«Somos una boutique de inversión e innovación en entidades financieras, combinando lo mejor de la banca de inversión, el conocimiento en regulación y la tecnología para crear, transformar y financiar empresas, productos y servicios financieros incluyentes y sostenibles.”
There is no country in the world that has developed without a strong financial system. In fact, the economic literature describes, not only a strong relationship between economic development and the financial system, but also that the greater the institutional development and the stronger the financial regulation are, the greater the positive impact of the financial system on a country’s economy, because industrial sectors feel more confident in turning to external sources of financing (OECD, 2006). For this reason, at Pronus, we believe that a strong and well-regulated financial system has a very positive impact on society and that premise has led us as a firm (and also in our individual professional experience) to seek to generate an impact on the Colombian and Latin American financial system.
The traditional financial system is threatened by Fintechs and Insurtechs. However, at Pronus, we consider that this rivalry is myopic because traditional entities will have to digitize if they want to survive, and fintechs need to become regulated to scale their operations and offer services that are disruptive, innovative, easy, less expensive for the user, and have the right standards for their customers.
In the United States and Europe, large financial institutions are buying fintechs and insurtechs to go digital, contrary to what some local financial groups are doing. We do not pretend to be “prophets of the apocalypse”, far from it, but there is a substantial difference between buying a fintech that has a solid market logic and a sustainable model versus investing in the development of a digital business based on a “Power Point” built by the CTO of the traditional financial institution. We have seen many fail, naturally. For this reason, at Pronus, we believe that there is a very important space for symbiosis between existing and new financial institutions with a common and clear objective: improving the impact of the financial system on the economy in tandem with better profitability for their shareholders.
Until recently, people had to go to financial institutions to access their services. The digitization of these businesses, together with Fintech, Insurtech, and Regtech, broke that trend. What’s more, the pandemic finished convincing disbelievers that financial services will be eminently digital from now on. Now, the change is not minor, since the fundamental principle was reversed: customers do not go to their financial institutions; rather, financial entities go to their customers through apps and webpages in what nowadays we call a “customer-centered” approach.
This change (critical for those who do not offer a friendly and agile service to their clients) is the greatest the financial world has seen in decades. Gone are the days of paper letters filed as complaints with the financial institution (and responses 30 business days later). Now complaints are posted on social media, on a Saturday night, and the response must come immediately through the same network or via a chatbot.
Gone also are the days of complex agreements full of asterisks and opportunistic conditions. Now agreements are digital, and as short as a few bullets to allow them to be easily read on a smartphone; and, if there is a complaint, we go back to the previous point… At Pronus, we know that, today, the financial consumer service process is as important or more important than business risk management, and that becomes a powerful tool for growth, thanks to technology.
Not all financial or insurance services will be digital, since what can be digitalized is what is easily standardized. It wouldn’t be possible to get a loan to build a highway or a port through an app, or insurance for the hull of a ship, for example. However, products like consumer credit, microcredit, and even some types of business credit (e.g., factoring), or car insurance will be unfailingly digital. There is no going back.
Moreover, even when financial or insurance services are not digitalizable, there is a significant contribution in digitalizing part of the front-to-back processes; this includes collecting better data, and leveraging AI and machine learning technology for risk and commercial operations. At Pronus Control, we use REGTECH as a method to reinvent financial operations, using technology to mitigate risks that are very difficult to manage in the offline world, reduce costs, and increase the scope of business.
Colombian financial norms describe in detail the requirements that must be met in front of the regulator in order to obtain a financial license. Of course, the devil is in the details. At Pronus Control, we have implemented a project management methodology that allows us to manage a project as complex as the construction of a bank or an insurance company, where the monitoring matrices can include thousands of rows outlining monitoring tasks that take place during months, even years, to build up to the beginning of operation. Furthermore, having a PMO available allows our client to avoid having to hire very large teams in the pre-operational stage of a project, significantly reducing costs.