Bogotá: home of champions

Bogotá, Colombia, a city of ten million people boasting a strong middle class, is the commercial center of Colombia, the fourth largest economy in South America.

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The business dynamic is dominated by SMEs (small and medium-sized enterprises), which here are defined as companies with revenues of 10 million USD and below. I visited Bogotá in August 2019 with LendIt’s president, Joy Schwartz, as part of our Fintech Roundtable series. As we walked the streets of Bogota, enjoyed meetings with many Colombian entrepreneurs, and experienced the culture first-hand, the genuine warmth of the people of Bogota stood out as one of its strongest attributes.

The oligarch’s dilemma

Colombia is subject to one of the most concentrated banking oligarchies in the free world, with three banks (really just two) commanding more than 90% of all banking activity. What’s more, these banks are controlled by family interests. Imagine, North Americans, a situation where our two choices were the Bank of Rockefeller and the Bank of Vanderbilt. How would that shape our economy, our society? This analogy is not unfitting of the situation in Colombia.

Now, in a world where Open Banking is taking shape, and bank APIs are beginning to peek out from behind curtains of opacity, I am beginning to allow myself to think of the major banks around the world as bank utilities. In this view, bank utilities serve as core systems through which complex transactions may occur securely. These bank utility systems achieve profitability through transaction fees, revenue sharing agreements, and product enhancements they provide to their customers through applications that are built (by fintechs) on top of their platforms. These applications function like apps in the App Store, but in this case the platform is not a phone’s operating system but a bank’s operating system.

In a future where Open Banking takes hold, the banking system is reinvented without being scrapped altogether. Another version of the future involves the wholesale toppling of the towering financial monoliths we know today, due to mass customer flight. This is the version of the future that N26 and Monzo may cherish. We can argue about which future is more likely, and which is preferred, but In either case we will end up with platform-and-app based banking, and a superior financial future. But one thing is certain: we will have a revolution in finance. Resistance is futile, so they say. But is it, really?

¿Puedo abrir una cuenta bancaria, por favor?

During our fintech roundtable dinner in Bogotá, three of our nine guests reported that, within the past month, they had been denied basic banking services because they were running fintechs. One was deemed to be a cryptocurrency trader (they weren’t) and their accounts were frozen. Two others were denied checking account services because they were viewed as competitive to the bank. The bankers were brash enough to say that, yes indeed, they were being denied services because “they didn’t want to assist a competitor.”

The Colombians will rise

In my assessment of the Colombian fintech scene, one thing sticks out as completely unresolved. I left the country quite upbeat about the prospects for innovation in financial services. However, as my travels in Latam progressed and I became more acutely aware of the vagaries of regulatory reform in these sovereign nations, I began to doubt my own initial assessment. In the video captured during my visit to Bogota, I proclaim optimism about a future where Colombian fintechs find hospitable regulations. And I stand by what I say: if the regulations are hospitable, the entrepreneurs will rise.

What has to happen for legislators to produce changes, such as open banking, crowdfunding and regulatory sandboxes, that are hospitable to fintechs? Under some circumstances I might say that the will of the people is enough. But in a country where just two banks — two families — control virtually the entire banking system, what then? Allow me to suggest that without strong leadership at the very highest levels, meaningful regulatory reform cannot be achieved. In such a case, the economy of Colombia will suffer.

Still, I have a sneaking optimism about these Colombian entrepreneurs with whom we met. I admit I have much more to learn, and I hope this post begins — or continues, rather — a fruitful debate that spawns meaningful regulatory reform. Let’s work together to embolden the legislative and regulatory leadership across Latam by showing them how positively fintech can impact an economy and a nation.

Puntuación
Posición en Iberoamérica
1
Juan Esteban Saldarriaga
Vice President at Alianza FinTech Iberoamerica | Co-Founder Rapicredit | ColombiaFinTech.co
24.4
5
2
Edwin Zácipa
Executive Director at Colombia FinTech | Managing Partner MiBank.co | Founding Member FinTech IberoAmérica
20.4
17
3
Diego Molano
Consultor internacional en temas de TIC e innovación
19.4
18
4
David Velez
Founder and CEO at Nubank
17.0
27
5
Martin Schrimpff
Co-Founder of Zinobe | Founder of PayU | Founder Pagosonline.net
15.6
32
6
Ángel Sierra
Director Ejecutivo en Asociación FinTech e InsurTech de Chile | Member of Alianza FinTech Iberoamerica
14.8
39
7
Paula Cardenas
Business Manager at AEFI | Founder Member FinTech IberoAmérica
14.5
42
8
Clementina Giraldo
FinTech & AgTech in Latin America
11.8
60
9
Juan Francisco Schultze-Kraft
Board Member – Vicepresident at Colombia FinTech | PayU Legal
11.4
63
10
Daniel Rojas
CEO & Co-Founder at Rocket.la
10.1
69
11
Alan Colmenares
Digital Transformation Enablement – Latam at Microsoft
7.3
89
12
Laura Gaviria Halaby
Global Head FinTech Acceleration at Citi | Chief Acceleration Officer at TheVentureCity
6.3
101
13
Diego Alejandro Guzman Guevara
CEO and Co Founder at Bankity
6.2
104
14
Andres Ramirez Sierra
CEO at Banlinea LATAM
6.2
105
15
Daniel Navarro
CEO & CoFounder at NIMMÖK
6.1
109
16
Fernando Sucre
CEO at ComparaMejor
5.9
110
17
Andres Villaquiran
Founder & CEO Alkanza
5.3
119
18
Carlos Castañeda Olaya
Open innovation leader at Accenture | Country Manager at Wayra
5.2
123
19
Marisol Camacho
Director of Corporate Relations at Bancóldex | Director of Mindset at iNNpulsa Colombia
4.6
131
20
Felipe Valencia
Partner at Veronorte
3.7
143
Conoce más de estas Fintechs
Las empresas Fintech mencionadas en este artículo ya no hacen parte de la Asociación. Por lo tanto, Colombia Fintech no puede dar una recomendación positiva o negativa de la calidad de sus ex miembros, ni asume ninguna responsabilidad por ello.
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Colombia Fintech, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la Asociación. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.