What would happen in Colombia if cash didn’t exist?

The advent of new technologies and their application as means of payment tends to give the impression that cash is on its way out in the near future. Belying this impression, however, in most of the world’s countries cash is still almost as essential as it was a few years ago, and its demand is still growing.

The Managerial Progress Association (Asociación para el Progreso de la Dirección: APD Colombia) and the publishing house Kienyke, have come together to analyze the across-the-board implications of a totally digitalized economy, doing so by holding a conference called “Digital Democracy, challenges of a cashless economy”.

The encounter involved a debating panel on the pros and cons of cash and the importance of the financial sector’s digital transformation in Colombia. Victor Gaspar, GMV’s Country Business Manager for Colombia, took part in the debate by pointing out the barriers to a cashless existence: innovation-throttling regulation overkill; lack of knowledge and interest, etc. In the particular case of Colombia “there are still 7 million people without a bank account and there is also an infrastructure barrier that needs to be wiped out in order to make further headway in the digital transformation”. “We need better communications, better devices and greater access. A colleague told us he lives four kilometers from here and has no internet access. This has got to change”, Gaspar pointed out. Another of his main thrusts was the need to unify financial-sector regulations to allow companies to expand without hindrance, for example with improvements like GDPR. Victor Gaspar argued that a proper digital transformation also depends on removing cultural barriers, seeking solutions to banks’ real problems, like customer distrust of change.

As for the main advantages offered by the financial transformation, Gaspar itemized competition, boosting consumer sovereignty and cutting down the monopoly power of current stakeholders. In a more digitalized environment the consumer is given more affordable options, such as apps for making swift and simple money transfers (Revolut, TransferWise, etc). Startups can now break into the market offering a single product or service in a swift and economically feasible manner, eating into the profit margins of the big players.

The forum set out to analyze the across-the-board implications of a one-hundred-percent digital economy that underpins the financial sector’s enterprising aspects and digital-favoring ideas and institutions. Other experts taking part in the debate were José Luis Gómez, innovation manager of Claro Colombia; Santiago Andrés Torres, business development manager of DaVinci Technologies; Joan Gili Suárez, president of the trust company Renta 4 and Jaime Espinosa, manager of BBVA Open Innovation Colombia.

Furthermore, Gerardo Hernández, member of the Banco de la República’s managing board, spoke during this encounter of the great changes in the sector now being driven by today’s technological advances, arguing that “banks now have to think about how to assume the technological changes”. As for Colombia itself, Hernández also claimed the current climate for technological developments is pretty bright, although “we still have to tap into technological resources for proper analysis and better management of risks”. The Banco de la República, for example, has been working on alternatives to optimize payment systems and embark on the path towards more efficient payment systems and a less cash-dependent Colombia.