Abstract

The CIBP SPARK session, presented by Ronny Ramirez of Banco Cooperativo Coopcentral, highlighted the bank's extensive digital transformation journey initiated over six years ago. The focus was on integrating advanced technology to benefit the Colombian solidarity sector, emphasizing customer-centric digital products and monetizing digital channels. Coopcentral achieved significant milestones, including 100% national payment system interoperability and 99% customer coverage, while forming alliances to expand its ecosystem. The bank prioritized data integration, AI for fraud prevention, and created the first private cloud in the solidarity sector. Coopcentral is advancing towards Open Finance, developing APIs for centralized account management, and offering Embedded Finance products to enhance financial services and inclusion.

Summary

The CIBP SPARK session titled 'Open Finance in the Digital Age - Banco Cooperativo Coopcentral’s Vision for the Future' was presented by Mr Ronny Ramirez, Vice President of Digital Banking and Technology at Banco Cooperativo Coopcentral. Mr Ramirez discussed the bank's digital transformation journey, which began over six years ago with the rise of fintech in Colombia. The bank aimed to integrate cutting-edge technology and best practices in digital banking to benefit the Colombian solidarity sector.

The transformation focused on designing customer-centric digital products and monetizing digital banking channels. The bank enhanced its technological infrastructure and developed a demand capacity management area to analyze and manage technological solutions. Training and skill development were emphasized to ensure effective use of these technologies, addressing the issue of underutilization. Coopcentral built alliances to expand its ecosystem, achieving interoperability with national and international payment systems, including Visa and Mastercard. The bank aimed to create a comprehensive mobile ecosystem for banking operations, financial education, and other services like public utility payments.

Data integration and analysis were prioritized to offer solutions aligned with customer expectations. Coopcentral achieved 100% national coverage in payment system interoperability and 99% customer coverage. The bank interconnected with various entities, including issuing banks, merchants, and payment gateways, and envisioned a cooperative payment system interoperable with all cooperatives. The bank also engaged in international operations with Visa and Mastercard and collaborated with the Central Bank for high-value clearings. New actors, such as non-financial acquirers, were involved to create competitive markets and reduce user costs. The bank's payment system aimed to interoperate with fintechs, electronic wallets, and other players, aligning with national regulations. Coopcentral maintained a low-cost funding model by financing cooperatives at below-market rates and deployed a network of ATMs and point-of-sale devices to support cash and electronic wallet withdrawals. Despite advancements, the proportion of cash transactions in Colombia remained significant. The bank has also focused on digitalizing cash for cooperatives that receive a lot of cash at their physical points.

Coopcentral is addressing digital challenges by structuring data through a data lake and implementing artificial intelligence for data mining and fraud prevention. The bank created the first private cloud in the solidarity sector to protect data and reduce costs. Coopcentral offers software as a service, enabling cooperatives to develop and launch new applications. The bank is working on cross-border payments to reduce remittance costs and enhance security through tokenization and partnerships with Visa and Mastercard. Coopcentral is also focusing on tokenization and cybersecurity to protect both consumers and merchants. The bank is evolving towards Open Finance, aiming to centralize account management from different banks through APIs, and is developing a federated directory for seamless data sharing among cooperatives and other entities. Coopcentral is also working on Embedded Finance products, allowing non-banking entities to connect directly to their financial core and use their technology. They offer white-label digital wallets and payment gateways, enabling cooperatives to position their brand and deliver financial services. The bank has created a fintech ecosystem to bring advanced technologies to the cooperative sector without implementation costs. Coopcentral has integrated 160 cooperatives and is working with 15 more, offering 21 digital products and a network of shared ATMs and dataphones.

The bank has also focused on artificial intelligence to improve software development, cybersecurity, and transaction processing. Coopcentral has won several awards for digital transformation and is committed to sustainable energy and financial inclusion for migrants in Colombia. The bank has achieved 100% sustainable energy consumption through a partnership with Via and is working to provide digital banking and financial education to migrants arriving in Colombia. Coopcentral's model with fintechs involves creating wallets that allow users to open savings accounts, assign debit cards, and ensure interoperability within the ecosystem. The bank collaborates closely with the Central Bank of Colombia and the regulator to facilitate immediate operations and enhance the digital and payments landscape.

