Redefining Access: The Movii Movement for Financial Inclusion

Bolstering financial inclusion is an important step in creating a more equitable, prosperous society. Financial inclusion works to bridge the gap between the financially underserved and essential financial services – such as secure accounts and small-scales loans – empowering individuals and businesses alike to participate fully in economic growth and opportunities.

At the forefront of this mission in Latin American markets is Movii, a financial services company co-founded and spearheaded by CEO Hernando Rubio, whose primary objective is to meet the pressing need for comprehensive financial inclusion, laying the foundation for a more equitable and accessible financial landscape worldwide.

In conversation with Alexandra Rogan, Director of Programs and Partnerships at the Council for Inclusive Capitalism, Rubio explains how Movii is profitably engaging with millions of new customers through low-cost and easy to use online financial tools. Read a summary of his remarks below or click to listen to the full recorded conversation.

The written summary below is edited for brevity and clarity.

Tell us about Movii and the challenges in the banking system that you’re working to overcome.

Movii is a digital wallet and bank founded with the goal that every individual and merchant, regardless of their social economic status, has access to digital transactions. We firmly believe that expanding access to the digital economy will elevate the quality of life for all.

Our biggest challenge is reshaping ingrained behaviors from the traditional banking approach, where customers were served in-person, paid exclusively in cash, and fees were imposed for financial services. This model didn’t fit emerging markets, as a substantial portion of the population couldn’t afford the price of these services, leading to widespread non-adoption and a heavy reliance on cash transactions.

In emerging markets, merchants primarily accepted cash as they didn’t have to pay for a point of sale system. With the rise of digitization and widespread access to a phone or with the internet, we are pushing a new model focused on providing a better user experience than the traditional banks free of charge.

With your customer base growing so significantly, in recent years, how many users do you currently serve? 

We’ve had quite a journey! In only five years, we reached more than 10% of Colombia’s population, more than 4 million users, making us the fifth biggest financial institution for digital transactions in Colombia. We’ve been growing really fast, and a lot of firms are interested in understanding how we grew so quickly.

Why is financial inclusion is a priority for your company?

One of the biggest threats to our society, specifically in emerging markets, is economic inequality. According to the Gini index, Columbia has historically been one of the most unequal countries in Latin America. Looking at World Bank data, 8 of the top 20 high-coefficient countries are in Central or South America.

There are two main drivers of these inequalities: a lack of education and lack of financial services, both of which keep people stuck in the poverty cycle. The rise of digitization provides an opportunity to change that, for many people to increase their quality of life by having access to the digital economy thereby being able to sell and buy goods with greater ease and with better pricing models.

How can other businesses, regardless of whether they’re a financial institution or not, play a role to help to advance financial inclusion around the world?

Financial inclusion means much more than payments, but of course payments are important to have access to the other layers. So first, we all need to make sure that everyone has the capacity to pay or be paid digitally. For companies not related to the financial sector, they can help advance this by promoting and digitizing their payment systems with customers by building services into wallets and encouraging use of these systems.

Can you share a little bit about Movii’s partnership with MasterCard and how that’s enabled you to serve broader markets than either Movii or MasterCard could have done on your own?

Absolutely – MasterCard has built a lot of infrastructure over the last few years that’s been really instrumental in helping us make a greater impact. In our case, it helped us to reach more users, not only with the card, but with cross-border payments, as well as security and authentication measures.

We’re still working with MasterCard discussing how to continue to reduce costs, but they are doing their best in order to find ways to achieve greater financial inclusion around the world within their business model.

Why do you think the digital economy has lagged in Latin America? Where are there opportunities for enterprises like Movii?

The main difference between adoption in developed versus emerging markets is the costs associated. In developed markets, without much cost burden, people started using checks, then debit and credit cards, and then mobile money. In emerging markets, checks and wires were relatively more expensive than using cash so other payment methods were rarely adopted. When cards were introduced, there was low adoption because of the cost of monthly account fees and associated merchant discount rate.

Now with mobile money, it’s much closer to the costs of using cash with a lot of convenience attached. So emerging markets, not only Latin America but also in Africa and Asia, are leapfrogging from cash to mobile money.

The other piece that’s different in emerging markets is most of the payment infrastructure is owned by banks. Because banks want to delay competition, it’s really difficult to connect the banking infrastructure to the payment infrastructure, but we were able to do this with our app. And we share our infrastructure with other competitors in order to create greater change.

How are you expanding access to the unbanked given particularly some of those logistical challenges?

One significant area that demands improvement, especially in terms of financial inclusion, is the rural regions. There are many places in Colombia lacking internet access, but as an entrepreneur, I prefer to view these challenges as opportunities rather than barriers. Interestingly, out of approximately 52 million people in Colombia, around 73% have access in some way to the internet.

We’ve been inspired by the heartwarming stories from farmers who have experienced the positive impact of our solution. With the Movii platform, people can now receive money from their relatives in a more fast and cost-effective way. Rather than going into town, they can also make digital purchases of goods at more affordable prices.

Could you share a bit more about the work that Movii has done to enable migrants and refugees coming into Colombia?

We are witnessing the largest migration of people worldwide, with millions of refugees leaving Venezuela to move to other Latin American countries, Colombia hosting the majority.

When these individuals arrive in Colombia, they receive a document that allows them to work. However, the majority of banks don’t accept this document for opening an account. Recognizing this challenge, we started accepting their refugee documents.

Meeting the needs of our refugee population and retaining them as customers has been crucial. Surveys showed that the majority want to stay in Colombia, have families here, and are likely to be long-term residents and customers. They are actively earning income, with a lower unemployment rate than the general Colombian population. Their prior experience with financial systems makes them prefer formal banking over cash-based systems, so our low-cost, formal banking services align perfectly with what they seek.

Where did you first see an opportunity to collaborate with the social welfare system and the Colombian government? Or could you share a little bit more about the structure and the approach?

When the pandemic started, the government was providing income assistance. Normally people had to wait in long lines which, during the pandemic, wasn’t possible so the Colombian government was looking for companies willing to help with distribution. The big banks didn’t want long lines, they wanted their branches to be able to offer services to customers. For us, it naturally fits with our mission and target demographic so we began our partnership with the government.

This welfare need was a huge driver in getting people to use a digital wallet. By distributing welfare payments through our digital platform, we were able to reduce the percentage of those withdrawing the money as cash from 100% to only 30%. And when we studied the consumers that this money was disbursed to, we found that 68% of the people made their first online purchase with us. And 35% of these people started putting their own money into the wallet as well for continued use.

Finish this sentence,  business at its best is…..

I think business at its best is when it creates value for both the company and their customers and their society. It’s not only about profits, it is also about contributing positively to society and the environment. And I think that’s the big change that we need to make from the old way of doing capitalism to the new way of doing to the fair, inclusive capitalism.