Guatemala’s Fintech Ecosystem Faces Regulatory Challenges

Rapid Growth Brings Attention from Regulators

The fintech industry in Guatemala has experienced significant growth over the past few years, with the number of operational companies increasing from four in 2017 to 16 by the second quarter of 2019. However, this expansion has also brought attention from regulators, who are struggling to keep pace with the changing landscape.

The Need for Regulatory Framework

The Guatemalan Superintendency of Banks has allocated more resources to studying and analyzing fintech companies and their impact on the traditional financial system. In a recent lecture, the Superintendent of Banks emphasized the need for a regulatory framework that is consistent with the dynamic nature of technological development, while also managing risks and promoting financial inclusion.

Regulatory Challenges

Despite recognition of the need for regulation, laws in Guatemala regarding fintechs are still pending approval. As a result, fintech companies operating in the country must navigate complex and burdensome financial regulations to carry out their business without infringing on existing laws.

Options for Addressing Regulation

The Superintendency of Banks is currently evaluating two options for addressing the regulation of the fintech ecosystem:

• Implementing a Specific Law: This option would involve creating a new law and corresponding support regulation specifically tailored to the needs of fintech companies.
• Creating a Regulatory Sandbox: This option would allow fintech companies to operate within a controlled environment, testing how they would function under existing regulations.

Implications for Fintech Companies

The decision on which option to pursue will have significant implications for both local and foreign fintechs operating in Guatemala. The country’s fintech ecosystem has the potential to drive economic growth and financial inclusion, but only if regulatory challenges are addressed effectively.

By providing a clear and consistent regulatory framework, Guatemala can attract more investment and talent to its fintech industry, ultimately contributing to the country’s economic development and financial inclusion goals.