How Colombian banks are building their digital muscles

Fintechs in Latin America, instead of competing with banks, tend to work in partnership with them to help banks quickly and efficiently strengthen their digital muscles - and Colombia is no exception.

Fintechs are making a lot of incursions, said Santiago Castro Gómez, president of Colombia's banking association Asobancaria, ahead of a conference it is hosting in partnership with regional banking federation Felaban.

"In terms of presence, fintechs are starting to arrive in greater numbers in Colombia in the area of mobile apps," said Castro, who is among the speakers at the September event, the 18th Latin American financial technology and innovation conference, or CLAB as it is known.

"But the majority, instead of trying, you could say, to compete with banks, are actually providing a range of services to them," Castro (pictured) told BNamericas.

This general trend is likely to continue until a tech company with the capital and right capacity seeks to enter the banking fray.

"I think that if there is a fintech startup that has the opportunity and capital to create a banking structure, it would surely do it," he said. "But in the absence of this happening, they'll work with the current financial system, and I think the developments have been very interesting."

Colombia's banks have taken a proactive role in digital transformation and embracing change. Asobancaria has created a so-called financial technology innovation laboratory and, in partnership with Colombia's IT and telecom chamber CCIT, has established an online collaboration and discussion forum known as Fintechgracion.

"We won't allow banking to become the next Blockbuster versus Netflix of the financial services industry," Castro said. "For that reason we've embraced the areas of technology and financial innovation. Departments have been created within each of Colombia's banks, VPs of innovation and technology have been named. A lot of investment has been made and, as an industry body, we've worked on a collaborative ecosystem where they can work on different initiatives that will benefit, in a transversal manner, all our members."

As an example of a successful digital transformation initiative, Castro cited Banco Davivienda's DaviPlata mobile wallet, which has helped boost financial inclusion in the country.

According to the BNamericas Intelligence Series report BigTech: The Coming Disruption of Latin America's Banking Sector, the major threat facing the region's banks are big technology companies such as Amazon and MercadoLibre.

Ramón Heredia, fintech innovation ecosystem director at regional digital bank innovation platform Digital Bank Latam, has said a key focus of banks should be on developing digital ecosystems, to help prepare for a potential bigtech incursion. And fintechs are seen as key allies.

*The CLAB conference takes place in Cartagena, Colombia, from September 19-21. Find out more.