From 16 – 18 of May, Daniel Castillo from OBP joined around 2,500 people at the Chile FinTech Forum 2023, including banks, fintechs and main financial authorities of the country.
Among these was the Minister of Finance, Mario Marcel, who pointed out that such events are fundamental for an industry that is in full expansion and offers opportunities for local and international players.
In addition, the president of the Financial Market Commission Solange Berstein and the Advisor to the Central Bank, Alberto Naudon, spoke about financial inclusion, innovation & competition, which have been key factors for the expansion of the FinTech sector in the country.
Chile Fintech Forum 2023
Ludmila Volochen (FDATA) and Daniel Castillo (OBP)
Among the numerous insights, the following 3 key messages echoed throughout the event:
InvestChile – the Chilean Foreign Investment Promotion Agency – and FinteChile held a workshop where they underlined that the process of defining the regulation has begun. To this end, the private sector will be allowed to participate through collaborative working groups.
The main figures covered by this regulatory effort are:
- crowdfunding platforms,
- alternative transaction systems,
- order routers,
- financial instrument intermediaries,
- custodians of financial instruments,
- investment credit advisors.
In order to make progress with each of the above-mentioned groups, 8 roundtables will be organised based on certain themes, 6 of which will start in June and the other 2 in a staggered manner.
Pacific Alliance Open Finance Regional Standard
The financial technology associations of the Pacific Alliance (Chile, Colombia, Mexico and Peru) officially announced the proposal “Open Finance Standards as a lever for regional conversion”.
The proposal contains key information about setting a regional API standard for developing a competitive, homogenous and inclusive FinTech industry while enabling customers to access innovative financial services securely.
The standardisation aims to facilitate the exchange of data between financial institutions and improve the efficiency of financial services. Beyond that, it will drive regional interoperability in a way that will allow Fintech companies to scale across markets with less friction.
The association mentioned that a regional data-sharing standard can allow citizens to access a wide range of financial services offered by institutions in other countries, thus widening the range of options available and fostering competition, which can improve the quality of services and reduce costs.
It also encourages innovation in the financial sector by enabling the integration of services and data from different providers.
The proposal comes at a time when regulators, traditional banks and FinTechs in the region are working towards generating innovative products and services that are user-centred, personalised, in line with individual and community needs, and that also allow for the development of an open and collaborative ecosystem among financial sector players.
You can download the proposal (in Spanish) here.
Chile could become a technology hub for LATAM
During the event, Minister Marcel shared that Chile has the potential to become a regional financial technology hub.
Until now, two distinct ecosystems have been identified. On the one hand, there is Brazil, which has the largest and most mature market, and on the other, the rest of the region, with Mexico and Colombia being the main leaders.
These three countries accounted for 40% of investment in the region in 2022.
Chile, however, is a technologically modern market. In this respect, different experts believe that the conditions are in place for the country to continue to develop as a hub for technological services.
By introducing regulations that are positive for the establishment of FinTech companies, Chile can easily become a regional hub. Chile has comparative advantages over other countries in terms of institutions and economic stability.
To boost the sector, Chile should develop regulations that facilitate the emergence of innovative companies that can scale and leverage a good venture capital market.
While the Chilean Fintech Law is at a recent stage of enactment and adoption, there are other key issues on which considerable progress has also been identified.
The draft Law on Personal Data Protection, which considers a broad framework of guiding principles, also seeks to ensure that data processing is carried out with the consent of the data subject or where authorised by law. It also seeks to ensure standards of quality, information, transparency and security. It is important that this law also considers sufficient controls for the proper transmission of data outside Chilean territory and onward transmissions.
The draft Law on Consolidated Debt, which will facilitate the flow of credit and potentially new business by providing positive and negative credit information over a period of time that allows for an adequate assessment of payment behaviour.
The draft Law on Insurance Risk-Based Capital, which will allow for greater flexibility in the management of risk in new business by insurance companies by providing proportionality in requirements and flexibility of the current regime.
Overall, there’s a lot going on in the region, from regulatory roundtables to developing Open Finance standards that can cover 4 countries, and Chile has already come a long way in this respect. The challenges are significant but the outcome will undoubtedly catapult a new wave of financial services that will facilitate financial inclusion and innovation for the benefit of all players and consumers.