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Stories about access to banking from Medellin, Colombia

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Note: The original post on Medium can be seen here

Venezuelans trading Bitcoin for cash with a fee over 10%

I moved to Colombia just before the pandemic and I learnt that a lot of Venezuelans had fled their country in recent years crossing the border and held their wealth in Bitcoin. Not only did it provide a store of value, they could take it across borders, and it wasn’t controlled by any government, and their country’s currency the Bolivar was worthless (with 2,177% inflation).

The Venezuelans having arrived in a new country, needed to buy things for everyday living, like food and groceries. The only way to buy things was to get Colombian pesos, so they needed to exchange it for their Bitcoin, however cash was hard to exchange for their bitcoin. So they were willing to exchange their bitcoin for more than a 10% cost.

The demand was so big that an Australian friend had hired a team of around 20 people to drive across the city on motorbikes using many credit cards to visit ATMs and withdraw the maximum amount of cash each day. There were months where he was collecting up to a million dollars in USD worth of physical pesos and delivering it to the exchange points — and it wasn’t enough to fill the demand.

This was a shocking realization to me — that Venezuelans had saved their net worth within Bitcoin, crossed the border, and were willing to lose so much money in order to exchange it into the local Colombian pesos in order to use it for living expenses.

The question posed itself — why should they have to change their Bitcoin for Pesos in order to live here? Why couldn’t Bitcoin or other cryptocurrencies be used for real-life utility? Like buying groceries, or food.

Remittances to Venezuela

A few months after arriving in Colombia the pandemic began in which brutally strict lockdowns began. Which meant being inside the house for around 6 months straight, and with more lockdowns following. During this time I spent a lot of hours talking and learning from my Venezuelan housemate. I learnt that she and her family had lived through the traumatic period in their country seeing what they once thought was impossible — their house, car, bank savings and every asset decline in value to be worth nothing. Losing everything. She had vowed to never return to her homeland. She told me about the life of her aunty who was still in Venezuela and eating one egg a day and struggling to survive. She needed to send her USD from Colombia in order to survive because the local currency was practically useless. Explaining how difficult it was for her and her family to get a Zelle account because of documentation and ID requirements and how incredibly high the international exchange fees were. She said there was just no good options.

Fortunately for Lala, she had been able to open a bank account, despite having an expired ID.

No Identification resulting in no bank account and no job

My Venezuelan friend Klayder did not have an ID and had arrived to Medellin from Caracas, but who could not find employment in Colombia because he had no Identification and couldn’t get a bank account.

If you cannot receive money it hard to start a business

It was not just Venezuelan’s that struggled with bank accounts. My Colombian friend Mary who during the lockdown would cook and send me healthy meals. However, I couldn’t send her money because her alternative banking account didn’t accept transfers from any foreign bank, and she couldn’t make money. This was a common problem for nearly all local businesses in the area.

Not having savings to withstand economic shutdown

The most difficult thing to see during the lockdown were the thousands of households with red flags in their windows — a sign to show that the household did not have food. This was particularly prevalent in the poorer neighborhoods where being banked and saving or receiving government support, was not possible. The country was not prepared for an economic shutdown for so long. In fact, in March of 2021, desperation reached a boiling point and lead to the protests against any more economic shut downs, and nearly led to the collapse of the country. Many protestors were being killed and disappearing, and there was genuine concern that Colombia was heading in the same direction as its neighbor Venezuela. It was one of the reasons why I left the country to go live in Mexico.

These are just some of the problems I saw with accessibility to banking services. The key learning was that the infrastructure was not there, but also, there was a deep and genuine need to improve accessibility, it was just not just a nice to have.