A 1-minute tour of the state of fintech regulation in Latin America
Mexico is the only country in Latin America with a specific fintech law. It was passed in March. But secondary regulations – to be released in the coming months – will define crucial details.
The specifics on open banking – how banks have to share customer data with other service providers – are particularly important, the head of regulatory policy at Mexico’s securities regulator told iupana recently. So, although the regulator has two years to finalize details like how banks should offer application programming interfaces (APIs), he is aiming to get it done much sooner.
“We believe [open banking] is a fundamental pillar of the law. The subject of open data is going to drive competition and drive greater financial inclusion.”
– Carlos Orta, head of regulatory policy at Mexico’s banking and securities regulator
But banks are not waiting for the regulator’s starting gun. Citibanamex, for example, is already testing its APIs and hopes to launch partnerships with developers to take them live later this year.
“We have found a lot of appetite in tech companies for whom APIs are pretty natural things to use on a day to day”
– Juan Guerra, Citibanamex’s chief innovation officer, referring to large Silicon Valley-based firms
LISTEN: For more on Mexico’s fintech law you can hear our full interview with Carlos Orta, CNBV here, and our conversation with Eduardo Guraieb, the head of Mexico’s fintech association here.
Argentina was the launch pad for multiple LatAm tech unicorns. And yet it has no fintech specific regulations.
“We’re not Mark Zuckerberg, nor the founders of PayPal, nor do we know exactly where things will end up. What we do want is to guarantee a fertile field to allow those innovations to take place.”
– Lucas Llach, former deputy governor of Argentina’s central bank
Some in the industry think that regulations would be a good thing: fintech regulations would help attract investment to the sector by making it clear what is acceptable and what is not.
“A properly regulated fintech sector is synonym for a sophisticated and developed market that generates trust to those who want to invest – and Argentina clearly trails other LatAm countries in this area”
– a leading Argentine fintech-er, who did not want to be named out of concern for getting offside with the government
The big topic to watch in Argentine fintech regulation is this: Will Luis Caputo, the new central bank governor, take a new approach to fintech regulation?
In Chile and Peru, regulators are working on specific rules for the fintech industry. Meanwhile, Colombia’s financial regulator launched a sandbox – a reg-lite environment for testing new ideas – in April. Colombians hope it will drive innovation in finance.
New rules mean that Brazilian fintech startups no longer have to partner with a bank to offer financial services.
“The regulation is very positive, because it made rules clear”
– Nicolas Arrellaga, co-founder of Nexoos, a startup
And just like in Mexico, banks are not sitting back and waiting for regulators to push them into open banking. Banco Original and Banco do Brasil are testing out their own APIs in a bid to get ahead of the curve – and attract new customers via integrations with third party applications.
“It will add channels and increase revenues, as it creates new business models and brings more clients”
– Paulo Felipe de Oliveira Antônio, Banco Original
Banco Bradesco’s CIO Mauricio Minas talks more about the justification for this strategy – essentially, combating the new risks posed by aggregators and marketplaces – here.
“We want Next to become the hub of people’s lives. We want Next to be the first screen of everyone’s smartphones. We want people, when they want to do something, they can start with Next”
– Mauricio Minas, Bradesco CIO
The next big fintech regulation to watch in Brazil is payments: The central bank is looking at standards for the industry, and some are worried that a push for interoperability here will squash innovation.
Should big tech be financially regulated?
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Should tech companies be regulated by financial authorities?
No: Any financial services they offer are minor ancilliary business
Maybe: If they seek a banking license
Yes: Any company offering credit or payments should be monitored by financial regulators