Opening channels: Technological developments enable more Peruvians to join the formal financial sector

Like many other emerging economies, financial inclusion is one of the greatest challenges facing Peru. Findings of the World Bank’s 2017 Global Findex, which measures the progress of financial inclusion in 140 countries, highlighted a number of areas that need to be improved if the country’s banking sector is to be successful in penetrating a larger proportion of the population. Although the percentage of adults in Peru with a bank account is below the regional average, at 43% against 51%, this is a notable improvement from the country’s 2014 results, when only 29% of Peruvians had a formal financial account. Notably, around 60% of interviewees cited the costs associated with having an account as a central barrier to opening one.

In terms of savings, 40% saved money, though only 8% did so formally, and when it came to lending, 40% borrowed money – either formally, semi-formally, or from family, friends or other informal sources – but only around half of these lenders sourced this credit formally. However, this conflicts with figures from the Superintendency of Banking and Insurance (Superintendencia de Banca y Seguros del Perú, SBS), which found that 33% of the population had taken out formal loans of some kind as of December 2017. Statistics from the SBS indicate that strides have been made in incorporating small and medium-sized enterprises in the formal sector in particular, with some 458,000 becoming part of the formal sector over the 2012-17 period. The ratio of loans to GDP, which is an important indicator when assessing banking penetration, increased from 16.1% in 2004 to 36% in 2016. However, this is still below the Latin American average of 55%.


To enable more banking activities to take place in the formal sector, Peru will need to overcome the geographic obstacles of its large and diverse landscape. Indeed, there is a sizeable disparity in financial inclusion between urban and rural areas. According to the SBS, only 24% of the adult population in rural areas had a bank account as of July 2017. This is in large part due to the length of time it takes to reach a financial institution: it takes an average of one hour and 30 minutes in rural areas, compared with just seven minutes in Lima. This makes going to banks or ATMs to withdraw cash from an account an unfeasible option for many. Therefore, installing new access points could make accounts more convenient, in turn encouraging more people to open accounts. There has been significant progress in this regard: the number of financial service points per 100,000 inhabitants outside of Lima and Callao increased from 139 in 2012 to 638 as of end-2017. In addition to having more access points, transport infrastructure also needs to be developed further, and a number of industry stakeholders have noted that many people still distrust financial institutions.


An alternative channel that could improve accessibility to formal financial services is mobile banking. The platform for this is already in place, as the mobile phone market has expanded substantially in Peru. As of the first quarter of 2018 there were some 40m active mobile subscriptions, and at the end of 2017 PwC estimated the mobile internet penetration rate to be 43%, forecasting that it would be close to 70% by 2021. In the “2017 Financial and Digital Inclusion Project Report” compiled by US think tank the Brookings Institution, which ranks 26 emerging economies on the accessibility of their formal financial services, Peru’s scores improved the most. The report stated that this was due to “increases in the adoption of smartphones and the expansion of mobile money offerings”. The country also received a score of 100% in terms of its regulatory environment for mobile money. (https://romantichoneymoonisland.com)

While many of Peru’s major banks are providing mobile money services, emerging financial technology (fintech) firms in particular are increasingly offering more innovative financial products than their traditional counterparts.


Fintech companies are helping make financial services more accessible to the general public, and have gained a reputation worldwide for enhancing or even replacing the use of traditional financial services. At the close of 2017 there were more than 45 businesses classified as fintech firms operating in the country. Offering more efficient and easier forms of conducting transfers and online payments, fintech companies have been successful in reaching Peru’s younger generations. According to a study published by EY Peru in 2017, over 50% of Peruvians who are connected to the internet utilise at least one fintech service to make payments with cryptocurrencies or send remittances.

In the Andean region, Peru is third in terms of the number of fintech start-ups, having 45 currently operating. This places the country behind Colombia (70) and Chile (67), but ahead of Ecuador (31). In terms of the types of segments these work in, 24% of Peruvian fintech start-ups offer loans and lending services, while 20% facilitate payments and remittances. The remainder specialise in crowdfunding; trading and capital markets; financial management for businesses; savings; personal insurance; personal finance management; and others.

In October 2017 Google ran its Campus Latam Exchange Founders programme, which was designed to support promising Latin American fintech start-ups. In total, eight start-ups were selected from the region, including representatives from Chile, Mexico, Argentina, Colombia and Uruguay. Latin Fintech, which provides fast online consumer loans, was the only Peruvian start-up that was selected.

Alternative Sources

One of the most effective channels of extending credit to underserved sectors of the population are municipal-level savings and loans associations (cajas municipales de ahorro y crédito, CMACs), which are decentralised non-for-profit banks often found in more remote parts of the country. CMACs are present in around 90 different districts, generally serving areas where traditional banking is absent or insufficient, thus fulfilling an important role in financial inclusion. A law enacting the establishment of CMACs was passed in 1980, and the system commenced operations in 1982. In order to ensure that CMACs have the necessary tools to compete on equal terms with modern private microfinance institutions, the SBS submitted a bill to modify the normative framework of the CMAC in March 2017. On July 13, 2017 Law No. 30607 was enacted, which outlined new guidelines aimed at strengthening the operations of CMACs.

So that the new regulatory framework can be fully implemented, the SBS has approved a series of special rules, including guidelines related to the authorisation to carry out new operations and services applicable to the CMACs; new standards that set forth the requirements and the authorisation procedures for the appointment of a general manager to replace joint management; the composition of general meeting of shareholders when third-party shareholders participate, as well as in those cases in which more than one municipal council is a shareholder of a CMAC. In addition, the new regulations allow for the minimum capital requirements to be kept at 50%. Furthermore, the SBS made amendments to the regulations for internal audits, liquidity risk management and the constitution, reorganisation and establishment of companies and representatives of the financial and insurance systems. It is expected that this revised regulatory framework will ensure the sustainable, long-term development of CMACs, allowing these institutions to provide microfinancial services to Peruvians who would have difficulty lending from a traditional bank.