Chile fintech law is expected to trigger significant market changes

After the approval of the fintech law, cryptoassets will rise and Chile’s financial market will become more dynamic, according to experts.

“The first impact is greater competition in the financial system, which will automatically translate into better service and lower prices for people and businesses, so it will deepen because it is already happening in the industry,” the head of fintech association FinteChile told BNamericas .

Among other things, the Act lowers establishment barriers for technology companies.

In addition, an open financial system is created, and a framework implemented to regulate technology-based financial services, such as mediation and custody operations, delivery of transaction platforms and advice on financial instruments. It also regulates providers of payment initiation services.

“Of course, this law will provide greater dynamism and competition in the financial market, mainly with open banking, which generates the incorporation of new actors, new technologies and a flow of customer information that will allow them to make better financial decisions and provide more options of access to financial products ,” Francisco Barreda, a partner at Barreda Legal Tech, told BNamericas.

In particular, the incorporation of new players such as information providers, data-based service providers and payment initiation service companies is expected.

More investments and increasing exports are also expected. “The opportunity is very big,” Sierra said, adding that approx 400 fintechs can operate in the country in two years. Currently approx 260 operate in Latin America.

“Today we already see a very important dynamic of expansion of companies towards the Pacific Alliance, especially Mexico, Colombia, Peru, so we imagine that this is going to deepen,” Sierra said.

Financial inclusion will also evolve as new players need to identify segments to serve. “Banks and fintechs are forced to go to underserved segments and this automatically starts to translate into financial inclusion,” Sierra added.

IMPACT

“Users will be able to observe a decrease in the prices of financial products and services, the creation of customized products according to their needs, the attraction of new technological players, optional transaction methods, among others,” Mauricio Fernández, director of operations for the Americas at banking software provider BPC, told BNamericas .

Meanwhile, Barreda mentioned that the regulation from the Financial Markets Commission “is a guarantee for end customers and for the market in general”.

OPEN BANK

Chile has experience with unregulated open finance, but the new legislation will provide greater confidence and further pressure the introduction of open banking.

“Although some banks have prepared for the arrival of open banking services, the truth is that, in general, the response capacity of conventional banking is slower and more responsive to the development of new technologies,” said Barreda, who predicts a significant change of the financial. market.

“Financial institutions have made investments in technology, but there are still major challenges, especially for banks that have legacy payment infrastructures,” Fernández added.

He said banks have the opportunity to invest in technology to innovate and offer better services. “We cannot forget that open finance requires a much stricter use of people’s data. Strengthening the security of transactions, preventing fraud and identity theft is extremely important so that there is trust and less friction with end customers.”

CRYPTO ASSETS

“The recognition of certain crypto-assets as means of payment, added to the technology behind the transaction channels of this asset class, will mean that payment companies linked to cryptos can compete on an equal footing with the big players behind online payments,” Barreda said.

This influence could be felt even before adoption. BCI, one of Chile’s largest financial institutions, announced that the main cryptocurrency exchange Buda could open a current account in the bank.