The CGAP Technology Program plans to partner with Credibanco Visa to find ways to increase access to financial services. The proposed project would focus on three banks, which would roll out a network of banking agents.

“No, I don’t want a bank account. How do I know they’re not stealing my money? And it costs too much in any case,” says Juan, a cab driver in Bogota. In Colombia, as few as one in three people have access to financial services. Reasons for this include taxation on withdrawals, stringent account-opening requirements, and high costs to open and maintain a bank account. This is not uncommon in Latin America. According to figures from the International Monetary Fund, in Sao Paulo fewer than 40% of households have access to financial services. In Mexico City, that number drops to just one in four. The Inter-American Development Bank says that only 14.4 percent of the low-income population in Latin America has access to a savings account, and only 6.4 percent of them have obtained a loan.

The CGAP Technology Program plans to partner with Credibanco Visa to find ways to increase access to financial services. The proposed project would focus on three banks, which would roll out a network of banking agents.

The Government of Colombia has launched a new financial sector policy, dubbed “La Banca de las Oportunidades,” recognizing the power of banking services to help lift people out of poverty. As an initial effort to encourage banks to reach remote parts of the country, banks have been given regulatory permission to deliver financial services through independent agents known as “corresponsales no bancarios.” Examples include shops, pharmacies, and other retail outlets.
Microfinance lending in Colombia is currently reaching only around 2.5 percent of the population and is provided almost in equal amounts by microfinance institutions, and commercial banks. However, microfinance institutions (MFIs) are reaching poorer clients, with average loan sizes of around US$518 (23 percent of GNI per capita).

Since June 2006, five commercial banks (Banco BBVA, Bancolombia, Banco de Bogota, AV Vilas, and Banco Agrario) have launched 79 agent outlets in 19 municipalities which do not have bank branch infrastructure. Despite this, establishing and operating a network of banking agents is not easy. These pioneers are facing several challenges. Cost for needed technology is very high if it is not bought in bulk. Some banks have paid around US$7,000 per device.

Signing up new customers for accounts has been difficult, especially in areas where the bank had only a few existing clients. Banks will have to develop new strategies to acquire low-income, and often remote customers, if this model is to succeed. Shop owners are often not satisfied with their new role as a banking agent because the bank’s equipment may take up lots of space, as well as the fact that though they were paid per transaction, the owners had to use their own money to call the bank for technical support, and inquiries about financial products.

Most transactions have been deposits and bill payments, which means the agent then has to deal with large amounts of cash. This can be disruptive to the agents primary business, such as running a store.