MARIANO GALVEZ UNIVERSITY OF GUATEMALA

FACULTY OF ECONOMIC SCIENCES

MASTER'S IN INTERNATIONAL STANDARDS OF
ACCOUNTING AND AUDITING WITH A FOCUS ON
RISKS

Course: Market Risk and Liquidity Risk

Professor: Lic. Julio Josué Gómez Villatoro

Research topic: FINTECH

Group 3:
1937-11-1720 Miguel Ángel Gil García
1937-12-2328 Eber Samuel Coló Chacaj
1937-12-8422 Willy José Raguay Hernández
1937-13-1810 Ricardo Javier Hernández Barrios
1937-14-636 Carlos Viviano García Pérez
1937-15-11340 Lesly Rubí Son Say

Section 'D'

Guatemala, April 23, 2022.

 INDEX

Content
INDEXE ...................................................................................................................................2
Introduction
FINTECH
Description of the Global and Regional Situation
Main Segments ............................................................................................................8
Structure of the Fintech market in Latin America by segments.................................10
Fintech Law of Mexico.....................................................................................................11
The regulation in Colombiaa ...................................................................................................14
Examples of Fintech companiesh..............................................................................................16
Fintech Guatemala
Bibliography
 Introduction

The term fintech is used to refer to those companies that provide products and
innovative financial services, through the use of technology or via
technological platforms. The technological developments that have taken place during the
last decades in the world, along with the new business models that these have
generated, challenge the financial services industry (IDB, 2017). Through these
new technologies, costs are reduced and procedures are simplified, improving the
efficiency of financial services, which facilitates access to a greater number of
individuals and companies. In this way, gaps are reduced, promoting inclusion
financial and access to credit for small and medium-sized enterprises.

While fintech companies are not new, the number of startups in the world is
this segment increased exponentially after the global crisis of 2008 (Torres,
2017). In the same vein, the adoption of this technology by consumers also
has done. The international consulting firm EY interviewed more than 27,000 consumers in 27
markets to develop the Global Fintech Adoption Index 2019. They find that 96%
of global consumers knows at least one fintech service for transfer and payment of
money, 75% use a fintech service for money transfers and payments and 48% a
insurance service. Regarding the evolution, a marked growth stands out in the
use of these technologies. In 2015, 16% of respondents used two or more
fintech services, a figure that doubled in 2017 (33%), reaching 64% of the
interviewed in 2019 (EY, 2019).

Latin America has not been left out of this evolution, a marked occurrence has taken place.
growth in fintech ventures. In BID (2018) the existence of this was reported
types of companies in Latin America, registering 1,166 young companies, distributed across 11
business segments. Among them, payments and remittances (24%), loans (14%) and
management of business finances (15%).

In the Economic Commission for Latin America and the Caribbean (ECLAC) the
results of a survey conducted among financial regulatory institutions of 11 countries
Latin America. It consults authorities and experts about the potential impact,
regulatory and normative treatment, and the opportunities and risks of fintech. It is located
that the payments and transfers segment is mentioned as the one with the greatest impact, followed by
por los de crédito colaborativo y la inversión alternativa o colaborativa. Entre los factores de
risk, it arises that the main problem is cybersecurity, while experts do not
foresees great risks in terms of liquidity, insolvency or disruptions in cash flows
funds. Regarding opportunities, the high potential of financial technology stands out.
digital, its impact on reducing transaction costs and increasing efficiency in
payment systems, as well as the improvement in universal access to financial services
by individuals and SMEs, in addition to the increase in competition in the sector
(ECLAC, 2018).
 FINTECH

What is Fintech?
FinTech is an emerging industry in which companies use technology to provide
financial services efficiently, quickly, comfortably, and reliably. The word is formed by
starting from the contraction of the terms finance and technology in English.

FINANCE + TECHNOLOGY = FINTECH

FinTech companies offer various types of financial services and operate within
varied markets. Some provide their services directly to the users of the system
financial and others design solutions for other companies.

How does a fintech work?

FinTechs offer a wide variety of services and are also capable of adapting to
different markets.

Some fulfill the objective of providing various services to users that are present
within the financial system, while others seek to provide solutions to businesses
that need this type of technology.

Over the years, they have been demonstrating that, in comparison with banks
traditionally, it is possible to provide services with much less bureaucracy, operational costs
lower and at the same time greater intelligence and agility in processes.

What services does a fintech provide?

