What is a sure thing is that Colombia is going to see a very disruptive 2022. But, before anyone thinks for a minute that I am going to dive down a political rabbit hole, I am not talking about the forthcoming Presidential elections. Yes, it will be fun to watch, and I would certainly not rule anything out at this stage, but I am talking about a continuation of the kind of positive disruption that has already taken hold in Colombia, and which is rapidly changing the financial landscape.

Over the last 2-3 years a host of new actors have either arrived in Colombia, or more exciting still, been created in Colombia and it is a trend that is gathering momentum. Recent weeks have seen market headlines dominated by the Gilinski family’s backing of bids for Grupo Nutresa and Grupo Sura; however back in the summer they also saw the digital financial arm, Lulo Bank, get its banking license. This made less headlines but was also a significant move, the major banks such as Bancolombia and Davivienda already have digital platforms called Nequi and Daviplata respectively but now there is a new player.

We have also this year seen the appearance of IRIS, another ‘neobank’, this time geared towards the corporate sector; when it comes to competition, the more the merrier. All this is without counting the arrival of Nubank back in September 2020 – across four countries they have close to 50 million customers and now with their IPO war-chest of $2.6billion USD are surely set to make further inroads wherever they operate.

Other areas have also seen developments. In the payroll loan sector (libranzas), we witnessed the appearance of Avista who also became the first fintech to issue a bond in the public market. In the commercial space another new name was Addi – again finding space in the market to facilitate consumer loans. In fact, wherever you look there are new actors.

Did I mention Rappi? Little more needs to be said. They have utterly disrupted last mile services and are rapidly (excuse the pun) moving into other areas such as finance, whenever they do decide to IPO it will be a major event.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

This year also saw the first fully digital equity trading platform in the guise of Trii. Colombia has lost 100,000s of retail investors over the last decade and Trii is tapping into this – their ambition is to move themselves into other countries in the region and move towards one million clients, few would bet against them. There are other new platforms enroute such as Tyba from Credicorp and the hope is that they will be fully digital as well – elsewhere Ualet (Wallet) has been offering funds for some time.

At the BVC back in 2019 we launched a2censo, the first fully digital crowd-funding investment platform and it continues to power ahead. It has now successfully placed 94 campaigns raising close to $10million USD for some of the 2.5million SMEs who are the lifeblood of the economy. Next year the BVC will go further looking to offer not just debt via a2censo but also CBs and equity – a potentially vital step in offering access to the equity market for previously overlooked smaller companies.

Looking into 2022 the BVC aims to further support the digitization of the market, bringing clients ever closer to the markets whilst facilitating their investments. Oddly in many respects the BVC is not viewed as a force for change but through a multitude of products it is constantly driving new markets by supporting innovation both internally and externally. In English we call it Chinese Whispers, in Colombia it’s ‘Teléfono Roto’ (Broken Phone) but the BVC has so much more to tell when it comes to the fintech space and its involvement in it. Keep an eye out for ‘Porto’ in 2022, already launched in conjunction with our new webpage, it will soon offer investors the opportunity to access a variety of products directly.

What all the above have in common is less bureaucracy. There is less queuing at physical locations, less paperwork, if any, to full out. Just as the traditional banks are trying to increase efficiency via more online payments, the new actors in all of their respective sectors are finding niches in which to operate at low cost.

Colombia in the end is only following what is already to be found in the developed world. The millennials live in the cloud, nothing for them needs to be on a document or in a vault – they are content to control their finances from the palm of their hand. Equally trading stocks and shares via APPs is nothing new, countries such as the US or UK have been doing it for many years, they are however markets that are far more liberal when it comes to trading regulations.

So, as we can see – 2022 is set to be very disruptive once again and that is good for everybody. End clients will benefit as the offering increases, but the financial sector will also be a huge beneficiary as competition invariably creates a ripple effect that drives innovation and efficiency which in the end pleases shareholders.

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That is about it for today – with that I would like to wish everyone who takes a brief look at this note a very, very Happy New Year and the very best for 2022.

My regards to all,

Roops

As opposed to the 2020 story, which was completely overshadowed by COVID with both government and companies explaining how they had survived the pandemic and what were the next steps, this time there was a more optimistic tale to tell. Colombia has bounced back economically at an unexpected rate with analysts constantly upgrading their GDP targets for both 2021 and 2022 – on a global basis the country looks set to be a top 10 performer this year.

This is now being manifested with a change in the interest cycle as inflation slowly rises; however, within reason, this is a good problem to have. On top of this the 2022 budget has now been approved and the problematic tax reform is now in place – in fact a lot of positive messages to share.

Within the event the BVC traditionally hosts a panel however this time we chose to go non-traditional. As opposed to the blue-chip names who have had so much digital exposure during the pandemic, we opted to take a look at the Brave New Digital World that is rapidly arriving on Colombia’s doorstep.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

The panel featured Rappi, Lulo Bank, TRII and our own a2censo discussing disruptive behavior in their respective sectors, whether it be Digital Banking, Trading Platforms or Crowd-Funding. The important message from all four entities was that the priority is the end user, be it retail or institutional – it was good to hear that the Superfinanciera are on message. There was a call for more government support in the field of open banking but in general there has been good support.

But of course, these four entities are simply the tip of an iceberg that is emerging quickly from the Colombian waters. Even before the World Economic Forum named Colombia (Medellin) as the LATAM center for the 4th Industrial Revolution, this country was a hub for technology development. A few years ago I had occasion to meet with one of the world’s leading satellite suppliers on a visit to Medellin, I asked if there was any interest in Colombia in making a purchase – the answer was revealing:

“They have no budget to buy one but in reality, this is one of the few countries I have visited that are capable of building their own satellite”

Over the past two years we have seen a host of new names appear in the Colombian digital ecosystem – perhaps best known is Nubank but others are constantly appearing such as Iris Bank or Avista. I even had occasion to sit down recently with a ‘Second-Life’ company dedicating themselves to education.

“…in reality, this is one of the few countries I have visited that are capable of building their own satellite”

As mentioned above, the challenge still for many is ‘Open Banking’ – the willingness for institutions to share data for the good of the end client but this is something that is not confined to the banking sector.

At a time when Brazil has thousands of independent advisers creating a cross pollination of product for the man on the street, in Colombia there is still resistance to such moves, open architecture is a watchword in many markets, but for the time being it remains only an aspiration in Colombia.

Nonetheless these are exciting times for the Colombian digital universe, be it banking, trading, libranzas or crowdfunding, the world is changing, and the end beneficiary will be the clients, either directly via the new entities or indirectly as the legacy actors are forced to adapt.

That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops