Fraud in Small and Medium-Sized Enterprise (SME) Loans Increased Over the Past Year

  |   For  |  0 Comentarios

Private credit can be an important source of investment, but for the system to work for all parties—both lenders and borrowers—the chain cannot be broken.

However, fraud in small and medium-sized enterprise (SME) loans has increased by double digits year over year, with most lenders expecting fraud levels to continue rising in the coming months, according to the LexisNexis Risk Solutions SME Loan Fraud Study.

More than 80% of respondents reported that fraud in SME loans increased by nearly 14% over the past year, despite lenders being less willing to issue new credit.

While SME loan fraud is steadily increasing, it is gradually moving away from the influence of the pandemic. In particular, fraud is often detected within the first month of establishing a relationship with a new client.

The majority of fraud losses are attributed to digital channels, prompting 70% of organizations to adjust their strategies to detect and mitigate fraud.

“This shift highlights a proactive approach within the sector, with many lenders tightening their mobile and online transaction policies. While smaller banks and credit unions are balancing their policies, larger institutions are taking stricter measures,” the report states.

Regarding the main methods used by defaulters, the theft of a company’s legitimate identity and the theft of consumer/owner identity have emerged as the most common forms of SME loan fraud, making detection particularly challenging.

The study offers several recommendations to prevent SME loan fraud, such as improving identity verification controls and utilizing advanced fraud detection systems that go beyond manual methods.

Additionally, it advocates for a multi-layered approach by combining different solutions to address the unique risks posed by various channels, payment methods, and products. This approach should integrate cybersecurity with fraud prevention efforts and employ advanced solutions like OTP/two-factor authentication, biometrics, and behavioral biometrics.

Finally, lenders should focus on early fraud detection and intelligence sharing. Businesses should harness the power of collective intelligence through consortia and digital identity networks. By participating in a consortium, companies can share valuable data, creating a peer-to-peer intelligence layer that allows them to gain greater context, protect their digital channels from cybercriminal networks, and make smarter, real-time risk decisions.

81% of Citizens Worldwide Believe That Funding Their Retirement Is Their Own Responsibility

  |   For  |  0 Comentarios

Are You Unsure if You Can Retire? Don’t Worry, the Global Retirement Index (GRI) by Natixis IM Shows Stability in Retirement Conditions Worldwide

According to the latest edition of the Global Retirement Index (GRI) from Natixis Investment Managers, retirement conditions remain stable globally. After nearly all developed countries improved their scores last year, the latest findings suggest that retirement remains secure.

Countries that perform best in the GRI tend to show consistent results across all sub-indices, reflecting a stabilization of global retirement prospects. The top 10 ranked countries have remained the same for two consecutive years. However, individuals are feeling the pressure as more people realize that they are increasingly responsible for financing their retirement on their own.

In this year’s index, Switzerland overtook Norway to claim the top spot with an overall score of 82%, relegating Norway (81%) to second place. The top rankings have seen little change, with Iceland (3rd), Ireland (4th), and Australia (7th) maintaining their positions. Germany and Denmark each moved up one spot from last year, securing 8th and 9th places, while the Netherlands overtook Luxembourg to claim 5th place, pushing Luxembourg to 6th. However, New Zealand showed the most significant change among top-performing countries, dropping two spots to 10th.

Created in collaboration with Core Data Research, the GRI serves as a global benchmark that incorporates a wide range of essential factors for ensuring a healthy and secure retirement. These factors include important financial considerations as well as access to healthcare, its costs, climate conditions, governance, and overall population happiness. The GRI’s rankings are relative, not absolute, based on an aggregate of average scores ranging from 0% to 100% for 18 performance measures across four sub-indices (Finances in Retirement, Material Wellbeing, Health, and Quality of Life) that together offer a comprehensive picture of the retirement environment.

“It’s encouraging to see a consistent set of results in this year’s GRI, although there’s still room for improvement in most cases, within a broader environment characterized by rising debt levels, fiscal pressures, and higher interest rates. To prevent a future retirement crisis, a key step is to invest and work with a professional financial advisor to design a resilient, well-diversified portfolio, making the most of savings opportunities that align with individual retirement goals and the current environment. Fortunately, more people are taking responsibility for ensuring their financial security in retirement,” explains Javier García de Vinuesa, head of Natixis Investment Managers for Iberia, in relation to the survey results.

Key Index Movements

Manutara Ventures highlights that Switzerland, which tops this year’s GRI, achieved a perfect score in the unemployment indicator, reflecting the country’s impressive workforce participation rate. Despite declines in most sub-indices, Iceland retains its third position for the second year in a row. “Notably, Iceland dropped seven spots in the Health indicator (from the top 10 to 11th), despite a slight increase in its score,” they note. Meanwhile, Norway saw declines in both the Material Wellbeing sub-index, dropping from 1st to 6th, and in the Finances in Retirement sub-index, where it fell out of the top 10, landing in 12th place due to drops in the fiscal pressure, dependency ratio, and governance indicators.

Luxembourg, however, rose four percentage points to claim the top spot in the Health sub-index, driven by an increase in its life expectancy score, displacing Norway from its previous lead. Slovenia and Belgium also climbed four spots each: Belgium moved from 19th to 15th, and Slovenia just missed the top 10, moving from 15th to 11th.

Ireland leads the Finances in Retirement sub-index, improving its score by one percentage point to 74%, thanks to the continuous reduction of public debt. The United Kingdom also moved up two spots in this year’s GRI, ranking 14th due to improvements in the Health sub-index, while its scores in the other sub-indices remained unchanged.

Citizens Feel Increasingly Alone in Retirement

Despite generally positive global retirement security prospects, the Natixis Global Survey of Individual Investors in 2024 shows that the number of individuals who believe it is increasingly their responsibility to fund their retirement, rather than relying on public or private pensions, has grown from 67% in 2015 to 81% in 2023. Additionally, the number of people who believe a miracle is required to achieve retirement security rose from 40% in 2021 to 45% in 2023. One in five investors (19%) says that even if they could save $1 million, they still wouldn’t be able to afford retirement, including 18% of those who have already accumulated $1 million.

The report also identifies key risks individuals face, highlighting four in particular. First, they point to interest rates. “While low rates had been a key risk for retirees in the more than 15 years following the Global Financial Crisis, today’s higher rate environment presents new risks. Specifically, with more than $6 trillion invested in money market funds, deposits, and similar instruments, investors need to be aware of how the current cash trap could prevent them from meeting their need for a sustainable long-term income source,” they explain.

Second, they highlight inflation. While the worst may be over, as inflation slowly returns to central bank targets, the post-pandemic price surge serves as a stark reminder of how quickly and severely inflation can rise. Now, 83% of investors acknowledge that recent events have reminded them of the great threat inflation poses to their retirement security, and they must act accordingly to ensure they’re prepared for any future inflationary episodes.

Another risk is public debt, which in OECD countries has more than doubled in the first quarter of the 21st century, as policymakers responded first to the Global Financial Crisis and then to the Covid-19 pandemic. While these measures were necessary to avoid short-term economic collapse, policymakers now face the long-term task of paying down this debt. A growing number of people are concerned that they’ll be asked to foot the bill, which could lead to cuts in public retirement benefits—the cornerstone of many retirement plans.

Lastly, they identify “people themselves” as a risk. “A secure retirement is a journey, not a destination. Success requires realistic expectations and significant individual commitment. While many may appreciate this in concept, not all investors set reasonable assumptions or establish realistic goals. GRI survey results show that investors lack a consistent view of what it takes to succeed,” the report concludes.

Manutara Ventures Fund Invests in the Latin American Expansion of Atomic Kitchens

  |   For  |  0 Comentarios

(cedida) Cristián Olea, Managing Partner de Manutara Ventures

As part of its second venture capital fund, the specialized investment firm Manutara Ventures announced a $750,000 investment in the foodtech startup Atomic Kitchens, which operates in the food industry. The purpose of the funding, they explained, is to support the company’s expansion across Latin America.

