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Financial Inclusion
Business Models that harness new technologies and mobile penetration that are helping to bring financial services to unbanked communities.

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Financial Inclusion as the key enabler for development
By Sebastián Guerrero

The Opportunity

The government of Colombia has been implementing its National Financial Inclusion Strategy since July 2014 The strategy focuses on increasing SME’s and individual’s access to the banking system’s financial products and services, and enhancing the financial literacy.  Some of these results have been:

  • Colombia ranked first overall in the 2019 Microscope report. Colombia showed improvement in the Stability and Integrity and Product Outlets domains. It lifted prior restrictions on bank and non-banking institutions’ activities related to remote account opening and customer due to diligence requirements compared to the report in 20181.
  • In 2019, Colombia maintained financial inclusion coverage in all municipalities and succeeded in increasing the financial indicator, closing 82.5%. In other words, 29.4 million adults had at least one financial product2.
  • Digital transformation has become a key consideration in recent financial inclusion efforts. In 2018, 6.334 billion financial transactions worth $7,183 trillion pesos were made in the credit institutions overseen by the Superfinanciera3.

Despite the progress made, there is still a need to bring financial inclusion to those who have historically been neglected, such as women (79.3%), young people (68.5%), and the rural population (55.7%)4.

The Challenge

Although Colombia has shown significant progress, four major challenges remain:

  • Business financial inclusion continues to be a challenge, especially for SMEs who still face several barriers, including access to financing. As of December 2019, 939,682 companies had at least one financial product (7,782 less than in December 2018), and 642,440 of them were active (35,531 less than in December 2018)5.
  • Access to financial products in Colombia decreases as the population’s level of rurality increases. The financial products access indicator was 90.4% for cities and urban agglomerations, 71.6% for medium-sized municipalities, 64.1% for rural municipalities, and 55.7% for dispersed rural municipalities. The gap in the financial inclusion indicator was found both for deposit and credit products6.
  • The youngest age group had the lowest access indicator (68.5%), which may be related to a lower insertion into the labor market. Also, a large percentage of those belonging to this group are students. They are financially dependent on their parents, demanding few financial services or doing so with their relatives’ support7.
  • In 2019, men had an access indicator of 85%, while women stood at 79.7%, five percentage points lower, due to discrimination in the labor market8.

Expected development outcome

Overcoming the challenges that face Colombian in financial inclusion can bring significant social benefits:

  • Improved inclusive economy9.
  • Decreased reliance on solely informal networks10.
  • Increased spending on basic services11.
  • Accelerated business expansion12.
  • Improved financial resilience13.

Enabling Factors

We believe that in Colombia, there is the right environment for better financial inclusion:

  • Coverage: The financial system’s coverage throughout Colombia has had a positive performance in the last ten years14.
  • Digital financial inclusion: Colombia has a range of providers capable of providing digital financial services to populations, on the margins of the formal financial system, regulations control for some of the risks inherent in these services, and clear rules mark out spaces appropriate for innovation to achieve greater financial inclusion15.

Law: in May 2019, formally adopted a sandbox regulatory approach, adding to prior regulations passed in July and December 2018 to facilitate crowdfunding and banks’ investments in fintech, respectively16.

Obstacles to Scale

  • Financial services are still expenses: 90% of Colombians prefer to pay in cash in large part because of the financial transaction tax, which can be avoided by not documenting transactions and remaining informal17.
  • Financial education programs: According to the Encuesta de Mapeo sobre Programas/Iniciativas de Educacion Economica y Financiera en Colombia, more than half of the programs identified by this survey fail to include an impact evaluation component18.

What is Amplo Doing

  • Supporting financial-based companies Investigating markets and take advantage of growing markets (market positioning). [Digital Holding]
  • Developing business plans, financial models and formulating sustainable projects that advance financial inclusion models and promote better money use management. [Digital Holding]
  • Supporting smart-lending companies to grow their business models by accessing investment capital [Digital Holding]
  1. Global Microscope 2019: The enabling environment for financial inclusion, The Economist.
  2. Financial inclusión report 2019, Banca de las oportunidades.
  3. Financial inclusión report 2019, Banca de las oportunidades.
  4. Financial inclusión report 2019, Banca de las oportunidades.
  5. Financial inclusión report 2019, Banca de las oportunidades.
  6. Financial inclusión report 2019, Banca de las oportunidades.
  7. Financial inclusión report 2019, Banca de las oportunidades.
  8. Financial inclusión report 2019, Banca de las oportunidades.
  9. Understanding impact performance:Financial inclusion investments, Global impact Investing network
  10. Understanding impact performance:Financial inclusion investments, Global impact Investing network
  11. Understanding impact performance:Financial inclusion investments, Global impact Investing network
  12. Understanding impact performance:Financial inclusion investments, Global impact Investing network
  13. Understanding impact performance:Financial inclusion investments, Global impact Investing network
  14. Financial inclusión report 2019, Banca de las oportunidades.
  15. Global Microscope 2019: The enabling environment for financial inclusion, The Economist.
  16. Global Microscope 2019: The enabling environment for financial inclusion, The Economist.
  17. Ensayos sobre inclusión financiera en Colombia 2019, IDB.
  18. Financial education programs in Colombia: Challenges in assessing their effectiveness, Banco de la republica de Colombia

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