Since its establishment in 2015, La Paz-headquartered UltraGrupo (“Ultra”) has gone from strength to strength. Operating in real estate and finance, Ultra has raised more funding than any other startup in Bolivian history. The group’s financial services arm, Ultra Creditos (“Creditos”) is the first financial accounting advisory services lending marketplace in Latin America and covers multiple types of loans complete online. This all the more remarkable given that Bolivia is one of the most difficult countries in Latin America to establish and successfully develop a business.
The CTO of Ultra in Bolivia explains, “When we first started, digital banking services in Bolivia were among the least developed in Latin America. The process to obtain a loan was extremely long, complicated and bureaucratic. That is now changing. In an era of increasing digitalisation, although it is hard to believe, the banks in Bolivia had no foresight to make the leap to digitalisation.”
“In an era of increasing digitalisation, although it is hard to believe, the banks in Bolivia had no foresight to make the leap to digitalisation.”
CTO of Ultra, Bolivia
Ultra looked to get more Bolivians acquainted with digital banking and to access the financial system. Real estate was one area where better technology facilitated much smoother transactions between those looking to buy, sell and rent real estate. In this sense, the transmission of information and financial data has been key to the platform’s success. In doing so, the startup found that Bolivia’s banks were very much behind the times in terms of digitalisation. Ultra now finds itself providing services to major local financial entities.
“We explained to the banks that we have the technology to unite credit providers with clients. But they were afraid of losing control, even of increasing their risk by lowering bureaucratic hurdles,” explained the CTO.
On the other side, the CFO of the largest bank in Bolivia explains that “…the banks did not make the technological leap before because of the characteristics of Bolivia’s bureaucracy. In addition, you have a majority of people who do not have easy access to the internet, nor do they have the level of education or understanding of complex transactions to carry out financial services online.”
Indeed, most of the economy is informal which is why Ultra’s pioneering of micro-credits has been particularly successful. Nonetheless, the bureaucracy looms and Bolivia’s superintendency of banks retains strict controls.
Ultra wants to expand to new regional markets in the future. Given this, the bank’s CFO comments that “…the biggest challenge they face is regulation in Bolivia. The next stage for them is to become a fintech. They already have the size and the technology for that. And more than anything, they have managed to attract quite high investments for the reality of Bolivian startups.”
The next stage for them is to become a fintech. They already have the size and the technology for that… and have managed to attract quite high investments for the reality of Bolivian startups.”
CFO of the largest bank in Bolivia
Ultimately, Ultra’s success and the potential of other indigenous startups should spur the Bolivian government to take action in reforming its bureaucracy that has historically been the major hindrance to the blossoming of such innovation. In a country where a large proportion of the population do not even have a bank account let alone access to more sophisticated financial products, that can only be a good thing for lender and customer alike.