Regulatory Technology in Banking Takes Center Stage in Guatemala
The fintech ecosystem in Guatemala has experienced a significant surge in recent years, with numerous startups and operational companies providing alternative financial services in the country. According to the Inter-American Development Bank’s 2018 report, “Fintech Latin America 2018 - Growth and Consolidation,” as of December 2017, there were only four operational fintech companies in Guatemala. However, by the second quarter of 2019, the Asociación Fintech de Guatemala reported that there were already 16 fintech companies operating in the country.
The Guatemalan Superintendency of Banks Takes Notice
The rapid growth of the local fintech ecosystem has caught the attention of the Guatemalan Superintendency of Banks. The superintendent recently stated at the VII Regional Congress of Information and Communication Technology that supervision of fintechs in Guatemala must be based on a regulatory framework consistent with the dynamic nature of technological development, managing different risks, and promoting financial inclusion.
Regulatory Challenges
Despite this emphasis on regulation, as of the date of this article, regulations in Guatemala regarding fintechs have yet to be approved. As a result, fintech companies operating in the country are forced to navigate complex and burdensome financial regulations to avoid infringing on existing laws.
Options for Regulation
The Superintendency of Banks is currently evaluating two options for addressing the regulation of the fintech ecosystem and entities involved at the national level:
- Option 1: Implementing a Specific Law - This option involves implementing a specific law on the matter and corresponding support regulations.
- Option 2: Creating a Regulatory Sandbox - This option entails creating a regulatory sandbox to understand how entities would operate within the existing framework, allowing for an evaluation of whether new regulations are necessary.
Implications for Fintech Companies
It is clear that the Superintendency of Banks in Guatemala is poised to take a determined stance on fintech regulation, which will have a direct impact on both local and foreign fintech companies operating in the country. The outcome will be closely watched by industry experts as it shapes the future of fintech in Guatemala.