Consumer Credit in Colombia

PROSPECTS

Falling consumer credit demand

There has been a general decrease in demand for different credit types, especially regarding commercial loans, where balance remains negative. Regardless of the size of companies, applications and credit awards have been very low and will continue to grow slowly in the short and medium term.

Slow credit restructuring

Most financial entities have been increasing the terms of current loans, consolidating different credits held with financial entities in to one loan, and offering possibilities for portfolio purchases at lower rates, especially for consumer credit and commercial loans. In the context of an economic slowdown and deteriorating credit risk indicators, financial entities are providing credits to known clients, rather than taking risks with new customers.

Generational and gender changes

Financial entities have observed that young people and women are showing increased demand for new consumer credits. This can be attributed to a number of reasons, including special initiatives, individual entrepreneurship and determination to improve employment prospects via education and training.

COMPETITIVE LANDSCAPE

Market adaptation and participation

Consumer credit players have been adapting to changing market conditions, with a number of financial institutions performing mergers and acquisitions. The arrival of Itaú, the purchase of Citibank’s consumer portfolio by Colpatria, and Serfinansa’s launch of the bank transformation process will clearly impact the competitive environment within consumer credit in Colombia.

Companies accepting more responsibility

In recent years, leading financial players have embraced the idea of operating more responsibly given the important role played by banking institutions in the national economy. This new outlook has therefore helped to foster confidence in the system as a whole.

Scope to improve service

However, customer satisfaction regarding the service offered by banks remains low, with loyalty rates being impacted by recurring complaints associated with collection, fees and poor advice regarding different credit products. Therefore, competition tends to centre around credibility and reputation, rather than product portfolios, which are typically similar among different financial entities.

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