Queen Maxima of the Netherlands on Wednesday lauded Colombia as an excellent example of how to increase access to banking and financial systems.
The United Nations Secretary General’s special advocate for inclusive finance for development made the comments in a statement in which she praised Colombia’s financial sector.
“Today , more than 99 % of municipalities are covered by financial institutions or banks, and loan accounts are more than double those were ten years ago.”
“Colombia has demonstrated the value of financial inclusion to reply directly to the needs of his people, the growth of its business and the potential of its country.”
Although by marriage to King Willem-Alexander in 2002, Maxima is the Queen of the Netherlands, she is originally Argentina, studied economics and was an investment banker in New York before joining the Dutch royal family.
Phones to connect people to banks
Maxima said Colombia still has a largely untapped potential in mobile phone banking.
“I have seen areas where phone banking can open new markets and reduce costs significantly,” she said.
The EFE news agency reported Colombian Finance Minister Mauricio Cardenas has pledged to the government to reduce phone banking text message costs to 45 cents and transaction costs to 5 cents.
Trust issues
However, many Colombians retain a cultural distrust of banks.
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“In Latin America, 65% of people don’t use banks, because they just don’t trust banks,” Ana Barrera, CEO of financial services startup Aflore, told Colombia Reports last year.
“Here in Colombia, trust is built between people…it is hard to build trust with an institution. And something very small, like an overcharged account, will lose trust in that bank.”
Because of that underlying lack of confidence, said Barrera, 24% of adult Colombians have loans through friends, families or informal financial advisers, while only 12% have formal loans with a bank. And indeed, even that 12% is a significant increase over just a few years ago.
And other issues do remain in the financial sector in Colombia. For example, three of Colombia’s largest holdings companies, Grupo Aval and Grupo Sura and Grupo Bolivar own 53% of ownership in the financial sector, but have a combined 14 subsidiaries, making cross-group regulation difficult.
MORE: New financial regulation to put tighter controls on Colombia banking giants
Sources
- Reina de Holanda recomienda a Colombia incentivar uso del sistema financiero (EFE)
- Press Release from the Dutch Embassy