Colombia: underdeveloped Wealthtech and Banking Tech sectors are an opportunity for Swiss fintechs

In Colombia, the underdeveloped fintech segments, including investment management / wealth technology and banking infrastructure, represent a market opportunity for Swiss fintech companies, which over the years have developed expertise and skills in both areas, according to a new report from the Swiss government agency Switzerland Global Enterprise (S-GE) says.

With more than 320 companies, Colombia has the third largest fintech ecosystem in Latin America (Latam), a booming industry that has been driven by the country’s young population of digital natives, the growing demand for digital financial services and a stable legal and political environment.

This landscape has fueled the rise of a fintech industry that is now largely dominated by the first state fintech services serving underbanked people, including neobanks and payment providers, leaving plenty of opportunities in the markets. areas of wealth tech, banking tech and more broadly fintech enablers, a paper says.

By comparison, Switzerland is a world leader in banking technology and wealth technology, building on the country’s historic leadership in innovation, banking and wealth management. This expertise, coupled with the growing demand for these solutions in Colombia, opens up opportunities for Swiss fintech companies in the country, he says.

Colombian fintech landscape compared to the Swiss fintech landscape, Source: Switzerland Global Enterprise, October 2021

Colombian fintech landscape compared to the Swiss fintech landscape, Source: Switzerland Global Enterprise, October 2021

Wealth technology and investment management firms make up only 24% of all FinTech firms in Colombia, making them a young segment that is emerging rapidly nonetheless. The industry is poised to grow, according to the report, and will be pulled by tech-savvy millennials demanding low-cost modern, transparent trading platforms and robo-advisers.

Banking infrastructure, a category that only represents 11% of the entire fintech startup landscape, is another segment with strong growth potential. This industry will develop thanks to the modernization efforts of the historic banks. These will look to replace their decades-old core systems to keep pace with cloud-native neo-banking leaders, the document said.

Payment and transfer opportunities

Besides these two market opportunities, other areas are also worth exploring. For example, 35% of FinTech companies in Colombia offer online lending solutions to consumers, making it quite a developed and crowded space. However, the persistent funding gap means that no real leader has yet emerged.

Opportunities also exist in the area of ​​payments, where changing customer expectations will increase the demand for frictionless processes, great experiences and great customer support. In this landscape, providers of payment solutions that are easy to integrate, inexpensive, and work on all platforms will have an advantage, according to the report.

Cross-border money transfer is another attractive segment, especially considering the amount of money Colombians abroad send home each year, estimated at $ 7 billion in 2020, according to data from the central bank of Colombia. Colombia is also home to two million immigrants and refugees from neighboring countries who also send money to their countries of origin.

SME financing gap

Although Colombia’s fintech sector is pale compared to regional leaders in Brazil and Mexico, the country has the highest fintech adoption rate in Latam with 76% of consumers using some kind of fintech service. , according to the 2019 EY Global Fintech Adoption Index.

Yet 62% of small and medium-sized enterprises (SMEs) in Colombia do not have access to finance, a market opportunity that the digital lending platform Finaktiva seeks to exploit. Recently, it acquired Libera Supply Chain, a factoring startup, to pursue its ambition to build a neobank for SMEs.

Last month, fintech startup Paymovil won the API’s Challenge, a competition run by telecommunications operator Claro and the Colombia Fintech business group to solve specific industry issues. Paymovil won the grand prize for an innovative electronic payment solution for SMEs that works via Near Field Communication (NFC).

Tuya won second prize with a tailor-made financing proposal under a Buy It Now, Pay Later (BNPL) model.

This article first appeared on fintechnews.am

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