The banking system is preparing for the arrival of new players next year. To the requests of BTG Pactual, JP Morgan and Lulo Bank to operate as banks in the country will be added that of Finsocial, a company that grants loans to public sector teachers and pensioners from Colpensiones, Fopep (Public Pension Fund), Casur (Retirement Salaries Fund of the National Police), Positiva and Fiduprevisora.
Santiago Botero, CEO of Finsocial, confirmed in an interview with LR that he expects the fintech to become a 100% digital bank by the first half of next year. However, the estimated time will depend on the length of the validations and analysis by the Financial Superintendency to grant the license.
“Right now a new partner is coming to Finsocial. There are five companies interested and I estimate that before the end of the year all the details of this transaction will be known. The firms behind this operation are foreign, there are North Americans and there is also a very large European fund, ”added Botero. Once this operation is completed, the license application will proceed.
The CEO of Finsocial also assured that the bet to become a bank occurs because, first, they have the resources to achieve it and, second, because they have already done the most difficult thing that these entities do, which is to learn to lend money and know how to manage the risk in those operations.
Taking into account the experience they have in the sector, Botero advanced some details of how the entity will work, once the Superfinancial gives them the guarantee. The first thing the executive highlighted is that the entity will raise money, offer other lines of loans that go the same way with its commitment to “safe credits”, and will have a credit card.
“We are doing the papers with Mastercard, but I think we will also have with Visa,” said Botero, who added that they will have a savings account in which they offer some type of return to customers and will have collection mechanisms such as CDT and Other than products that there are and that adjust to the needs of the users.
With the start-up of the operations of Finsocial, Lulo Bank, JP Morgan and BTG Pactual as banking entities in the coming months, the Colombian financial system will complete 29 banks, of which it has been confirmed, so far, that two would be neobanks, which are Finsocial and Lulo Bank. It is worth clarifying that Nubank will not yet function in Colombia as a bank.
In the midst of this avalanche of requests and the fact that about 90% of the municipalities in Colombia are not yet implementing electronic payment systems, according to a study by Visa, Botero said that betting on a digital offer is not a limitation because plans to take advantage of the 29 offices they currently have as an anchor to teach users about digital banking, as they have been doing so far.
Finsocial is committed to becoming a bank at a time when it has 30,000 clients and a loan origination goal of $ 290,000 million, at the end of this year, which would represent an increase of 30%.
Based on bets such as that of Finsocial, David Nieto Martínez, professor and coordinator of the financial area of the Faculty of Economic and Administrative Sciences of the El Bosque University, assured that one of the sectors that has had to reinvent itself the most is the financial one, the which had a greater pressure in terms of digitization due to the different mobility restrictions that were had. This conjuncture increased the need for 100% digital entities such as neobanks.
Manuel de la Cruz, president of Banco Santander Colombia, assured that this is great news, as this helps to improve competition and competitiveness. “We hope that the regulator will ask these banks the same requirements as traditional banks,” he added.
Radiography of the sector
The four entities that are lining up to start operating as banks come at a time when the profits of the 25 entities reached an accumulated $ 3.53 trillion at the end of July of this year, that is, 42.5% below the levels registered during the same period of 2019, when profits were $ 6.14 trillion, according to data from the Financial Superintendency.
In addition to entering a financial system that is hit by the economic crisis unleashed by COVID-19, the new entities will have to face a scenario in which Bancolombia and Davivienda are the banks that moved more than 69% of total operations registered by the financial system at the end of June 2020, with 2,701 million and 515 million transactions, respectively.
The movements of the two banks occurred in the middle of a context in which the number of operations that Colombians carried out through the financial system was 4,663 million at the end of the first semester. These moved a total of $ 3,599 billion, which represented an increase of 10.5% compared to the data for the second half of 2019.
It is worth noting that operations in virtual channels continue to increase. Through these, 74% of the total operations were carried out: 2,469 million through mobile banking and 966 million through internet, with shares of 53% and 21%, respectively.
Finsocial’s bets aimed at supporting communities
Botero assured that in the midst of the crisis that the country is going through, Finsocial has committed to creating products that support the economic development of different communities. A sample of this bet is that the entity launched three initiatives during the pandemic, which are FinsoAmigo, Finsoalivio and FinsoTienda. “To this is added that Finsocial plans to issue social bonds for $ 160,000 million. We plan for these bonds to come out before November ”, added the CEO of the company.