Financial Services
From The Report: Colombia 2019
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The banking sector has already begun to show signs of improvement in line with macro economic indicators. Measures taken by the national government and the Central Bank of Colombia appear to have enabled the sector to weather the storm, and improving economic conditions should pave the way for a positive performance from the financial sector. Despite the slow evolution of equities trading, Colombia’s capital markets appear to be moving in the right direction with regard to corporate debt, and the expansion of derivatives, Venture Capital and private equity markets. Moreover, regulators continue to engage closely with their counterparts to foment the further development of the Latin American Integrated Market, meaning the regional market will likely continue to gain prominence. The insurance sector in Colombia looks set to maintain its positive trajectory over the medium term, with GDP forecast to expand, and a population increasingly willing to purchase new insurance products. Also, the growth of insurtech will likely be a decisive shift for both customers and providers, giving customers a better experience and broader choice of products, and firms the ability to tap into artificial intelligence and data analytics to boost sales. This chapter contains interviews with David Bojanini, CEO, Grupo SURA; Juan Pablo Córdoba, President, Colombian Securities Exchange; and Javier Díaz Fajardo, President, Bancóldex.

Articles from this Chapter

Overview

Steady gains: The sector is poised for stable growth on the back of improving macroeconomic activity and regulatory reforms
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Despite Colombia’s subdued economic performance over recent years and slowing growth across all major lending segments, the banking sector has remained relatively resilient. Measures taken by the national government and the Central Bank of Colombia (Banco de la República de Colombia, BRC) appear to have enabled the sector to weather the storm, and improving economic conditions should pave the way for a positive performance from the financial sector. Results for the first few months of…

Interview

Fostering connectivity: David Bojanini, CEO, Grupo SURA, on sustaining the momentum of recent changes to domestic financial policy
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Interview:David Bojanini What impact will recent reforms have on the country’s financial services sector? DAVID BOJANINI: While the recently passed tax reform reduced the corporate rate, it also applied a surcharge on financial institutions for a minimum of three years. Details on how this will affect different industries like banking or insurance are still needed. Furthermore, we are waiting on a ruling by the Constitutional Court on the lawsuit brought by the Banking Association following…

Overview

Fintech revolution: Tech solutions are driving the evolution of the sector landscape
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Once reserved for ambitious start-ups and industry-leading tech operators, financial technology (fintech) has more recently caught the attention of major private sector firms and government planners alike, becoming a regular feature in budget speeches and strategic development plans. As fintech progressively plays a larger part in the lives of consumers, investors have quickly come to recognise its potential as a growth industry. The tech-focused Janus Henderson Global Technology Fund, for example, has expanded by more than 160% since February 2013, and grew by some 30% over the course of 2017. Fintech is rapidly advancing across an array…

Overview

Fintech revolution: Tech solutions are driving the evolution of the sector landscape
OBG
plus

Once reserved for ambitious start-ups and industry-leading tech operators, financial technology (fintech) has more recently caught the attention of major private sector firms and government planners alike, becoming a regular feature in budget speeches and strategic development plans. As fintech progressively plays a larger part in the lives of consumers, investors have quickly come to recognise its potential as a growth industry. The tech-focused Janus Henderson Global Technology Fund, for example, has expanded by more than 160% since February 2013, and grew by some 30% over the course of 2017. Fintech is rapidly advancing across an array…

Overview

On the up: Despite the recent slowdown, a number of developments bode well for increased dynamism and investment opportunities
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A number of factors bode well for Colombia’s capital markets. The country has well-established sovereign fixed-income and corporate debt markets, while recent efforts to continue integrating new technology are expected to improve investor participation. Likewise, the acquisition of the Central Securities Depository (Depósito Centralizado de Valores, Deceval), a trading platform, by the Colombia Stock Exchange (Bolsa de Valores de Colombia, bvc) in December 2017 has substantially reduced…

Interview

The right direction: Juan Pablo Córdoba, President, Colombian Securities Exchange (Bolsa de Valores Colombia, bvc), on market development
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Interview:Juan Pablo Córdoba How would you assess the development of Colombia’s capital markets in recent years? JUAN PABLO CÓRDOBA: The equities market has not fared well in recent years. However, there has been growth across other segments, including bonds and derivatives. The market has faced headwinds from a number of factors in the last few years, including an overly complex fiscal environment and an ample and liquid banking industry, disincentivising companies from capital market…

Analysis

Creative start-ups and policy reform help to deepen a virtuous: cycle of venture capital investment Global growth stage
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Gross venture capital (VC) investment in Latin American start-ups reached a record $780m in the first half of 2018, representing year-on-year (y-o-y) growth of 63% from $476m. The total number of VC deals was similarly up by 61.1%, from 90 to 145, according to data from the Association for Private Capital Investment in Latin America (LAVCA). The association projected VC investment for all of 2018 to top $1.5bn, against $1.1bn in 2017 and $500m the year prior. Across 2017 and the first half…

Analysis

Colombia increases bond offering to achieve development goals: Ties that bind
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Drawing on international best practice, public and private banks in Colombia have begun to develop financial products designed to promote environmental sustainability and achieve development goals. Beginning in 2016 the country has issued a series of green bonds to support environmental projects. Building on this experience, Colombia has more recently begun to issue new financial products aimed at supporting socially responsible entrepreneurship through microcredit. Eco-Bonds In December…

Interview

New options: Javier Díaz Fajardo, President, Bancóldex, on supporting start-ups and small business through alternative funding instruments
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Interview:Javier Díaz Fajardo What is being done to support the growth of micro-, small and medium-sized enterprises? JAVIER DÍAZ FAJARDO: It is important to distinguish between each segment, as businesses face different challenges depending on their size. For example, our strategy for micro-enterprises involves partnerships with more than 86 micro-finance institutions, many of which are not supervised by the Financial Superintendency of Colombia. The main challenge for this segment is…

Overview

Inclusion in global indices often results in a greater flow of funds: to capital markets, but it is just one aspect of the economic picture Indexed growth
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The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate that the participating countries apply…

Overview

New products and technology are aimed at enhancing penetration: Premium lines
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On the back of strong economic growth and diversified distribution channels, the insurance industry in Colombia – the fifth largest in Latin America – is expected to post steady growth over the coming years. The expansion of the sector, however, is not anticipated to be as strong as previous years’ due after lower-than-expected tax returns following fiscal reform efforts that are under way. More than most countries, the performance of Colombia’s insurance sector, especially as measured…