Financial technology occupies new markets and offers broader services, we can
mention some of its main services:

Operaciones bancarias como pagos, transferencias y similares.

Investments
Personal banking
Currency operations
Loans and credits.
Microinsurance
Crowdfunding

Benefits of Fintech for companies

As financial technology grows, new benefits are discovered. In this case
we will highlight 3 that will surely be of great help to companies:

More accessibility
FinTechs are promoting that even small businesses can access
to innovative solutions.
 In the past, it was necessary to have a deep knowledge of the subject, today companies
they seek to implement more user-friendly interfaces and do not require a
such a large economic investment.

Agility and flexibility

Thanks to FinTech, new and more agile workflows are being built. This allows
store data, perform operations through alternative financing, among several
more alternatives.
This contrasts with traditional financial services and their rigidity in their
operations.

Automation
Most fintechs operate under the SAAS (Software as a Service) model.
It allows for the automation of costly processes for companies and entrepreneurs.
Automation is very important as it reduces time and costs in many
processes, allowing the concentration of human talent and investment in more activities
strategic.

Description of the Global and Regional Situation

Fintech companies are breaking into the financial market with a value proposition that
positions itself in a more competitive place than traditional banks. First of all, they provide
a simple and fast service through a web interface, which implies greater
accessibility. On the other hand, its structure without physical branches and its lower use of
human resources allows them to offer a service at lower costs. This lower cost allows them
grants the potential to drive competition and pressure margins, thereby easing the
adverse consequences of highly concentrated banking systems. The nature
transversal in the financial sector leads to improvements in its costs being transferred to the
economy as a whole. In terms of security, they have tools for the
fraud protection (big data and artificial intelligence), which allows them to compete in
equality of conditions. Finally, its technology-based structure allows them to develop
customer-focused solutions rather than product-focused. This enables you to reach segments
to which the traditional financial system does not adequately address due to
inefficiencies or information asymmetries, such as 'low value' clients, favoring the
financial inclusion. In particular, through services such as platforms for
financing, electronic markets and invoice discounting services, the sector
fintech serves SMEs more efficiently by reducing their gap of
financing.

On the other hand, the emergence of these new technologies brings with it a series of risks. It
four risks stand out for Latin America: financial instability, financial integrity,
cybersecurity and protection of personal data. They understand that it is still not well understood
potential effects of these technologies on the structure of the financial system, especially
in its initial stage, when management systems and practices have not yet been implemented
risks that traditional financial companies have been developing for decades
amid greater regulatory demands. Regarding the integrity of the system
financial, while highlighting the ability of these technologies to strengthen compliance
from the regulations against money laundering and the financing of terrorism, they warn about
the possible use of them for illegal activities. In this regard, the rapid
expansion of fintech activities, with increasingly complex transaction models,
without proper supervision and regulation represents a potential threat to the
integrity of the financial system. On the other hand, the increase in digitalization and
connectivity exposes operators and consumers to cyber attacks, making it necessary
an active risk management. Finally, they highlight the challenge that protection represents in
the misuse of consumer data by technology companies
financial, due to the regulatory requirements for data privacy being
less developed.

In this regard, the IMF and the World Bank Group launched the Agenda at the end of 2018
Bali Fintech. This initiative consists of the recommendation of a set of policies
intended to help member countries seize the benefits and opportunities of
the rapid advances in financial technology. In turn, recommendations are made for the
management of inherent risks. It is understood that fintechs contribute to deepening and
improve the efficiency of financial systems, expand access to financial services
—especially in low-income countries and for underserved populations— and support a
broader and more inclusive economic growth. In this regard, it urges countries to facilitate the
fundamental infrastructures (telecommunications, broadband internet, services of
mobile data, data repositories, and payment and settlement services), promote their access
open and accessible, and ensure a conducive political environment to allow for new
technologies improve the provision of financial services. On the other hand, it is argued that
they must address the risks of market concentration and promote standardization,
interoperability and fair and transparent access to key infrastructures. It is recommended
at the same time, strengthen the competence and commitment to open, free markets and
competitive to ensure equal conditions and promote innovation, the
consumer choice and access to high-quality financial services.

