I am not going to talk about democracy, although I will refer to democratization. With regards to the financial system in particular, I am going to share our firm’s vision on how to make the world a better place, using the financial system.
In the middle of the last decade, I was a financial regulator at a moment in time in which regulators throughout the world were actively issuing norms; the Basel 2 Accord (currently on its way to the 4th version) was put in place as a global paradigm of state intervention in banking, while Solvency 2 and IOSCO were the benchmarks for insurance and securities markets, respectively. At the time, for example, I applauded the Basel agreement adoption and worked hard to implement it in Colombia, but as time went by, and now sitting on the market side, I realize that the fruits of this agreement have ambiguous readings, – banking operations are increasingly more expensive, complex, and not necessarily more secure and inclusive. However, in spite of the latter, we firmly believe at Pronus that regulation opens incredible spaces, especially when working hand-in-hand with the use of technology.
Technology seems to be the financial system’s greatest ally due to the possibilities it brings with it, but at the same time, its greatest threat. Fintechs are lean and fast animals, much more agile in service and delivery than their counterparts in the traditional financial world. How can the two worlds be reconciled? At Pronus, we believe that digitalization will not happen organically in traditional financial entities; instead, it must be conceived inorganically, i.e., outside these institutions, due to an inordinate number of conditions ranging from conflicts of interest amongst those in charge of legacy technology within the aforementioned entities, to the difficulty associated with changing business models and operations on the go. At Pronus, we do not believe in “in-house digital labs;” on the contrary, we are convinced of the power of collaborative economy and open-architecture models.
In sum, we understand the opportunity that emerges from the intersection of both worlds – regulation and technology – to make the financial system a better model for our society.
It is not easy to define us because we are investment bankers, even though we also behave like a private equity fund manager with the typical mandate to invest limited partners’ capital in the businesses that we like, and we want to incubate or accelerate. We are also sought-after as advisers to government and multilateral entities to improve the impact of public policy in the sector. Hence, we have also become experts in financial inclusion, one of the most powerful forms of democratization!
With humility, but also with pride, we can affirm we have been pioneers in several aspects of the financial system in Colombia and even beyond, in Latin America.
We want to maintain that trend by taking paths that no one has ever had the audacity to take before. If we are really excited about your project, we will even want to share equity and risk with you, our client. That’s our initial value proposition, but not the only one.
When we structure your financial business together with you – whatever it is – powerful, inclusive, sustainable, we will ensure that the Regulator grants us the required license, but you will also want us to accompany you in the process of constructing your “building” that is still at the “blueprint” stage.
This is the raison d’etre of Pronus Control, our REGTECH firm, which will be in charge of these implementing these operations with experts in risk management, technology, and connections to high and low value payment systems, the central bank (Banco de la República) and the Colombian Stock Exchange. Moreover, we know that you will like our service so much that you may want Pronus Control to be your BPO in risk management in the areas in which you are not so comfortable as managing your core risks. The future of the financial operations is based on this a principle of specialization, open architecture, the concept of open banking, and REGTECH.
Finally, if your project needs financing, our structured financing firm, Pronus Capital, will seek those resources with the flexibility that your business requires. We are pioneers in portfolio securitization in the “Segundo Mercado”, i.e., institutional private placements, as it is known internationally, but we also structure private equity funds, and, on occasion, we agree to be co-managers in order to increase the power and scope of the business.