The famous ‘drop by drop’ loans, an illegal practice in the country, have gained considerable strength in the informal credit system of Colombian households over time. Being an easily accessible practice, They make them a desirable system in the urgency of borrowing money, However, by having an interest rate much higher than that of the formal market, it ‘bleeds’ users’ finances and even puts their physical integrity at risk. That’s why, Fintech is a solution to attract more people to formal banking and thus eradicate this modality.
Can read: This is what Colombian households spend for every 100 pesos they have in their pockets.
This is one of the conclusions of Juan José Güemes, president of the Center for Entrepreneurship and Innovation at IE University, who assured this medium that This problem is due to the lack of access to credit in banksThere, fintech (from the English words Finance and Technology) break the barriers, as they combine the formal system with some of the virtues of ‘drop by drop’, in the sense of access.
“We are talking about hundreds of millions of adults around the world who for the first time have access to services and financial instruments that, due to their cost and complexity, when they were only offered by the legacy or traditional financial system, were simply not available. its reach. Previously, many people did not even have the possibility of having a bank account or something equivalent, which means that you cannot store money in a safe way to guarantee the safety of your family, for example, or to be able to take out insurance,” Explain.
For him, this step in financial inclusion, in turn, is inclusion in the normal economic life of a society, which allows reducing poverty in homes. “It is a fundamental step so that people can truly leave behind a situation of precariousness and poverty. And truly the innovators and entrepreneurs around the world in the fintech field have played an absolutely essential role in achieving this,” Güemes explains.
“Nowadays, there are many tools for managing financial assets, or for accumulating your wealth, that were not available, or that, being available, commissions were paid that were too high and probably unjustified in relation to the performance that was later given. the one who managed the financial assets. That is the face that Fintech has been taking fundamentally in the most developed world from a financial point of view”recognize.
Drop by drop
Juan Bautista Díaz / EL TIEMPO
Education as a definitive solution
In addition to these tools, for the president of the Entrepreneurship Center, Education plays a fundamental role in eradicating this practice that overwhelms family finances. Obtaining skills and informed decisions will allow people to increasingly obtain benefits from their assets and avoid over-indebtedness.
“Throughout our lives we are faced with decisions such as, for example, asking for a loan, knowing what the interest rate is, what to pay with an installment, etc. and many people do not know how to do it. It is not only a Colombian issue, there are very few countries that have what is called ‘financial education’, something that is taught in schools. “There is a lack of knowledge of the most basic things in relation to the logic of money and its administration, knowing that money also has a price,” Explain.
ensures that Many people are not aware of what a monthly interest rate is and how it translates into money per year, that it is necessary to make comparisons between banks, analyze benefits between one or the other, think about the sales and/or disadvantages of a portfolio purchase, among other doubts.
“These are very essential things that should be taught in schools, just as the decimal metric system is taught. “You know what a kilo is, you know what grams are, you know what centimeters are, you know what meters are, but you ignore that the financial system is part of everyone’s daily life,” says.
For this reason, it is considered essential to include it from basic education so that future adults make informed decisions. “It is very important that everything is incorporated and is part of the school curricula. “Even that governments make an effort to train adults who, perhaps in their childhood, or in their youth, did not have the opportunity to become familiar with the most basic financial concepts,” point.
You may be interested in: Cut in Minhacienda spending: a measure that is prudent, but would fall short
Portfolio File
“The essential knowledge of finances is to move through life, to not harm yourself, or your family, or perhaps harm others,” he adds.
There, precisely Fintech has also played a crucial role in educating and re-educating banking users, creating solutions where there were no possibilities, in addition, it is forcing the bank to compete and approach a ‘forgotten’ population group as it is not profitable enough, through its commercial network.
“Deep down they were people who were left aside by the entire financial system”says.
In addition to these two solutions, Güemes considers that the Government must generate, promote and protect laws that are on the consumer’s side, in order to prevent the legacy of ‘drop by drop’ from continuing.
“There must be rules that are part of the supervision schemes, regulations that promote competition but that are also aimed at protecting consumers and punishing and penalizing within the laws deception or abuse of consumer confidence in contracting. of financial products and services”, recognize
Can read: With electronic invoicing, does the paper invoice disappear completely?
“Banking in general, the entire financial industry, is at the core, at the heart of the most prosperous societies. Without finance, without a financial industry, without financial services and products, it would be absolutely impossible for us to have gotten to where we are. It is the basis of the world in which we live and the world in which we progress. For most of us, it would be unattainable, for example, to buy a house, buy a car. As simple as that”highlights its importance.
He assures that banks are increasingly aware of the role they play in society. “They are very aware that their role in society is enhanced and grows for their own benefit and for the benefit of others, being transparent, being accessible and being clear with their clients,” which allows the growth of society.
PAULA GALEANO BALAGUERA
Portfolio Journalist