Regarding regulation, it is argued that regulatory frameworks need to be adapted and the
supervision practices to achieve organized development, ensure stability of
financial system and facilitate the safe entry of new products, activities and
intermediaries. Attention is drawn to the fact that fintechs could transform the
financial markets through which monetary policy actions are transmitted
and could challenge the conduct of monetary policy, as well as redefine the role of the
central banks as lenders of last resort. On the other hand, fintechs could
help central banks improve their services, through the use of technology to
support regulatory compliance and supervision, the potential issuance of currency
digital and the expansion in access to payment services.

Beyond the benefits and risks that these technologies imply, on the demand side
consumers are significantly increasing their use of fintech.
The global fintech adoption index also finds differences in addition to this increase.
significant among countries. Emerging markets lead the adoption of fintech. Both
In China as in India, the adoption rate is 87%, while in Russia and South Africa,
both with an 82% are very close. The higher adoption in India is partly due to the
government plan, announced in 2017, to reduce the amount of paper money in
circulation. In Russia, the high rate may be related to foreign sanctions
imposed on the main banks, which has raised the profile of alternative providers
for services such as money transfers and currency exchange. Among the countries
developed, the Netherlands, the United Kingdom, and Ireland lead the adoption, reflecting
partially the development of open banking in Europe (EY, 2019). Latin American countries
studied are slightly above average (Peru 75%, Mexico 72%,
Argentina 67%, Chile 66% and Brazil 64%), while countries with low adoption stand out.
like the US (46%), France (35%) and Japan (34%).

In recent years, although the global level of investment in fintech has shown a
important increase, it has not been constant. After a sustained increase between
In 2013 and 2015, where the investment tripled, there is a decline in both years.
later. Fintech investment worldwide doubled in 2018 reaching
the 111.8 trillion dollars. This increase was partly driven by a small amount
of mega agreements1 (KPMG, 2019) and is led by the US with 41% of the investment
total received, followed by Europe with 31% and Asia with 20%.
In Latin America, while it attracts a much smaller proportion of global investment in
fintech, the sector has been growing in recent years. Venture capital investments
in technology companies in Latin America doubled in 2018 reaching a figure
close to 2 billion dollars, of which 25% was made in companies of
fintech. Among these investments in fintech, the funding received by Brazilian companies stands out.
like Nubank (digital banking), Creditas (loans), Ebanx (payments) and ContaAzul (management of
companies), and the Argentine Ualá (transfers and payments).

Main Segments
Fintech companies develop in different business segments. In this section
the description of its main characteristics is presented. The segment of loans is
one of the most prominent. In it we place the peer-to-peer lending platforms.
person (peer to peer), people to businesses (peer to business) and to companies that grant
credits or invoices are discounted. Peer-to-peer lending platforms work
as intermediaries between borrowers and lenders, assuming the latter the risk for the
loan. This risk is limited by the requirements that the platform demands.
to the borrowers. On the other hand, lenders can reduce the risk of
through its disaggregation, meaning lending small amounts to many people.
One of its main contributions is the decrease in interest rates from a
a more efficient structure than that of traditional loans. It also allows access to
credit to individuals or SMEs that due to their characteristics could not access credit
a traditional financial institution. Within this segment, globally stand out
companies like Lending Club, Prosper, On Deck, Kabbage, Borro, NoviKap, Affirm, Patch
of Land, Avant, SoFi, Zopa, and RateSetter.

Payments and transfers is another of the most relevant segments, made up of companies.
that provide online payment services for e-commerce, point of sale, cards
rechargeable or prepaid, credit card aggregators, payments through code scanning
QR, mobile wallets, person-to-person transfers, among others. In this segment, the
The differential of fintech compared to the traditional payment system is its speed and lower cost.
cost. In the payments segment, companies such as ApplePay, Samsung Pay, PayPal stand out,
Alipay, Square, M-Pesa, Google Wallet, and Venmo, while in the transfers
We located WorldRemit, Clip, Kantox, CurrencyFair, and Transferwise.

On the other hand, within the personal finance segment are the applications for
its administration, allowing through the use of data and the systematization of
information, a more efficient management of money usage and decision-making in savings,
spending and investment. At the international level, companies such as
Bills & Guard, Credit & Karma, CoverHound, Qapital and Earnin.

In the area of investments, we find the applications of: capital financing (In
in this segment we find companies like Circle Up, Gust, Loyal3, Crowdcube,
OurCrowd, SeedInvest, Seedrs, AngelList, Early Shares, and Funding (crowdsourcing) that
they allow companies to obtain capital from investors in exchange for shares or instruments
of debt, investment advice through financial education or information for the
decision making and institutional investment (E-Toro and Kapital stand out in this segment;
Future Adviser, Nutmeg, Betterment, WealthFront, Robinhood, Magna, eStimize and Xoom
for the optimization of the profitability of investment portfolios through the analysis of the
stocks, bonds, currencies, debts, commodities, etc.