The early-stage venture capital vehicle shared details of the deal through a statement, noting that the investment was in equity and marked their entry onto the tech firm’s board.

In addition to regional expansion, the financing aims to develop new business lines that synergize with the current business model. The foodtech company has set the ambitious goal of doubling its partner network between October 2023 and October 2024.

Founded in 2020 in Chile, Atomic Kitchens focuses on creating and connecting food franchises with restaurants and ghost kitchens—also known as dark kitchens—that have unused capacity.

This startup’s work, they explained, is supported by the development of its own data analysis technology, which allows them to optimize kitchen capacity, implement marketing strategies, and improve the offerings of these franchises.

Under this model, the company helps expand food franchises or brands without requiring large initial investments, while assisting established kitchens and restaurants in boosting their sales and operations. Their mission is to support and empower small food entrepreneurs.

Currently, Atomic Kitchens has over 900 franchises from its brands distributed across Latin America, with operations in Argentina, Bolivia, Chile, the Dominican Republic, and Uruguay. They have also launched a B2B marketplace in their main markets, reporting double-digit monthly growth.

Manutara Ventures, also founded in Chile, operates in Miami as well, offering entrepreneurs a platform to access U.S. markets and experience. The private equity firm has built an ecosystem of entrepreneurs and investors, helping to grow its portfolio of renowned startups. This includes Xepelin, ETpay, and OpenCasa—three young firms that, together, exceed $1 billion in valuation.

In the press release, Cristián Olea, Managing Partner of the venture capital firm, highlighted Atomic Kitchens as a startup with “high potential.” “Although the investment is recent, it’s highly likely that we’ll invest in them again if they continue with their current strong performance and traction, to avoid too much dilution in the next round,” he said.

Meanwhile, Atomic Kitchens CEO and co-founder Uriel Krimer stated that the investment “represents significant support for our vision and long-term goals.” He added, “We are committed to using this capital to drive sustainable growth, improve the profitability and professionalism of our partners, and expand our presence in both current and future markets, always with a focus on innovation and leadership in our sector.”

Is a New Golden Age for Fixed Income Approaching?

  |   For  |  0 Comentarios

According to the team at Insight Investment (BNY Investment), as markets reach a mid-point in 2024, now is an ideal time to increase allocations to fixed income.

“With bond yields returning to pre-financial crisis levels, investors no longer need to take on the equity-like risks or sacrifice liquidity to meet their investment goals. Simply put, yields are back, and they’re here to stay,” the firm argues.

Their analysis suggests that despite some signs of inflation stabilization and easing rate hikes by mid-year (both the European Central Bank and the Bank of Canada cut rates in June), central banks are expected to operate in higher interest rate ranges over the coming years, which should keep bond yields elevated.

“It’s likely that market participants will take some time to adjust to the idea that extremely low interest rates aren’t coming back. After all, some investors have only known an era dominated by central bank easing and quantitative easing policies. However, we believe that optimism around rate cuts will be tempered by the persistence of inflationary pressures. Globalization, which had exerted significant downward pressure on goods prices, is now giving way to increasingly protectionist rhetoric, and we think this will be one of the factors making it harder for central banks to control inflation sustainably,” Insight Investment adds.

At the longer end of the yield curves, high government debt issuance and the reduced proportion of debt held on central bank balance sheets should keep yields elevated. Over time, this is expected to slowly become ingrained in market psychology, keeping bond yields at levels similar to those seen before the global financial crisis.

In this context, Insight Investment believes that long-term return objectives can be achieved with fixed income alone. Many segments of fixed income markets currently offer yields comparable or even higher than the long-term returns of the MSCI World Index.

“We believe this creates the opportunity to lock in long-term returns similar to equities but in fixed income markets and sectors like global high yield,” they add.

Volatility Check

Insight Investment points out that fixed income markets, largely income-driven, tend to be less volatile and more predictable than other asset classes like equities. In many cases, this can lead to more reliable returns, lower downside risk, and diversification benefits. “An active management strategy can allow a manager to add value above market yields. With low interest rates and quantitative easing behind us, volatility may be structurally higher in the coming years, providing market disruptions that managers can exploit. The more flexibility a manager has, the broader the range of potential opportunities they can explore,” they argue.

