Bienvenido a Colombia!, or welcome to Colombia! A country that is home to passionate soccer fans, coffee, and an explosion of fintech in recent years.
Colombia has the third most fintech activity in Latin America after Mexico and Brazil. In the last year alone fintech in Colombia grew 26%, seeing over 200 fintech startups in the country.
Now with coronavirus spreading across the globe and making Latin America one of its latest epicenters, what are the latest trends of fintech in Colombia?
Keep reading to find out!
What is Fintech?
Financial Technology, or “fintech,” includes any kind of technology in financial services. You use fintech a lot more than you think!
Below are just a few examples.
Companies like Kickstarter, GoFundMe, and more all use fintech outside of the traditional banking sense. Crowdfunding platforms raise money from a variety of sources for a specific cause like new projects, businesses, or fundraisers.
Instead of going to a bank for a loan, you can go directly to investors for support on your new projects!
Apps like Zelle, Venmo, ApplePay, and PayPal all use fintech to make transferring money easier than ever before. This makes it convenient and fast for you to make payments and send and receive money directly into your bank account.
Blockchain and Cryptocurrency
Blockchain is exactly what it sounds like, a long chain of blocks with a record of transactions on each block. It was created to carry the location of cryptocurrency but is used for a lot more now like voting records and medical data.
Cryptocurrency is basically a digital currency, with the most famous one being Bitcoin.
Blockchain and Cryptocurrency are relatively new fintech innovations that have already taken parts of the investment world by storm!
These new technologies make transferring money more efficient, quick, and secure than cash. Keep your eye out for these innovations because experts agree that they have the potential to drastically improve many industries!
Now that we’ve covered the basics of fintech, let’s turn our attention to fintech trends in the Colombian market.
Trends of Fintech in Colombia
Colombia is among the top three countries when it comes to fintech ecosystems in Latin America.
There are about 200 fintech companies in Colombia, making up about 13% of all fintech companies in the region. Let’s go over how exactly coronavirus has affected fintech in Colombia.
Most fintech companies in Colombia are located in Bogotá or Medellín. They’ve grown rapidly and attracted attention and financing from foreign investors. About 61% of Colombian fintechs raised financing from foreign investors.
For instance, Greensill Capital, a well-recognized British firm that helps businesses fund their operations, is acquiring Colombia-based Omni Latam this summer. This is bound to speed up fintech growth in Latin America.
Now, it may be surprising to learn that fintech has only continued to grow since coronavirus hit the region!
Fintech firms have closely been working with the public sector to lead about two million people in opening deposit accounts for the first time between March and June.
This has made it easier for the federal government to issue pandemic-related aid to its citizens.
Just look at the rise in deposit accounts in Colombia!
The lending sector has also exploded for fintech in Colombia. This makes sense as tons of people and businesses need to take out loans in order to avoid bankruptcy.
It is more practical to get these loans through online banking than having to enter a bank and risk contracting coronavirus.
In second place are payment and remittances, with 43 companies. This can be due to family, friends, and the government sending money digitally in this difficult time.
Just check out this illustration below:
With all of the movements in Colombia as of late, fintech is an industry that is definitely one to watch. Be sure to check out our complete guide on fintech in Colombia for more information and insights.
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