In another segment of the financial system, alternatives to traditional currency are emerging.
digital currencies, which can be used worldwide without the control of an organization
central and without intermediaries. In 2009, Bitcoin, the first cryptocurrency, was launched on the market.
This currency uses Blockchain technology, consisting of a distributed ledger that
forms a 'blockchain'. The blocks contain information that is found
packed and verified, they are validated and become part of a transaction chain
and information from previous blocks, being permanently registered in the record
distributed what Blockchain is. Besides the pioneer Bitcoin, there are others in this segment.
other cryptocurrencies like Bistamp, Xapo, or BitPay.

At the same time, as an alternative to traditional banks, digital banks are created, which
they operate with their own banking license or that of a third party, providing banking services to
through digital solutions. Characterized by not having physical infrastructure and a
low utilization of human resources, providing a fast and lower-cost service. Within
the most successful digital banks internationally include Simple, Cardlike, Atom,
Moven, WeBank, CBD Now, Bank Mobile, N26, Monzo, and Orange Bank.

Finally, there are companies that provide services to banks with solutions of
infrastructure (Some international examples are: Kapitall, Future Adviser,
DemystData, SeekingAlpha, Finitec, Size Up, Cash flower, SnapCard, Kensho and Elsen)
they improve the functioning of the bank, including the management and analysis of databases, and the
development of the interface for third-party applications with the internal systems of banks,
and others that offer services in the area of security, authentication, and prevention of
fraud (For example, Ebury, Ewise, Standard Treasury, Riskfied, Dashlane, Aire, Bonify,
Kredit Karma, Secure Key, EFL Lenddo, and Connaizen, focused on technological solutions.
that allow to face the risks of cyber attacks or frauds, for example, through the
use of technologies for the calculation of alternative credit scores or biometrics.

It is important to highlight that there are two types of services within the segments. For one
On one side, there are those who intervene in the financial market with a 'disruptive' service.
What has historically been offered by the traditional sector such as insurance or currency exchange.
currency. In this case, by using technology, a better service is provided to
lower costs, which pressures traditional sectors to modernize their services to
to stay competitive. On the other hand, there are new services, characterized
thanks to technology, such as peer-to-peer lending and payments through
mobile phones. This type of service has an even greater impact as it fills niches
of the market and in some cases have the potential to redefine and transform subsectors
financial.

Structure of the Fintech market in Latin America by segments

The number of fintech startups in Latin America has grown in 2018 according to
the surveys conducted by BID and Finnovista. In the latest study, it was found that
existence of 1,166 fintech ventures distributed in 11 business segments (BID,
2018). The segment with the highest number of ventures is payments and remittances,
representing 24.4% of the total. Following them, one step lower, is the loans segment
with 17.8% of total ventures and management of business finances with the
15.5% (see graph 3). The significant weight of these three sectors in the total is explained by
the high penetration of smart mobile devices in the region, the high proportion of
underserved or excluded population from the formal financial system and the limitations and
inefficiencies of the traditional financial services offering.

The payments and remittances segment in the region is driven by two factors. On one hand, the
high proportion of the population without access to an account in a financial institution
represents an opportunity. In Latin America and the Caribbean, 46% of older individuals
15-year-olds do not have an account (Global Findex Data). On the other hand, the penetration of
smart mobile phones is higher reaching 62% of the population (GSMA,
2018), becoming an alternative for financial inclusion.
In Latin America, Brazil and Mexico stand out from the rest of the countries for both
the number of ventures as well as the amount of investments made. In the case
from Brazil, one third of the new ventures reported in 2018 in Latin America are
developed in that country.

Regarding the investments received, it stands out that the company Nubank in the segment of
digital bank that has reached a valuation of over one trillion US dollars. In
2019 reaches 12 million customers with its credit card and account services
currents, employing more than 850 people.

The general fintech market in Brazil showed strong maturation during

2018, particularly in the payment and loan spaces, which can be seen in
the successful stock market launches of payment companies PagSegaro and Stone Payments.

In Mexico, 23% of the new ventures identified are located.

Latin America.

