Encouraging More Colombians to Join the Formal Financial System


Ester Julia Álzate is a working class, 60-year-old mother and grandmother from Yumbo, a small, industrial city and municipality in western Colombia. She has a 28-year-old daughter, a 21-year-old son, and a five-year-old granddaughter. For the past 25 years, Ester has been steadily employed, working in the accounting and portfolio division of a nationwide network of funeral homes in Colombia. According to the Latin American Development Bank, 37% of Colombians save their money at home “under the mattress” instead of using the financial system. Ester was one of these people who resisted joining the formal financial system - until very recently.

Access to proper financial tools and resources can advance the success of individuals, businesses, and entire communities. The World Bank’s research shows that formal financial services spur economic growth by making it easier for customers to save money, send and receive payments, and mitigate risks by purchasing insurance.

By comparison, those that operate outside of the formal financial system do so at a considerable disadvantage. Cash transactions are generally more insecure, inefficient, and expensive than transactions made with bank accounts, and research from the Gates Foundation linked informal, cash-based economies with stunted personal and social economic development.

Despite the advantages of formal financial tools, many Colombians haven’t historically kept money inside of banks — largely due to a lack of trust and costs. In Ester’s case, a previous experience with a bank had her mistrusting the financial system. Fees were costing her more than the benefits of having an account.

As part of their growth strategy, Banco Colpatria, a subsidiary of Scotiabank, looked at how they could gain more customers and enhance trust of the financial services with those that were unbanked. They decided to try removing traditional transaction fees for day to day bank accounts as well as waiving a minimum deposit when opening an account. They also waived fees for consultations so new customers could have access to banking experts.

Rolling out the strategy was a massive undertaking. The bank was not simply rolling out a new product or service — it was trying to shift Colombian customers’ attitudes about the financial system. All of Banco Colpatria — from top executives, to marketing teams, to in-branch employees — worked together to spread the word about the strategy, adapt to customers’ responses, and make sure that all parts of the bank remained in alignment.

The results have been a resounding success for both Banco Colpatria and Colombian customers. By eliminating account fees, Banco Colpatria encouraged hundreds of thousands of Colombians to access the formal financial system, protecting them from the dangers of a cash-only financial existence. In 2018, more than 400,000 accounts were opened for customers.

But perhaps the most widespread advancement of the strategy lies not in what it eliminated — by removing fees — but in what it provided to customers — the ability to better manage their finances and take control of their financial well-being. Financial access has made it possible for more customers to manage their money and plan for the future, advancing the future for families, businesses, and communities throughout Colombia.

Ester’s situation illustrates the benefits created by the strategy. She was able to quickly and easily open her account online. Her account saves her time and effort, as she no longer has to leave work or home to conduct financial transactions. Best of all, she is now motivated to save. Because, as she says, "From now on I can save for the future of my children — and grandchildren."