In the suburb of Envigado, within Medellín's dynamic cityscape, an inspiring fusion of technology and ambition is blossoming between Avista, a trailblazing fintech startup, and customers like Maria Victoria Fonnegra, a tenacious pensioner-turned-entrepreneur. Together, they are showing how to reshape Colombia's “silver economy” (people over 50), demonstrating the power of inclusivity and innovation.
Launched in 2019, Avista swiftly emerged as a leader in Colombia's fintech sector, carving a niche in credit and payroll loans for primarily pensioners, as well as public servants. Amidst a competitive field of over 300 fintech startups, Avista stands out by focusing on these often-underserved demographics. Avista employs an internal AI-based credit scoring system along with transparent credit policies for a streamlined digital lending process. With 110,000 loans exceeding USD $370 million, Avista is providing essential financial services to those in need, including Maria Victoria. Seventy-eight percent of Avista's customers earn less than 1.5 times the local minimum wage of USD $278 per month, and around 40% of total clients were previously rejected by other financial institutions.
Maria Victoria’s story is a testament to Avista's transformative impact. As a retired IT professional turned owner of Lirio de Mayo, a handmade jewelry and crafts store she launched in 2021, Maria Victoria encountered significant barriers in securing traditional bank loans. Like many Colombian female pensioners, traditional banks viewed her age, young business, and lack of credit history as barriers. But then, in 2023, Maria Victoria learned about Avista, and possibilities opened.
Avista's support was crucial, enabling Maria Victoria to secure a loan of 50 million Colombian pesos (approximately USD $12,800) to jumpstart her business. Avista uses an alternative credit scoring model to offer loans to people, including those with past credit issues.
Thanks to the loan, Maria Victoria secured a larger, well-situated storefront, enabling her to stock up on raw materials and diversify her business. Together with her sister, she skillfully oversees production and sales, which are increasingly done online via social media channels. Avista’s approach, tailored specifically for pensioners and public service employees, resonated deeply, she told UNSGSA Queen Máxima while speaking at her jewelry shop on 26 February 2024.
Today, she added, Lirio de Mayo is more than a successful venture providing her main source of income. Beyond enhanced financial health and financial stability, Maria Victoria’s business has provided her with a renewed sense of productivity, purpose, and community. Together with her sister, Maria Victoria conducts handicrafts workshops, contributing to a sense of shared creativity and skill development, particularly among other pensioners and women. Additionally, she has started to sell products online and aims to digitally transform her operations to promote market expansion. Maria Victoria told the UNSGSA that to run her business more efficiently, less costly payment and savings products are needed, including those that are interoperable between accounts.
“The partnership between Avista and customers like Maria Victoria transcends financial achievements, highlighting the broader social impact inclusive financial services and products can have on a community,” said Gabriel Seinjet, co-CEO at Avista.
Martin Restrepo, co-CEO at Avista, added that these loans, ranging from 1 million to 140 million COP (USD $255 to $35,800) are in large part used for productive and entrepreneurial projects, creating a multiplier effect in their communities. Repayments are deducted from their pension payroll automatically. Avista is also growing a business line focused on loans for debt consolidation to improve the financial health of pensioners with limited incomes.
A fintech like Avista can be critical in Colombia, where only 36% of adults have access to a credit product, with this figure dropping to 21% in rural areas, according to 2022 data from the Banca de las Oportunidades. The challenges of access to credit are compounded by the rise of loan shark lending. This issue is particularly pressing for vulnerable segments such as pensioners.
Regulatory complexity and the digital divide are other challenges for Avista and its customers. However, stories like Maria Victoria’s demonstrate fintech's potential to overcome barriers to financial inclusion, while enhancing people’s financial health and overall social cohesion.