April 28, 2020, Bogota, Colombia — Accion Venture Lab, Accion’s seed-stage inclusive fintech investment initiative, has invested in R5, an innovative inclusive fintech that aims to address the financial needs of underserved consumers in Colombia – and ultimately improve their financial health and resilience.
Despite having a strong enabling environment for financial inclusion, Colombia still has a massive need for access to affordable, high-quality financial services. Fewer than half of Colombian adults have an account at a financial institution. R5 aims to address this need through financial products and services that help underserved consumers increase their income and assets, reduce their expenses and liabilities, and build their financial health and resilience. The company leverages vehicles as collateral to extend loans at lower rates and longer tenors to customers who might otherwise look to higher cost credit cards or informal lenders. R5 also offers vehicle insurance policies through a seamless digital process that leverages a unique machine learning risk model to provide better coverage at a lower price to low-income clients.
In addition, in response to the rapidly evolving needs of Colombia’s financially underserved amid today’s global pandemic, R5 has already:
- Provided deferrals of monthly repayments to clients in need
- Launched a new lending product for motorcycle delivery drivers
- Begun working to expand its insurance offerings through a fully-digital, low-cost medical assistance service in partnership with a telemedicine provider
- Developed tools and resources – like a credit calculator and a compilation of resources for bank borrowers – to support the financial health of Colombians
“Efforts to support the financial health and resilience of underserved clients have never been more urgent, and early stage companies are uniquely positioned to innovate in response to these rapidly evolving needs.” said Michael Schlein, President and CEO of global nonprofit Accion. “With its focus on designing a holistic set of financial products that support financial health and resilience, R5 can make a difference for Colombia’s financially underserved consumers, who are acutely vulnerable to health and economic disruptions.”
“R5 leverages technology and data science to offer cheaper insurance and loan products for low-income segments,” said Fernando Sucre, Founder and CEO of R5. “45% of adults in Colombia work in the informal economy and are particularly vulnerable to the effects of COVID-19 and the lockdowns. Lending by banks is already down by 72% since the crisis started, which will force informal workers to seek high-interest credit from loan sharks. We believe online asset-backed loans is a great alternative to help clients during this difficult period. We are very glad to partner with the Accion’s team of fintech specialists and look forward to benefiting from their broad expertise in financial services across multiple regions.”
“Accion Venture Lab looks for promising new fintech innovations that respond to local needs. R5’s innovative approach leveraging new assets as collateral significantly expands access to credit for Colombia’s underserved, and the team’s quick responsiveness to the current environment demonstrates their commitment to their customers’ financial health and well-being. We’re pleased to add them to the Venture Lab portfolio,” said Vikas Raj, Managing Director of Accion Venture Lab.
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R5 is an online insurance and lending platform that uses assets (cars and motorcycle) as collateral to offer better interest rates, larger amounts and longer terms. Our low-income customers use the funds to refinance expensive debt, invest in their business or remodel their home. R5 is the leader in Colombia for online mandatory vehicle insurance. A risk-pricing model built using artificial intelligence and a fully-automated process allows R5 to offer the cheapest policy for approximately 50% of drivers.
About Accion Venture Lab
Accion’s seed-stage investment initiative Accion Venture Lab provides capital and extensive support to innovative fintech startups that improve the reach, quality, and affordability of financial services for the underserved and have the potential to scale. Backed by commercial and impact investors since the launch of its third-party fund in 2019, Venture Lab has invested in more than 40 early-stage startups that operate in 30 countries worldwide. Venture Lab is a part of Accion, a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For more than 50 years, Accion has helped tens of millions of people through our work with more than 110 partners in 50 countries. For further information, visit https://www.accion.org/venturelab.