Over recent years, Colombia has emerged as a hub of FinTech innovation in Latin America. A host of local and foreign companies dedicated to financial technology have established themselves in the country, attracted by its strategic location, favorable business environment, and generous incentives for tech companies.
According to one recent estimate (in Spanish), Colombia’s FinTech industry grew 45% in the 18 month period up to the end of 2019.
Colombia’s FinTech industry complements the finance sector
Financial technology innovation challenges the status quo in the world of finance. However, according to business economist and FinTech expert David Igual Molina, in many cases technology has been willingly adopted by some of the major institutions. That in turn has seen it to reach a level of scalability that tech start-ups would struggle to achieve on their own.
Igual Molina also states that pressure to adapt in an increasingly online commercial environment has forced many of the big financial institutions to shift their approach and adopt FinTech innovations. That, in turn, has converted some of the biggest FinTech firms into major players in the global financial system.
“The banking industry is facing an intense transformation of its activity, both due to the need to reinvent its services … and due to the change in the demand for digital products among users, as well as the need to adjust inefficient structures,” wrote Igaul Molina in his 2018 book Fintech and the Reinvention of Finance.
Colombia’s FinTech industry is a leader in Latin America
According to KPMG, global investment in FinTech doubled between 2018 and 2019, to reach $14 billion (USD). In Latin America, that surge in development has seen Brazil, Mexico, and Colombia emerge as leaders in regional FinTech innovation.
Many of Colombia’s major cities have poured significant resources into attracting and developing technology companies, with the country’s second-largest city Medellin today widely considered the “Silicon Valley of Latin America.” As such, Colombia’s fintech industry is already five times bigger than neighboring Ecuador’s and dwarfs those of Argentina, Chile, and Peru.
That fact is all the more impressive when the proportion of the local population that has a bank account is taken into consideration, with 55% of working Colombians unbanked, compared to just 10% in Chile.
According to former Bancomext Director General Francisco N. González Díaz, FinTech promises “equality and economic benefit” for many of those excluded from the financial system, suggesting that Colombia’s unbanked population are a significant potential market for FinTech innovation.
Entering Colombia’s FinTech industry
Whether you are looking to establish a new entity, or expand your FinTech operations into Latin America, entering Colombia’s FinTech industry demands a full evaluation of the financial sector in order to understand the opportunities available and the viability of your business.
When doing business in Colombia, you must establish a legally constituted entity according to local legislation. You will also need to tap into the local workforce — where both skilled worker availability and expected salaries are favorable to new foreign businesses — and arrange visas for anyone who will be moving to the country to run operations.
With that all in place, a strong marketing campaign will be essential to getting your name out there and establishing yourself in local and international markets.
Take advantage of the best commercial conditions in Colombia with the support of Biz Latin Hub. Our team of multilingual lawyers is equipped to provide all the support your company needs. Get in touch with our team of experts to start your adventure in Colombia’s FinTech industry, and take advantage of this growing trend.
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