Fintech Law of Mexico

The Fintech Law in Mexico has been a pioneering example in Latin America of how
address the regulation of fintech from a general perspective. This Law is based on
the principles of financial inclusion and innovation, promotion of competition, protection
to the consumer, preservation of financial stability, prevention of illegal operations
and technological neutrality. Its objective is to provide greater legal certainty through
of a legislative framework to regulate the platforms known as Institutions of
Financial Technology (ITF), as well as to establish a framework that ensures competition
just between fintech ventures and financial and banking institutions
traditional. It mainly focuses on four areas: i) ITF, composed of Institutions
of Crowdfunding and Electronic Payment Fund Institutions, ii) assets
virtual (cryptocurrencies), iii) applied programming interfaces (API) and iv)
temporary authorizations for innovation testing (sandboxes).

In the case of Crowdfunding Institutions (CFI), the need is established

to obtain authorization to operate, the requirements for it to be granted and the institution
in charge of the licensing. On the other hand, it stipulates that both the Federal Government and the
Public administration entities will not be responsible or guarantee the resources.
used in the operations conducted by the IFC. Clients of an IFC will be able to carry out
among them and through this institution collective debt financing operations,
in order for investors to grant loans, credit, or any other
financing causing a direct or contingent liability to the applicants; financing
capital collective, in order for investors to buy or acquire titles
representatives of the social capital of legal entities that act as applicants; and
crowdfunding of co-ownership or royalties, in order for investors and
applicants form partnerships or any other type among themselves
agreement by which the investor acquires a fractional share or participation in an asset
present or future in the income, profits, royalties, or losses that are obtained from the
implementation of one or more activities or projects of an applicant.

On the other hand, the obligations that the IFCs must fulfill are established. Among them
we found, among others, the obligation to inform investors of the criteria
selection of the applicants and projects subject to financing, the prohibition of bidding
projects that are being offered at that same moment in another institution of
crowdfunding, analyze through evaluation and rating methodologies
of the applicants and projects, and inform potential investors about their risk,
including general indicators about their payment behavior and performance, and use
at least one credit information company.

Regarding Electronic Payment Fund Institutions (IFPE), the law defines the
operations that encompass and also establish the need to obtain authorization for
to operate, the requirements for the granting and the institution responsible for the habilitation. Among
other things, it is stipulated that they may operate in national currency, or in foreign currency or
virtual assets prior authorization. It also establishes certain restrictive conditions in the
who may grant credits and overdraft loans without charging interest or fees.
Both the operations of the IFCs and the IFPEs must be carried out with the
authorization from the National Banking and Securities Commission (CNBV) and must comply with
the following basic requirements: to have bylaws that comply with the provisions established by the
Fintech Law, have a risk disclosure policy, have a plan for
businesses, having a fraud prevention policy and operations with resources of
illicit origin and have information about the governing body of the person
moral.

Regarding virtual assets, the law defines them as the representation of value
electronically registered and used by the public as a means of payment for all types
of legal acts and whose transfer can only be carried out through means
electronic. The ITFs will only be able to operate with the virtual assets that are determined by
the Bank of Mexico and will require an express authorization. The ITFs that operate with assets
virtuals must be able to deliver to the respective client, when requested, the
amount of virtual assets held by this entity, or the amount in national currency
corresponding to the payment received from the sale of the virtual assets that correspond.
ITFs will be prohibited from selling, transferring, or assigning their ownership, lending, or providing as collateral.
to affect the use, enjoyment or enjoyment of the virtual assets that they hold and control on behalf
of their clients, except when it comes to the sale, transfer, or assignment of such
assets by order of their clients. The ITFs operating with virtual assets must disclose
to their clients, in addition to what is provided in this Law, the risks that exist by entering into
operations with such assets, which must include, at a minimum, informing them in a manner
simple and clear on its website or medium it uses to provide its service, that the
virtual currency is not legal tender and is not backed by the Federal Government, nor
by the Bank of Mexico, the impossibility of reversing operations once executed, the
volatility of the virtual asset value, and technological, cyber, and fraud risks
inherent to virtual assets.
The law establishes that Financial Entities, money transmitters, the companies of
credit information, clearing houses, ITFs and authorized societies
to operate with 'Novel Models' they will be required to establish interfaces of
standardized computer application programming interfaces (APIs) that enable the
connectivity and access to other interfaces developed or managed by them
subjects to which this article refers and third parties specialized in technologies of the
Information. Open financial data, aggregated data, and data must be shared.
transactional, prior authorization from the client.

