Colombia's digital inclusion strategy is bolstering financial inclusion — especially for women

Over the last decade, and particularly in response to the COVID-19 pandemic, governments worldwide have been leveraging technology to improve the provision of public services, foster financial inclusion and drive economic growth.

The digital systems that allow institutions to provide vital public services to citizens — from digital disbursement of social benefits to scheduling appointments at the nearest clinic — are known as Digital Public Infrastructure (DPI).

In the most recent OECD Digital Government Index, Colombia ranks highly alongside countries such as Korea, Denmark, the United Kingdom and Norway. Colombia has recently undertaken a collaborative effort of multiple government agencies to advance the development of a robust digital ecosystem that streamlines operations, generates trust in the procedures and services of public and private entities and that will drive the country's digital economy in the coming years.

The Centre for Public Digital Infrastructure has identified the three key components of DPI essential to build digital economies to support the 17 Sustainable Development Goals of the United Nations:

1) Interoperable digital payments.

2) Digital identity systems.

3) The ability to share data between institutions.

A case study of Colombia's efforts in these areas provides a potential model for other countries in the region and even further afield to emulate.

Following the best practices of other successful instant payment systems like Pix in Brazil or UPI (Unified Payments Interface) in India, Colombia is developing a new low-value interoperable fast payment system (FPS) that will launch in May 2025. Banco de la República, Colombia's central bank, is leading this effort in close collaboration with the private sector, emphasizing co-creation, interoperability, efficiency, inclusion and innovation to reach the last mile. The FPS, which will operate under the name “Bre-B”, will allow real-time digital payments 24 hours a day, seven days a week, revolutionizing financial transactions and driving digital financial inclusion throughout the country. It will significantly benefit women and the most remote communities, as mobile banking accounts helps women to accumulate savings and increases their ability to cope with shocks.

To ensure a comprehensive and inclusive approach, Banco de la República established a Payment Systems Forum, inviting a wide range of stakeholders, including financial regulators, banks, fintech companies and electronic money issuers. This platform facilitated valuable debates and knowledge exchanges, fostering a collaborative environment where stakeholders could contribute their knowledge and experience. They co-designed the operating rules and model, agreed on the technical requirements, and built consensus about clearing and settlements. In addition, the Better Than Cash Alliance, based at the UN, provided technical assistance and facilitated knowledge exchange with instant payment operators in other countries to ensure Colombia's DPI strategy incorporates best practices and lessons learned from other systems.

When the interoperable payment system is fully implemented, a significant move toward digital payments is anticipated over the next 15 years; the typical period for such systems to reach maturity. The expansion of cross-border payment offerings will be analyzed as the next step, further integrating Colombia into the global digital economy and facilitating international transactions.

In 2020, Colombia launched the Digital ID, an innovative digital version of the national identity card. People can obtain their digital identification by downloading an application, scanning a QR code and authenticating their identity through facial recognition technology. By July 31st 2024, more than five million digital IDs had already been processed, allowing citizens to use the document as a secure digital passport for travel within the Andean region, identify themselves in physical and digital environments and carry out virtual transactions. Digital identification lays the groundwork for secure and efficient access to assorted services and digital transactions, streamlining processes and improving the overall user experience.

Colombia's Digital Government Strategy introduced the Digital Citizen Services initiative, which simplifies the process of submitting and accessing key documents such as birth certificates and medical records. This initiative facilitates agile, secure and fluid data exchange between public entities through an electronic authentication system and the data exchange mechanism. This DPI component improves the efficiency of public services and significantly reduces administrative burdens for citizens, saving them valuable time and resources.

The DPI components of the Colombian strategy, particularly the digital ID and fast payments system, will enhance financial inclusion by providing secure, efficient and accessible digital financial services to underserved populations, giving digital tools so individuals can empower themselves and fostering economic growth.

During the COVID-19 pandemic, Colombia showcased the potential of its DPI strategy by accelerating its digital Government-to-Person payments journey through the innovative "Ingreso Solidario" programme. This programme leveraged regulatory modernization to deliver payments directly into bank accounts and mobile wallets, facilitating account opening for unbanked beneficiaries.

DPI plays a pivotal role in advancing all the interconnected Sustainable Development Goals (SDGs) by employing digital technologies to address global challenges at scale. Studies suggest that low- and middle-income countries could even speed up their GDP growth by 20-33% with the adoption of digital public infrastructure in the finance sector.

Colombia's work towards building and implementing the fundamental blocks of DPI demonstrates a commitment and leadership to improve public services and support the country's digital economy and development priorities in the coming years. In addition, DPI offers a crucial opportunity to close the gender digital gap, allowing women greater flexibility to access government services and reach financial equality.