services very close to their homes and neighborhoods. Of course, this required technology, and we were born out of this endeavor. We developed a platform that allowed the payment of a bill to, say, a utility company. People could do this conveniently close to their homes. Around 2012, a large benefit program was made available by the state banking system, called “Familias en Accion”. It was aimed at women who are the heads of their families, and today reaches three or four million women nationwide, especially in underbanked regions. We were the drivers bringing these benefits to the population. People could finally receive cash at the sales point. Puntored has registered a considerable solutions impact. We are much more at the base of the pyramid.

How has Puntored served for a better Financial Inclusion?

Right now, we are serving around eleven million Colombians monthly who pay and do other financial transactions at points of sale. We help around 100 institutions, such as the government, insurance companies, banks, and digital wallets to access the underbanked population. We process around 300 million transactions each year. In 2022, we processed around USD 4 billion in small transactions of 5 to 10 USD. The other segment that enjoys numerous benefits from Puntored is independent store owners. They see us as an important ally for growing their business. Many of these mom-and-pop shops didn’t have connectivity when we started. They had never used technology before, or any computerized payment or management system in their stores. Being underbanked, they first had to incorporate technology somehow, learning how to move money and become bank agents. They are now even more important in their respective communities. Because in a small town in a region of the Amazon, mom-and-pop shops become the bank agent, bringing many services to the community. It gives them a reputation and an extra income because of the small commissions charged for each transaction. On average, a merchant with Puntored has a monthly income of around USD 100 to 300 for being the bank agent of the town or region. The families that own the stores generate employment for their families. And meanwhile, we generate the momentum that helps the community in different ways. We have around 100,000 outlets, of which 28,000 are independent small merchants that work with Puntored.

What was the impact of the pandemic and the role of Puntored?

The most important realization recently, especially during the pandemic, was that there were two large trends emerging. First, seeing the success we had in introducing financial services, many people would open a bank account. Today, Colombia tops the region for bankarization. Almost 90% of adults have a financial product. It is a combination of the effort of the banking agent system built by Puntored, helping the banks, combined with the search for mobile wallets that’s come into the market. Nequi, DaviPlata and Rappi are examples. It is an important combination because people will download the app and have mobile wallets but need to interact with merchants or do cash-in and cash-out payments with them. That is where Puntored has a strong standing. In that sense, when we started seeing the digitalization of many of these products, we fully grasped Puntored’s connection with the financial ecosystem.

How has Puntored diversified into other services?

In 2022, connected with 12 banks, probably accounting for 80% of Colombia’s banking system. We are connected with all mobile wallets such as Nequi, DaviPlata, Rappi, mercado pago, and Claro Pay. We also have connections with many insurance companies, and can become an important player in open finance. Open banking and finance are all about connections and APIs. We took these connections, which we’d built over the past 17 years, amplified them, and opened them to fintech companies and new players entering the market that need connections in the financial system. We can offer them these APIs to connect with the financial system. This is particularly interesting for us as it involves a move into the digital world.

How are you leveraging the data you gather?

We have launched a product called Puntored Data Services building on all the data we have gathered over 18 years, including people at the base of the pyramid who pay at a point of sale in cash. The traditional data system, like the bureaus or banks, cannot see them because it’s in cash. They pay a top-up for their phone, bill payment, or for receiving state banking service for a cash-out. Almost a third of the population had never had a bank product, and in consequence were invisible. If one of these unseen people sought credit, they would get rejected automatically. Not because they were not good payers but because there was no data on them. We vitally take this data and make it available to credit decision-makers. We are currently working with fintechs and banks to build products specially designed for these underbanked people. We are receiving input that the data works well and NPLs are low. Thus, we make a contribution to the availability of credit.

Would you ever export your model and expertise to other countries in the region?

We are in the process of doing just that. We have been a local company over these years because we were growing both in terms of our national coverage and product range. Yet, we realized a couple of years ago that our model was exportable and began to explore potential foreign avenues. We have an operation in Puerto Rico, which is our step into the migrant U.S. market. Right now, we are focused on building the same connections we have here in Colombia with the LATAM ecosystem. For prepaid and content products, the top-ups, and prepaid film and TV services, we have launched our service in 36 countries, almost the whole of LATAM. We have been focusing on connections and bringing the customers to the digital side of the business with the APIs we offer. We have just launched this service and, hopefully, we will soon have our first couple of international customers. The physical operation, the merchant, and the bank agent operation. We are looking to expand into the less-served markets and identify new opportunities. And for 2023, our goal is to have at least a couple of new operations beyond Colombia. Now is the time for expansion.