The law also includes a regulatory provision commonly known as a sandbox,

that allows the implementation of new products, services, and business models of
innovative character, through the so-called Novel Models, which will require
a temporary authorization from the corresponding financial authority. This space
provisional for innovation allows for creation within a free environment.

The secondary provisions of the Fintech Law establish the information and documentation
additional documentation required to act as a Financial Technology Institution
(ITF), including the asset situation and the origin of resources. Some of these rules
secondary determine the minimum capital amount for the ITFs, taking into account the type
of operations that are authorized, as well as the additional activities they carry out
and the risks they face. In the case of ITFs that carry out a single type of operation, they must
having a minimum social capital of 170,000 dollars (500,000 UDI). When they are
authorized to carry out two or more types of operations, must have a social capital of
at least the equivalent of 240,000 dollars (700,000 UDI).

On the other hand, the following limits are established for the financing of the IFCs: i) for
crowdfunding of personal loan debt between individuals equivalent to
17,268 dollars (50,000 UDI) and ii) for collective debt financing of loans
business relations between people, of debt for real estate development, of capital and of
co-ownership or royalties equivalent to 576,740 dollars (1,670,000 UDI). Additionally,
It is established that the IFCs that have an evaluation, selection and methodology
Qualification of requests and projects according to the criteria of the financial authority, may
request authorization to carry out operations up to 2,313,865 dollars (6,700,000 UDI).

From these limits, it was warned that some fintech companies would not be able to obtain the
license to operate due to its size or the high costs that complying with could generate
the entirety of the requirements contained in the law. In the specific case of the IFC or companies
from crowdfunding, they will not be able to publish requests on their platforms
financing of projects that exceed a certain amount, which will not allow for
large projects can be funded using the crowdfunding mechanism
(Bancomext, 2018).

Indeed, although a year earlier the CNBV estimated that there were 330 fintech startups
In Mexico, after the registration deadline, the Commission had received by October 2019
only 85 authorization requests to operate as ITF, 60 in the IFPE segment and 25
like IFC12. Beyond this, this law is still in the process of implementation by
what is not possible to draw conclusions about the results and the impact it has had on the
financial system.

Regulation in Colombia
In Colombia, a decree from 2018 regulated the financing activity.
collaborative through the issuance of securities. The draft decree was published a year earlier.
to be submitted for consultation. It seeks to facilitate access to financing products by
part of certain sectors of the economy that have particular needs, such as the
SMEs, and to establish a regulatory framework for the functioning of financing
collaborative of productive projects through values. Define the financing activity
collaborative as that developed by entities authorized by the Superintendency
Financial institution of Colombia, based on an electronic infrastructure, which may include
interfaces, platforms, websites or other electronic communication media.
It establishes two forms of financing, one constituted through securities.
representatives of debt and that of share capital. The activity of crowdfunding will be
developed by corporations with exclusive purpose that aim to put
in contact with a plural number of contributors to recipients requesting funding in
a proper name to allocate it to a productive project, which will be called
crowdfunding companies. Both the companies and the projects and
Contributors must be national. The decree stipulates that in order to operate, they must: i)
to be established as public limited companies, ii) to register in the National Agents Registry
from the Securities Market, iii) adopt measures to ensure continuity and regularity
of the mechanisms and devices implemented to carry out financing
collaborative, and iv) have adequate administrative and accounting procedures,
internal control mechanisms, effective management techniques and risk control
effective mechanisms for controlling and safeguarding their information systems. On the other hand,
establishes the prohibition of guaranteeing returns or profits on the invested capital and of
that a single project is financed through various platforms. Finally, a
maximum financing amount equivalent to 10,000 minimum monthly wages
project (Approximately 3 million US dollars) and the requirement to return the
money invested if the minimum financing percentage is not reached, in turn, is established
a limit on the investment by contributor of 20% of their annual income or their assets, the
that results greater.

Just like in the case of the Fintech Law in Mexico, the brief period of time that has
Since the implementation of this decree, it is not yet possible to draw conclusions about its
impact

In another context, in February 2020, the monetary authority of Colombia presented a project.
from the decree aimed at regulating the formation of controlled testing spaces for
financial innovation activities. This project is made public with the purpose of
it has been publicly discussed by the stakeholders.

