We understand Fintech as the use of technology to offer financial products and/or services either through mobile applications and/or web platforms. Fintech encompasses a new wave of companies that reduce costs and simplify procedures, improving the efficiency of these services, favoring financial inclusion and access to credit, payment methods, loans and investments for individuals and/or legal entities.
That said, we can evidence that the essence of Fintech companies is to facilitate the user’s life by accelerating and simplifying processes such as: (i) applying for a credit online, (ii) exchanging currencies or, (iii) making a payment; in other words improving the user experience. Technology is the best ally of any of these companies that is generating a profound change in traditional banking, introducing alliances and challenges for the financial industry that should be taken as the turning points that will generate a complete change in relation to the banking we are used to.
When we talk about change, the sectors that had the greatest disruption were those linked to sending money and payments, which led to the birth of different companies in the Fintech ecosystem in Bolivia. Currently, this industry is under the eyes of the venture capitalists and the investor world, attracting talent from traditional banking which, despite including new services related to their adaptation to technology, is still governed by the usual operational and hierarchical structure.
Article 331 of the Political Constitution of the Plurinational State of Bolivia establishes that financial intermediation activities, the provision of financial services and any other activity related to the management, use and investment of savings are of public interest and may only be exercised with prior authorization from the State. Likewise, the Central Bank of Bolivia (BCB) has full capacity to regulate the Payment Systems with the objective of promoting the efficiency of funds transactions between natural and/or legal persons.
This being said, paragraph III of Article 8 of Law No. 393 of Financial Services establishes that the Financial System Supervisory Authority (ASFI) shall issue specific regulations and supervise the financial systems and also the activity of the securities market. However, those companies engaged in the provision of these services must have an Operating License granted by the ASFI and comply with the authorization determinations.
The lack of regulation and updating of the current regulations forces Fintechs to develop their activities in the so-called loopholes granted to them. This prevents the efficient takeoff of these financial technology companies, but does not stop them from continuing to disrupt the market by offering technological solutions that enable financial inclusion, giving a role to all actors who wish to be part of the ecosystem.
With the industry growing by leaps and bounds globally, a good investment outlook is projected for Latin America and Bolivia, the latter having a wide market margin and a promising niche. This leaves us an open gap to continue creating and innovating.
Pending how this scenario will evolve, it is important to promote innovation and growth of digital companies within a single market and ensure users confidence and security. That is why, in Indacochea & Asociados we have lawyers specialized in Fintech and we care about comprehensively understand the needs of our clients who are engaged or plan to venture into the Fintech ecosystem, taking them by the hand in each of the stages of their project.