Corporate Health

From a corporate perspective, Insight Investment notes that many companies are well-positioned at this stage of the cycle. Corporate balance sheets look healthy, as do debt profiles. Many treasurers took advantage of low interest rates during the pandemic to lock in favorable funding levels for an extended period. This has insulated many companies from rising rates, giving them time to plan for higher financing costs.

“As global investors, we believe an increasingly asymmetric equity world makes a fixed income allocation even more appealing. While the rise of the so-called ‘Magnificent Seven’ reflects a period of exceptional profit growth, their dominance means that many equity investors are now more concentrated than they realize,” Insight Investment experts comment.

Risk Considerations 

Finally, Insight Investment highlights risk as a key consideration. “All markets carry some degree of risk. However, while fixed income markets experience periodic declines, they tend to be shallow and brief. For instance, the long-term returns of global high yield have been similar to those of global equity markets. Overall, this asset class has experienced less severe downturns and has recovered more quickly than equities.”

Income Generation

Lastly, they note that as income generated in fixed income markets offsets price declines, this creates natural protection against losses, provided that yields are high enough and the time horizon is long enough.

They also point out that government debt, and to some extent high-grade credit markets, offer another useful attribute. Economic recessions, when equity markets typically fall and economies contract, tend to be some of the best periods for fixed income returns.

“When central banks ease policy to stimulate growth, longer-term bond yields typically fall, and this drop in yields results in capital appreciation in fixed income markets. The negative correlation between fixed income and equities during severe equity market declines means that high-quality fixed income investments can complement holdings in higher-risk assets like equities,” Insight Investment states.

In this regard, the firm’s experts pose the question: What path should fixed income investors take? Their answer is straightforward: “For the remainder of the year, we believe that rising yields have created an opportunity to secure attractive long-term income streams. With yields returning to pre-crisis levels, income should once again dominate fixed income returns. In this context, more customized and sophisticated fixed income portfolios can be built to meet the specific risk/return objectives of a wide range of investors,” Insight Investment concludes.

The Return to the Office Begins: A Step Back in Workplace Flexibility?

  |   For  |  0 Comentarios

Over the past 12 months, there has been a significant shift towards in-office work: currently, 47% of companies follow a work model focused on in-person attendance, compared to 36% last year, while 45% follow a hybrid model (down from 53% last year). According to a study by Grant Thornton, if companies push too hard for a return to the office, they may inadvertently undermine gains in female representation in key positions that have been made possible through flexible work practices. The study’s main conclusion is that it is essential to ensure that at least one senior female executive is involved in decision-making on diversity, equity, and inclusion.

“This shift appears to be driven by male CEOs: 50% of companies led by a man follow a predominantly in-person model, compared to 40% of companies led by a woman,” states Grant Thornton’s Women in Business (WiB) study, based on a survey of around 10,000 business leaders from 28 countries. To foster and retain female talent in the workplace, companies must carefully evaluate the work practices they offer. The research suggests that following certain decisions made by male executives, it is necessary to ensure that a senior female executive is involved in diversity, equity, and inclusion decisions. Pushing too hard for a return to the office could unintentionally undo some of the progress made in promoting women to leadership roles, which was achieved through the adoption of flexible work practices.

Regional differences are also notable. In North America, 39% of companies have adopted a primarily in-office work model, compared to 53% in the European Union. Many large companies have begun implementing guidelines and incentives to encourage employees to return to offices, such as Goldman Sachs’ “office-first” approach, which required employees to attend the office five days a week. Amazon, Disney, and Boeing have also enacted return-to-office policies in recent months, according to a report by *Inc.*

Companies where employees predominantly work in offices are the only ones where the percentage of women in senior leadership positions falls below the global benchmark.

The ability to choose where to work offers substantial benefits to women in companies, not just at the leadership level but also for the talent pipeline. “A work model that combines in-person and remote modalities is great for both men and women, as it allows for a much better work-life balance. On the other hand, it’s also important that younger employees don’t feel neglected, so being available in person when needed is crucial,” says Grant Thornton Chile.

