Cards International recently published a country survey of Colombia and its potential for banking growth. They note that banks are profitable there and have low levels of non-performing loans. The banking industry appears to be poised for expansion in a market where only 57.6% of the 45 million people have a bank account.
With such low rates of banking penetration, the obvious question is: how can Colombian banks grow? Quite simply, by offering innovative products and services. As an example, some institutions are enabling payments via cell phone, to reach the underbanked and other less-penetrated segments.
This drive for innovation in Colombia has led to a peculiar scenario, where the line around financial services is becoming more and more blurred, particularly with financial cards. One financial institution has launched a card that combines a debit card with a closed-loop card for the public transportation system. Products like these can serve as a first touchpoint for consumers without a card or account.
Another bank went to a trade fair to offer loans for the purchase of furniture and consumer appliances during the fair. Logistically it was tough to implement an application approval process that allowed it to offer near real-time credit, as well as to instantly issue accounts and debit or credit cards. In the end, the gamble paid off.
We also see a growing trend to integrate major banks and retail channels in order to offer banking services through store branches and at POS terminals. The first steps were to enable payments for utility bills and mobile phones, but now payments can be made to most types of business.
As my colleague Andreas Suma says in the Cards International article, “I see a window of opportunity in Colombia for credit cards and financial services”. Agility and originality are the key drivers of this growth, as is adapting analytic solutions and other tools to meet the needs of the market.