The Dominican Republic is seeing the emergence of a thriving fintech sector
In the Caribbean, the Dominican Republic is seeing the emergence of a burgeoning fintech industry, a thriving ecosystem that has risen on the back of supportive regulatory initiatives and ambitions to improve financial inclusion.
With 55 active fintech companies, the Dominican Republic was identified by a new report from the Inter-American Development Bank (IDB) to be one of the most dynamic fintech markets in the Caribbean.
This ecosystem has blossomed in the past couple of years from the two fintech companies it hosted back in 2017, figures that suggest an impressive average growth rate of 129% year-on-year, the report said.
A 2022 map by the Dominican Association of Fintech Companies (Adofintech) shows a broad and diverse fintech ecosystem that includes both local and foreign participants operating across various subsectors, including digital payments, alternative finance, neobanking, cryptocurrency and insurance technology.
Image: Dominican Republic fintech map 2022, Source: Adofintech
According to recent data released by the trade group, 48% of fintech companies operating in the country are small companies, followed by micro companies at around 32%. Large companies have a share of 16% and medium-sized companies 8%.
There are currently around 12 foreign fintech companies operating in the local market. 50% of these are from Latin America, 33% from Europe and 17% from the USA.
Findings from a survey conducted as part of the IDB report found that the vast majority of fintech companies operating locally (65%) offer products targeting segments historically excluded from the traditional financial sector, a figure that is among the highest in Latin America (LatAm) and the Caribbean. Almost half of the Dominican Republic’s population does not have access to a bank account, according to data from the IDB.
Image: Percentage of Fintech startups focused on financial inclusion and percentage of the population with access to a bank account, by country, Source: Fintech in Latin America and the Caribbean: A Consolidated Ecosystem for Recovery, Inter-American Development Bank (IDB), 2022
Governmental funding
In the Dominican Republic, fintech development has accelerated in the wake of the COVID-19 pandemic and with the support of recent policy initiatives, the IDB report said.
The Financial Innovation Hub, for example, was launched earlier this year by the central bank and the Superintendencies of Banks, Securities Market, Pensions and Insurance to facilitate the development of financial and technological innovations, harmonizing them with goals related to financial inclusion, market efficiency, consumer protection and financial stability.
The Financial Innovation Hub is also responsible for providing personalized assistance and information on the regulatory and supervisory framework for the banking, payment, insurance, pension and securities market systems.
Most recently, the Dominican Republic took its first step towards open banking when the Superintendency of Banks (SB) and the International Finance Corporation (IFC) of the World Bank Group entered into a partnership to collaborate on the design and implementation of the concept in the country.
Under the agreement, the World Bank and IFC, in cooperation with the Japanese government, will support the SB in its ambitions to create a regulatory framework for the use of application programming interfaces (APIs). The ambition is to increase the efficiency of financial institutions and improve the user experience by leveraging data, while promoting greater financial inclusion.
In the Caribbean, government bodies and regulators are laying the groundwork for fintech innovation by establishing innovation hubs and regulatory sandboxes, the IDB report notes.
In 2019, the Securities Commission of the Bahamas created SCB FitLink, a hub intended to serve as a central point of contact with the public on issues related to fintech, including virtual assets, crowdfunding, distributed ledger technology (DLT) and artificial intelligence (AI).
In Barbados and Trinidad and Tobago, special regimes have been introduced to allow entities to experiment with innovative solutions and live-test their products and services.
This article first appeared on fintechnews.am
Featured Image Credit: Edited from Unsplash
