Rosanna Ramos-Velita on Los Andes’ Strategies to Enhance Rural Financial Services

Los Andes is embarking on a transformative initiative to enhance financial inclusion and accessibility for underserved populations in Peru through the implementation of cutting-edge mobile banking technologies. Recognizing the challenges faced by clients with limited smartphone access, the company aims to provide innovative solutions that bridge the digital divide and facilitate access to essential financial services.

To this end, Los Andes is empowering Business Advisors (ADNs) to manage a specialized application that serves a dual purpose: it educates clients on the usage of digital financial tools and allows for more personalized client interactions. By late 2024, this app will enable credit evaluations to take place at clients’ locations, reducing the barriers and time typically associated with securing financial assessments. This effort is crucial in streamlining access to credit for clients who may face challenges in accessing traditional banking services.

In an effort to address the persistent connectivity issues that affect many remote areas, Los Andes is forging strategic partnerships with telecommunications companies. A pilot program utilizing Starlink satellite internet has yielded impressive results, achieving internet speeds ranging from 20 to 50 Mbps in regions previously limited to traditional connections of just 3 Mbps. This initiative is expected to significantly expand internet coverage in underserved areas, ensuring that more clients can access digital banking services and participate in the financial ecosystem.

To safeguard its operations and protect client assets, Los Andes has established a self-managed transaction monitoring area and introduced dedicated roles focused on fraud prevention. By implementing robust online transactional monitoring tools, the institution can promptly identify potential alerts and enforce necessary blockages to mitigate risks. Additionally, the company has engaged a Security Operations Center (SOC) that specializes in proactively detecting and mitigating potential threats to its digital infrastructure, thereby enhancing the overall security posture of its financial services.

On the credit risk assessment front, Los Andes is developing sophisticated statistical predictive models tailored to serve both urban and rural clients, including those who are unbanked. These models will leverage the institution’s extensive data to evaluate creditworthiness, with a specific emphasis on assessing the credit profiles of rural clients operating informal businesses. This approach is designed to broaden financial access for individuals who have historically been excluded from the formal banking system.

Incorporating biometric authentication into its digital services is another key strategy being pursued by Los Andes. By partnering with RENIEC (National Registry of Identification and Civil Status), the company aims to verify client biometrics for remote transactions and new product acquisitions. This integration of biometric security not only enhances the safety of digital transactions but also provides clients with a more seamless and efficient banking experience.

Los Andes is preparing to launch its mobile application and digital account in 2024, featuring a design that facilitates interoperability within Peru’s existing financial ecosystem. This digital product will enable money transfers between Los Andes accounts and other associated entities through Peer-to-Peer technology, thus fostering greater accessibility for clients and encouraging them to engage with digital financial services.

To enhance data management and analytics capabilities, Los Andes is migrating its alternate data center to the cloud, which will establish a centralized data platform. This transition is guided by a unified data governance model that ensures effective data management practices align with the institution’s strategic goals. The move to the cloud will also facilitate advanced analytics and business intelligence capabilities, enabling Los Andes to better understand client needs and preferences.

Furthermore, Los Andes has implemented services on an integration platform (API BUS) with key partners, including Niubiz and Kasnet. This initiative is part of a broader effort to enhance service delivery and client experience. Future projects aim to expand capabilities by providing authentication, digital signature, and other essential services through APIs, thereby creating a more streamlined and efficient banking environment.

In its pursuit of community engagement and empowerment, Los Andes has launched “Lara de Los Andes” through its innovation laboratory, Candelab. This platform offers a wealth of resources on self-knowledge, mental health, entrepreneurship, and financial education. By harnessing the experiences of over 8,000 community members, this digital platform is designed to empower clients with the knowledge and skills necessary for achieving financial success and well-being.

Looking ahead, Los Andes has ambitious plans to incorporate climate-related risk assessments into its agricultural loan portfolio by 2025. The institution aims to develop models that correlate climate risks with macroeconomic variables specific to the geographic locations of its clients. This proactive approach will enable more informed lending decisions and support sustainable agricultural practices among clients in rural areas.

In addition to the mobile application, Los Andes plans to introduce a digital savings account that functions as an interoperable wallet. This account will allow clients to conduct banking transactions using their account number or mobile phone number, thereby promoting savings habits and enhancing overall financial management.

The Credirapp Pro application, designed to facilitate campaign credit granting, is set to expand its capabilities to include traditional evaluations by the end of 2024. This digital platform will enable loan assessments to occur at clients’ locations while adhering to the institution’s internal risk policies, streamlining the lending process and making it more accessible for clients.

As part of its 2025 roadmap, Los Andes aims to introduce programmed savings accounts and fixed-term deposits specifically designed for rural women, addressing the unique financial needs of this demographic. This initiative underscores the company’s commitment to promoting gender equality and empowering women through tailored financial products.

Additionally, Los Andes is focused on improving its data governance to identify new market opportunities and tailor products for underserved rural segments. By enhancing its understanding of client behaviors and needs, the institution can create targeted offerings that better serve its diverse clientele.

To support these technological advancements and growth initiatives, Acción’s $10 million investment in Los Andes will play a crucial role. Specific allocations of this funding will be defined in the fourth quarter of 2024, with an emphasis on ensuring the success of the digital transformation initiatives. The effectiveness of these initiatives will be evaluated using key performance metrics, including the Net Promoter Score (NPS), labor climate survey results, employee retention and training rates, alternative channel digitization percentages, and levels of client financial and digital education.

Through these comprehensive initiatives, Los Andes is positioning itself as a leader in the effort to enhance financial access and security in Peru. By leveraging technology and innovation, the institution aims to create a more inclusive financial ecosystem that empowers clients and fosters economic growth in underserved communities.