Finally, the study emphasizes, “When female employees have taken maternity leave and are ready to return to work, offering a hybrid model is essential to retaining them and helping them advance in their careers.”

Insigneo Adds Jerry Orosco in Miami

  |   For  |  0 Comentarios

The network of independent advisors, Insigneo, has added Jerry Orosco in Miami.

“We are pleased to announce that Jerry Orosco has joined our team as Vice President, under the leadership of Jose A. Salazar, head of the Miami Market at Insigneo,” the firm announced on LinkedIn.

Orosco has over 27 years of experience, having worked at Intercontinental Companies for more than 26 years as a trader and portfolio manager.

Additionally, between 2023 and 2024, he worked at Corient for one year as a portfolio manager and wealth advisor, according to his social media profile.

“We are delighted that Jerry has chosen Insigneo as the platform for his base of international clients, and we look forward to growing together in the coming years,” commented Salazar.

Orosco holds a bachelor’s degree in business and administration from The University of Texas at San Antonio.

“I am excited to join the talented team at Insigneo and contribute to the company’s inspiring vision. I look forward to this exciting journey ahead!” said Orosco, according to Insigneo’s statement.

There’s No Longer Any Doubt, Fed Cuts Are Coming!

  |   For  |  0 Comentarios

Estados Unidos (PX)

U.S. macroeconomic data and statements from Fed Chair Jerome Powell at the recent Jackson Hole symposium have solidified the expectation that this Wednesday, the Fed will announce an interest rate cut with its FOMC statement.

The main conclusions of the inflation report from the second week of September, ahead of this week’s Fed meeting, suggest that the cut will be 25 basis points, not 50, according to a report from New York Life Investments.

Additionally, experts from the firm state that economic overheating, or a re-acceleration of inflation, is no longer the main market risk, and once the Fed begins cutting rates, “it is likely to continue until it approaches a neutral interest rate,” which they estimate will be around 3%.

Given this context, New York Life Investments notes that the market’s focus on growth “completely changes” its reactivity to economic data.

“Good economic news is now good news—the recession hasn’t arrived yet—while bad economic news, even if it points to faster rate cuts, is now bad news. That’s why the debate over 25 basis points versus 50 basis points is important,” the report states.

Therefore, the firm’s experts suggest that in the short term, investors should expect volatility in both directions around the release of economic data. Stronger economic data will likely provide relief for the market: outperformance of cyclical equity sectors, narrowing credit spreads, and rising Treasury yields along the curve. Weaker economic data would raise concerns: defensive equity sectors would perform better, spreads would widen, and yields would fall.

These tactical movements should not distract investors from the real story over the next six to nine months. Reinvestment risk is now the investor’s worst enemy. So far, higher rates have brought volatility but also higher income. Now, that income-generating opportunity is changing, analysts warn.

For this reason, in fixed income, “the solution is not for investors to go long on duration, especially when the market is so reactive to individual data points.” Investors might consider moving away from cash-like securities and investing in short-duration corporate and municipal bonds, as well as adding duration to upward-sloping municipal bond curves. Although credit spreads are likely to widen as economic growth slows, holding bonds to maturity could offer opportunities for both price appreciation and income generation, experts explain.

On the other hand, it may be too soon to take large profits in equities, says New York Life. However, it is time to consider diversifying equity risk, they add.

“In terms of equity size, the slowing economic cycle favors large caps over small caps, as they tend to have better pricing power and balance sheet cushions in a more challenging operating environment,” they conclude.

David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, compared lowering short-term interest rates from a peak to “like moving a piano down the stairs.”

For the executive, “it’s better to do it slowly and carefully,” and he expects the Fed to “show some awareness.”

“Our base case is that they will avoid overreacting. We expect the Federal Reserve to cut the federal funds rate by 25 basis points, rather than 50, and in doing so, emphasize their satisfaction with inflation progress rather than any concerns they may have about economic growth,” Kelly published.

According to Kelly, the focus will be on the message the Fed delivers in its statement and the subsequent remarks from Chair Powell.

