Why Colombia Should Emulate Brazil’s Fintech Policy and Avoid Mexico’s Mistakes

The regulation of the fintech industry in Colombia is a crucial issue that is setting the economic agenda throughout Latin America, since many of the companies in that sector also operate in other countries. So the country faces an essential decision about its future halfway through the current term, to consolidate itself as a power in the region or remain in its current state.

Gabriel Santos, Executive President of Colombia Fintech, a trade association of said industry, spoke exclusively with Infobae to address the real panorama of what the country is experiencing and what is needed, all this within the framework of the Latam Fintech Market event that took place in Colombia.

“The country has to decide in these two years whether we are going to be more like Mexico or Brazil” from a regulatory standpoint. This approach is especially relevant given that Brazil has implemented successful public policies that have significantly reduced the concentration of financial assets and the use of cash, while integrating millions of vulnerable people into the digital economy. In contrast, Mexico has not had the same success with its system, as it has not managed to significantly increase consumption or reduce asset concentration.

Furthermore, the importance of emulating Brazilian best practices in terms of payment interoperability is highlighted. According to Santos, an effective payment system must substantially reduce the friction in moving money, allow immediate availability of funds and ensure free payments to individuals, “without discrimination of market agents, with standardization of practices. This approach could potentially transform the Colombian financial landscape, allowing more actors to provide a wider range of services.”

What is open banking and why is it necessary in the fintech world?

The debate also covers the need to move forward in open banking. Gabriel told Infobae that the free flow of data is essential for data to return to the control of the end user, which would benefit consumers with better interest rates and greater access to financial services. “If Colombia advances in this Open Finance policy in a more aggressive way, then we will see a true transformation of the financial ecosystem.”

In this context, the question arises about the role of business leaders and whether they are really looking for opportunities outside the country due to the lack of an adequate regulatory framework . In this regard, the president of Colombia Fintech commented that local companies are hopeful and preparing for a “world where we will have a flow of new users that can be counted in the millions.” He highlighted that foreign companies such as Revolut are showing interest in entering the Colombian market, as long as public policies are adequate.

What Colombia needs for the fintech industry to advance

The message is clear: the success of the fintech industry in Colombia depends largely on the correct implementation of a regulatory framework that encourages competition and does not limit the growth of new players in the market. Gabriel said that if the appropriate measures are not taken, the country runs the risk of losing its entrepreneurs to larger and better regulated markets such as Brazil.

Regarding the fintech sector, he explained that this year has been particularly encouraging, with 17% annual growth and a constant increase in the number of members.

Collaboration with associations from other Latin American countries such as Mexico, Peru and Chile is crucial to establishing shared standards in open finance. He also stressed that the association is working on various initiatives to help companies better understand the Colombian ecosystem and encourage the creation of new companies.

In terms of mandatory rules, Gabriel mentioned that it is urgent for Colombia to move forward in this objective by talking about open banking and although the standards already exist, “we need the mandatory open finance decree from the Financial Regulation Unit now.” This step is essential to guarantee the participation of all actors in the financial ecosystem and ensure that the system is truly operational.

Finally, he gave a message of optimism regarding the future of the fintech sector and the digital economy in Colombia, highlighting that if the country follows the right path, it could become an example to follow in Latin America.

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(Featured image by Random Institute via Unsplash)

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First published in infobae. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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