Keypoints

• Session Overview: The CIBP SPARK session focused on 'Open Finance in the digital age' and Banco Cooperativo Coopcentral’s vision for the future.
• Speaker Introduction: Ronny Ramirez, Vice President of Digital Banking and Technology at Banco Cooperativo Coopcentral, led the session.
• Digital Transformation: Banco Cooperativo Coopcentral has been working on accelerating its digital transformation for over six years, leveraging the rise of fintech in Colombia.
• Customer-Centric Approach: The bank designed its digital products around customer needs and aimed to monetize digital banking by increasing channel usage.
• Technological Evolution: The bank evolved its technological infrastructure to meet new demands and ensure the effective use of acquired solutions.
• Skill Development: Emphasis was placed on training people to manage and utilize new technologies effectively, addressing the issue of underutilization.
• Ecosystem Expansion: The bank built alliances to expand its ecosystem, ensuring interoperability with all payment systems in Colombia and internationally, including Visa and Mastercard.
• Mobile Adaptation: Technologies were adapted for mobile devices to create ecosystems where banking operations and financial education are accessible via a single application.
• Data Integration: The bank integrated data and analysis to create solutions aligned with client expectations, using a data lake to enhance market penetration.
• Interoperation and Coverage: The bank achieved 100% coverage at the interoperation level and 99% national coverage, connecting with all banks issuing debit and credit cards and all payment gateways.
• Cooperative Payment System: Colombia has a 100% cooperative payment system with 170 interconnected cooperatives, supported by entities like Credibanco, Visa, and Mastercard.
• Regulatory Support: New regulations in Colombia support fintech participation, aiming to create new markets and make rates more competitive, potentially reaching zero cost for users.
• Customer-Centric Payment System: The bank's payment system prioritizes customer needs, offering instruments for interoperability with various players, including fintech banks and electronic wallets.
• Wide Communications Network: A wide communications network was created, involving multiple actors to support cash and check operations and the creation of new products.
• Low-Cost Funding: The bank provides low-cost funding to cooperatives, supported by a network of devices at points of sale and an allied network of ATMs, although the proportion of cash transactions remains significant in Colombia.

Verbatims

• - "We started developing this more than 6 years ago with the rise of fintech in Colombia."
• - "We saw the opportunity to collaborate, yes, by hiring our cooperative nature and we did not see them as competition."
• - "The Bank had to having an evolution in all of its technological infrastructure and how those solutions that were being acquired could meet these needs."
• - "We see that most of the technologies that companies acquire are underutilized."
• - "We are interoperable with all payment systems at the Colombian level and at the international level, with allies such as Visa and Mastercard."
• - "Currently in Colombia we have a 100% cooperative payment system that we envision interoperating with all cooperatives."
• - "What the regulator is looking for is that we can reach a rate of zero cost for the user and the final consumer."

Glossary

• Clearing and Settlement

  The process of reconciling purchase and sale transactions and transferring the ownership of securities or funds between parties.

• Customer-Centric Design

  An approach to product development that prioritizes the needs and preferences of the customer, ensuring that products and services are tailored to their requirements.

• Cybersecurity

  Measures and practices designed to protect systems, networks, and data from cyber attacks, ensuring the confidentiality, integrity, and availability of information.

• Data Lake

  A centralized repository that allows for the storage of structured and unstructured data at any scale, enabling more comprehensive data analysis and insights.

• Digital Transformation

  The process of integrating digital technology into all areas of a business, fundamentally changing how it operates and delivers value to customers.

• Ecosystem

  A network of interconnected organizations, including partners, suppliers, and customers, that collaborate to create and deliver products and services.

• Financial Education

  Programs and initiatives designed to improve individuals' understanding of financial concepts and products, enabling them to make informed financial decisions.

• Fintech

  Financial technology companies that use technology to offer innovative financial services, often disrupting traditional banking models.

• Interoperability

  The ability of different systems, devices, or applications to work together within and across organizational boundaries to exchange and make use of information.

• Mobile Adaptation

  The process of optimizing technologies and services to be accessible and functional on mobile devices, such as smartphones and tablets.

• Open Finance

  A financial system where data is shared between financial institutions and third-party providers through APIs, enabling more personalized and competitive financial services.

• Payment Systems

  Mechanisms established to facilitate the transfer of funds between parties, including credit card networks, electronic funds transfers, and mobile payment platforms.

• Regulation

  The establishment of rules and guidelines by governing bodies to ensure the stability, fairness, and efficiency of financial markets and institutions.

• Technological Infrastructure

  The foundational technology systems and services that support the operations and management of an organization, including hardware, software, and networks.

• Tokenization

  The process of converting sensitive data into unique identification symbols (tokens) that retain essential information without compromising security, often used in payment systems.