“The danger of an unduly negative message will be most significant in the chairman’s press conference,” warned J.P. Morgan AM’s chief global strategist.

Chair Powell will need to acknowledge the slowdown in job growth, Kelly says, but he notes that as long as Powell “expresses confidence that this is merely a ‘normalization’ of the labor market rather than something more ominous, it will likely be key to the market’s reaction on Wednesday.”

The expert agrees that long-term neutral rates are expected to be around 3% in upcoming economic projections.

If they do, it will present a clear challenge for the futures market, which is currently anticipating rate cuts of more than 100 basis points over the next four months and 250 basis points by early 2026.

Whatever the reason, both the bond market and the federal funds futures market could price in higher long-term rates and a less aggressive easing by the Federal Reserve if the Fed’s actions, projections, and messaging unfold as expected on Wednesday, which Kelly believes should be a positive outcome for investors.

“A soft landing scenario is clearly positive for financial markets. However, investors need to ensure they are well-diversified, as an overreacting Fed or one that sounds overly alarmist in its views could undermine confidence, which is so crucial for the economy and financial assets,” Kelly concludes in his analysis shared via LinkedIn.

eToro Reaches an Agreement With the SEC and Will Focus Its Trading Activity on a Limited Set of Crypto Assets

  |   For  |  0 Comentarios

The U.S. Securities and Exchange Commission (SEC) has announced that eToro USA LLC has agreed to pay $1.5 million to settle charges related to its online trading platform for operating as an unregistered broker and clearing agency. “eToro has agreed to cease and desist from violating applicable federal securities laws and will limit the crypto assets available for trading,” the U.S. authority stated in its release.

The SEC’s order states that, since at least 2020, eToro operated as a broker and clearing agency by providing U.S. customers with the ability, through its online trading platform, to trade crypto assets that were offered and sold as securities. However, “eToro did not comply with the registration provisions of federal securities laws.”

“By removing tokens offered as investment contracts from its platform, eToro has chosen to comply and operate within our established regulatory framework. This resolution not only enhances investor protection but also provides a path forward for other crypto intermediaries. The $1.5 million penalty reflects eToro’s agreement to cease violations of applicable federal securities laws while continuing its operations in the U.S.,” explained Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

As a result, eToro announced that, from now on and subject to the provisions of the SEC’s order, the only crypto assets U.S. customers will be able to trade on the company’s platform are Bitcoin, Bitcoin Cash, and Ether. eToro publicly stated that it will provide its customers the ability to sell all other crypto assets only for 180 days following the issuance of the SEC’s order.

“This agreement allows us to move forward and focus on delivering innovative and relevant products across our diversified U.S. business. U.S. users can continue trading and investing in stocks, ETFs, options, and the three largest crypto assets,” said Yoni Assia, co-founder and CEO of eToro.

According to the firm’s CEO, the terms of the agreement will have minimal impact on their global business: “Outside of the U.S., eToro users will continue to have access to over 100 crypto assets. As a global, multi-asset trading and investment platform, we continue to see strong growth and remain committed to becoming a public company in the future.”

Assia emphasized that complying with regulations is important for the company, and they work closely with regulators worldwide. “We understand the importance of regulation to protect consumers. We now have a clear regulatory framework for crypto assets in key markets like the UK and Europe, and we believe something similar will soon be established in the U.S. Once that is in place, we will seek to enable the trading of crypto assets that comply with that framework,” the CEO concluded.

BlackRock Expands Its Product Range With a European High Yield Fixed Maturity Fund Maturing in 2027

  |   For  |  0 Comentarios

BlackRock has announced the launch of the BGF Euro High Yield Fixed Maturity Bond Fund 2027, a fixed maturity bond fund. According to the asset manager, the fund is designed to take advantage of currently elevated yield levels, offering investors a combination of income distribution and capital appreciation. “In the current macroeconomic environment, fixed maturity bond funds can be an option for investors seeking some level of cash flow predictability or looking to stagger their interest rate exposure,” they explain.

