Though FinTech in Latin America is a bit late to the party, yet it has been growing phenomenally. Recently, the sector was given a valuation of over $150, and it keeps on expanding year-on-year.
Meanwhile, the long-term impact of the prevailing pandemic is yet to be realized; however, the demand for fintech solutions would eventually increase.
Across the region, smaller financial institutions are facing the pressure to shift to digitization, and fintech is being pursued as help in this regard. Moreover, many SMEs are looking for digital loan services to support themselves to cope with this crisis.
The exponential expansion of Fintech in Latin America tends to imply that the regulators in Latin America are under immense pressure to pass legislation that would address the muddy waters of the fintech activity and assuring investors and consumers.
Nevertheless, the regulations across the region must be cautious as not to rescind innovation, whilst startups ought to figure out how they can be vigilant in an increasingly regulated environment.
Regulatory impact of Fintech in Latin America
Currently, Mexico is leading the Fintech regulations in South America; the credit goes to its 2018 Fintech Law. The law comprises FinTech activities such as virtual wallets, crowd-funding, cryptocurrency transactions, and open banking.
Additionally, Mexico has such financial laws that tend to regulate financial bodies in their execution while employing FinTech. This law also provides a regulatory sandbox for both the licensed and the non-licensed companies.