Loan: offer financial services through information technologies
Good Finance companies (Good Finance is a combination of the words finance and technology) offer financial services through information technologies more efficiently and at a lower cost.
In Latin America, the leading countries in the creation of these Good Finance companies are Brazil, Mexico, Colombia, Argentina, and Chile, in that order respectively, according to the number of ventures they contribute.
These ventures are still in the early stages
The Inter-American Good Credit Bank identified around 703 enterprises and the countries mentioned occupy 90% of Good Finance operations in Latin America. Many of these companies were established between 2014 and 2016 and this demonstrates the value that these entrepreneurs give them.
However, the study by the Inter-American Good Credit Bank mentions that these ventures are still in the early stages and that they need to strengthen their business models before they are truly sustainable.
According to the report “one in four Good Finance operate as alternative financing platforms, offering loans, collaborative financing (crowdfunding) or financing through the intermediation of invoices. Another quarter operates as payment companies, and the remaining segments include business and personal finance management, asset management, insurance, and digital banks. “
For this study, 393 Good Finance entrepreneurs from 18 countries in Latin America were consulted and something that was found was that a large number of these think that the objective of their companies is to reach those segments of the population that do not cover traditional financial organizations such as They can be some individuals or SMEs.
This new offer of financial services has been well received in different parts of the world such as Germany, Spain, the United Kingdom, among others. There are several factors that differentiate these alternative financing organizations. Each has its own conditions, but among some of these differences is the speed with which money is delivered, the fact that no guarantee is needed, that everything is done online, that loans are made in small amounts of money, and that traditional financial organizations are not necessary.
A sector of the population that is very interested
It has been seen as these companies develop their activities, that a sector of the population that is very interested in this type of services is that of the millennials or born between 1981-2000. This generation lived closely the era of the information and have very good management of technology, precisely because they grew up with it.
Although many of them are very well prepared academically, not all of them still have the financial stability that traditional banking organizations require.
It is important to clarify that although the rules for accessing the loan are more flexible than with the banks, the rules regarding the breach of the agreements they have reached are not so.
In other words, it is important to plan and be assured that there is the ability to cover periodic fees in a timely manner. Any breach of the agreements will result in higher interest, therefore, a more expensive loan.