The BGF Euro High Yield Fixed Maturity Bond Fund 2027 offers a carefully selected portfolio aimed at providing income and preserving capital until the strategy’s maturity date, which is three years from now. It primarily invests in two types of bonds: high-yield bonds, which the investment team believes will generate income, and high-quality government bonds for risk management. The fund aims to provide income through the European high-yield market, avoiding credit risks over a three-year investment horizon. Its strategy seeks to deliver income and preserve capital for investors holding their units until the Fund’s maturity date.

The asset manager explains that the investment process follows a barbell structure, incorporating high-quality government bonds and carefully selected high-yield bonds (at least 50%). The investment team believes this approach offers the best risk/reward trade-offs within the European sub-investment-grade bond universe. The bond mix is built to optimize yield while minimizing defaults, leveraging the team’s fundamental high-yield research. This investment process seeks to maintain an aggregate BB+ rating and optimize the tax efficiency of any coupon or capital gain, while aiming to sustain a high level of income for investors.

The fund, managed by José Aguilar, Head of European High Yield and Long Short Credit Strategies, is part of BlackRock’s active fixed income platform, which includes $1.1 trillion in assets under management. “As yields remain elevated, the opportunity cost of staying in cash is increasing. In this scenario, fixed maturity bond funds not only offer some visibility in income distribution but also provide investors with the chance to lock in attractive current yields. Moreover, the rise in dispersion in the high-yield bond market may create more opportunities for investors to generate alpha,” noted James Turner, Co-Head of European Fundamental Fixed Income at BlackRock.

Chile Takes the Lead in the Financial Inclusion Ranking in Latin America

  |   For  |  0 Comentarios

Credicorp, a financial services holding company, released the fourth edition of its Financial Inclusion Index (FII), revealing a positive trend for the region. The study highlighted Chile as the leading country in financial inclusion, surpassing Panama for the first time.

According to the company’s press release, the report showed that 28% of the Latin American adult population achieved an advanced level of financial inclusion, a significant increase compared to 25% in 2023 and 16% in 2021.

The study, commissioned by Ipsos Peru, gathered data from eight countries: Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Panama, and Peru. The index is built upon three key dimensions: access, usage, and perceived quality of the financial system. More than 13,000 individuals over the age of 18 were interviewed for the report.

In this edition, Chile topped the regional rankings with a score of 58.3 on a 0 to 100 scale, where a higher score indicates a greater level of financial inclusion. This is the first time Chile has outperformed Panama in this measurement.

The FII’s latest results also revealed that 47% of Chileans have achieved an advanced level of financial inclusion, compared to 38% in 2023. Additionally, 40% of the population is still progressing towards better financial inclusion.

“Over the past four years, the FII has become a key tool in understanding the challenges countries face in terms of financial inclusion. The results highlight the role of digitalization and the urgent need to strengthen initiatives that decentralize formal financial services,” said Gianfranco Ferrari, CEO of Credicorp, in the press release.

Chile’s Case

While Chile has consistently ranked among the highest in the region since 2021, its financial inclusion level had not significantly increased since the COVID-19 pandemic. However, this year, there were notable improvements in access, usage, and perceived quality of financial products and services.

Several indicators have improved steadily since 2021, particularly in the awareness and perception of financial products and services. Chile excels in the indicator measuring the “monthly frequency of use of financial products and services,” with the average Chilean using them 21 times per month, compared to the regional average of eight times.

Regarding access, there has been a reduction in barriers to using financial infrastructure and an increase in credit product ownership within the financial system. Furthermore, the proportion of Chileans reporting savings has grown from 30% in 2023 to 41% in 2024.

Chile stands out as one of the best users of the financial system in Latin America and, unlike the rest of the region, has found an alternative to digital wallets: debit cards. Digital wallet ownership remains low at 20%, the same as last year, compared to the Latin American average of 36%. However, 77% of the population uses debit cards to pay for everyday products and services (household items, cleaning supplies, food, etc.).

This is notable because debit card usage for purchasing goods and services surpasses cash usage in Chile, a trend not seen in other countries, according to Credicorp. Only 7% of Chileans report receiving their income in cash.