COLOMBIA · BANKING

Colombia has more discount-store tills than bank branches. Putting the bank behind the till is the cheaper way to close that gap.

D1 Will Act as a Banking Correspondent for Grupo Aval

The hard-discount chain D1 has agreed to operate as a banking correspondent for Grupo Aval entities, allowing customers to carry out basic financial transactions at store tills rather than at a bank branch.

What a Banking Correspondent Does

A corresponsal bancario is a non-bank business authorised to perform a defined set of transactions on a bank’s behalf: deposits, withdrawals, bill payments, balance enquiries and in some cases loan instalments.

The category is regulated by the Superintendencia Financiera and has existed in Colombia since 2006, originally to extend coverage into municipalities without branches.

The bank remains responsible for the transaction. The store provides the counter, the cash and the connectivity, and is paid a fee per operation.

Why D1 and Why Now

D1 is Colombia’s largest hard-discount chain by store count, with a footprint built deliberately in neighbourhoods and small towns rather than in shopping centres.

That footprint is the asset. Grupo Aval’s banks have branch networks concentrated in the cities, and the marginal cost of a new branch in a town of fifteen thousand people is not recoverable from the deposits it would gather.

A discount store already handles cash at volume, already has staff at a till and already has a payments connection. Adding banking transactions to that counter is close to free at the margin, which is why the model has spread across Latin America.

Aval holds Banco de Bogotá, Occidente, Popular and AV Villas.

What Aval Gets

Grupo Aval is Colombia’s largest financial conglomerate, holding Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas.

What it gains is reach without capital expenditure, and a channel for the low-value, high-frequency transactions that are expensive to serve in a branch and unprofitable to refuse.

It also gains a defensive position. Colombian digital wallets have taken a growing share of exactly these transactions, and a physical cash-in, cash-out network is the part of the service a wallet cannot replicate on its own.

The Confusion Worth Clearing Up

This arrangement has been conflated in some coverage with a separate solar supply contract between the supermarket chain Olímpica and the energy company Promigas, producing reports of a supermarket-sector combination.

There is no such combination. D1 and Olímpica are different companies, the counterparties are different, and the two agreements are unrelated in substance.

The Rio Times reports each as what it is and does not state that any merger is under way, because none has been announced.

A correspondent network moves cash handling from branches to stores.

What to Watch

Transaction volumes are the only meaningful measure of whether this works, and neither party has published a target.

The second question is cash logistics. A correspondent network moves the burden of physical cash handling from bank branches to retail stores, and the cost and security implications of that fall on the retailer rather than on the bank.

Colombia’s correspondent networks are already large. Banks and their agents operate tens of thousands of points nationally, far more than the branch network, and the competition is for the retailers with the best locations rather than for the customers.

That makes exclusivity the term worth knowing. Neither party has said whether D1 will act for Aval alone or for other banks as well, and the answer determines how much of the discounter’s foot traffic Aval actually captures.

More: Colombia news in English, every day from The Rio Times.

Frequently Asked Questions

What is a banking correspondent?

A non-bank business authorised by the Superintendencia Financiera to perform defined banking transactions on a bank’s behalf.

What can customers do at a D1 till?

Basic transactions such as deposits, withdrawals, bill payments and balance enquiries, subject to the authorised scope.

Who is Grupo Aval?

Colombia’s largest financial conglomerate, holding Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas.

Is this a merger?

No. It is a service arrangement. No ownership changes hands.

Is it connected to the Olímpica solar contract?

No. The two have been conflated in some coverage but involve different companies and different sectors.

Sources: Superintendencia Financiera de Colombia, La República, Portafolio, Valora Analítik, El Tiempo.