IDB Lab, the innovation laboratory of the Inter-American Development Bank (IDB), is providing $1 million to help Uruguay’s startup Bankingly promote financial inclusion in Latin America and the Caribbean (LAC), in particular Colombia, Costa Rica, the Dominican Republic, Ecuador, Paraguay, and Uruguay. The funds will help foster the digital transformation of cooperatives and small and medium finance institutions (SMFIs) so they can reach out to the unbanked population in the region.

The IDB Lab’s contribution is part of a successful round of investment by Bankingly that has garnered $10 million-plus. The round was led by Dalus Capital and also included other investors such as IDC Ventures, Athos Group, Kube Ventures, Finaccess Group, iThink VC, and Sonen Capital, all of whom joined forces with preexisting investors like Elevar Equity and Endeavor Catalyst. 

Despite the quick evolution of digital banking in LAC, only 54% of its population is banked, compared with 94% in high-income economies. Credit cooperatives, microfinance institutions, and other SMFIs located in areas close to vulnerable, unbanked populations lack the digital infrastructure and the resources needed to provide them with access to financing, leaving more than 200 million adults in the region without access to such services.

Bankingly’s digital bank platform, already positioned as a strategic partner of financial institutions to press forward with digital transformation, is focusing on client apps and channels. Its solution helps any financial institution, credit cooperative, or SMFI have its own mobile app, chatbox and website, allowing them to operate in rural and semi-urban areas, become more competitive, and serve sectors traditionally out of the reach of banking systems such as low-income clients or people with limited access to financial services.

IDB Lab hopes that its investment will help the company reach more than 1,400 institutions and 5 million-plus registered active users by end-2025.

“Speeding up the digital transformation of SMFIs is crucial for the financial inclusion of Latin America and the Caribbean, a region that, unlike others in the world, depends to a good extent on these traditional channels and in particular on savings and loans cooperatives,” IDB Lab CEO Irene Arias said. The expansion of mobile connectivity is conducive to this goal, since while 50% of Latin America’s population lacks a bank account, 68% has a mobile phone.