This project establishes the set of rules, procedures, plans, conditions,

requirements and prudential requirements that allow testing technological developments
innovators in the provision of activities inherent to the entities supervised by the
Colombian Financial Superintendency. It is established that this space must be utilized
innovation in the provision of financial services and products, ensuring protection and the
interests of financial consumers, preserve the integrity and stability of the system
financial and prevent regulatory arbitrage. The ventures that wish to access
these spaces must process a temporary operation certificate, for which they must
present: the project of the social statutes and the application for constitution for operation
temporal; the specific objectives of innovative technological development; the model of
business, definition of the proposed financial product or service, business feasibility,
financial goals and breakeven point of the same; a description of the tools or
technological means that will be used; the identification of prudential requirements,
including the minimum capital, operating and risk management that need to be
flexibilized, the proposal for the conditions, requirements, and prudential requirements
differentiated applicable to the tests,

together with a justified analysis of the need and proportionality of such flexibility
according to the business model; policies and procedures that the entity will apply to
the management, administration, and disclosure of situations that generate conflicts of interest;
the proposal for the policies of analysis and risk management of products and
financial services that use innovative technological developments that aim to be tested;
the identification of the activities intended to be developed in the controlled space of
test; the legal provisions that regulate financial activity that hinder the
development of products or services; the metrics and indicators for the evaluation of the
proposed objectives; the target market and maximum number of financial consumers
those to whom the product or service related to the project would be offered, specifying in their
case, the respective geographic location; the maximum amount of resources it proposes to raise
of each consumer, as well as the maximum total amount that they will be able to receive during the validity period
of your temporary operating certificate; the proposed trial period and schedule; the way
on what it intends to inform and obtain the consent of its financial consumers
regarding the fact that the financial products and services offered are part of a space
test controlled, as well as the risks to which they are exposed because of it; a
proposal for the clearance plan and the proposal for the measures that will be adopted to achieve the
protection of the financial consumer, according to the level of risk of the temporary test.

Once the Financial Superintendence of Colombia verifies compliance with the

the established requirements, a temporary operation certificate will be issued to the applicant, which
will authorize the participants to carry out the activity. The operation certificate
temporal will contain the conditions under which the tests will be developed, which will include
at a minimum: the limits on operation, the capital requirements that apply and
defined procedures for project risk management, guarantees or others
coverage mechanisms that allow you to cover the liability for damages and losses
the information that must be reported to the Superintendency
Financial Institution of Colombia and the schedule for sending this information, the information
what should be provided to financial consumers about the risks they are facing
expose and the defined protection mechanisms, the duration term of the space
authorized test control and the legal provisions or supervisory practices that
they will be exempted in the controlled test space.
Examples of Fintech companies

In order to fully understand what financial technologies are and how they
services are applied in the functioning of small and large businesses, let's look at 5
examples of fintech in Latin America:

Xepelin (lending)
It is a Chilean fintech company that evaluates through data science resources.
the risks for SMEs. The platform assigns scores based on cash flow for
through machine learning tools, and subsequently evaluates the results of
according to the probability of default. In this way, small and medium enterprises
They can obtain financing approvals more quickly.

Global66 (payments & remittances)

This is a Chilean fintech company that offers services for money transfer.
international transfers and remittances quickly and completely online from Chile,
Argentina, Peru, Colombia, Mexico, Ecuador, and Brazil, to more than 55 destinations around the
world.

Konfío (lending)
This Mexican fintech company is one of the largest in Latin America and has grown the most
raised capital in the country. In general, it is in charge of assigning online microcredits to SMEs,
with long and accessible deadlines, for those who wish to grow their business.

Symmetric (enterprise financial)

It is a fintech company from Colombia that offers visibility and control of finances services.
through software that can manage transactions and automate
reconciliations to ensure traceability without the need for a code.

Innova Funding (business lending)

It is a fintech company from Peru that has an online platform type
marketplace that connects small and medium businesses with investors. The idea is
that through auctions it is possible to facilitate liquidity through factoring. Each
The investor determines the invoice they wish to purchase and the platform offers them options under
this criterion, with additional information about the risk and the annual rate of the paying company.
Fintech Guatemala

The Association's main objective is to bring together all the companies in the Fintech sector.
of the country to offer its members and the general public an inclusive space of
collaboration that allows them to drive the evolution of the industry.

29 associated entities are part of the Fintech ecosystem in Guatemala:

15 strategic partners:

14 allies:

The Fintech Association of Guatemala seeks to have an impact on the following axes:
Boost the fintech ecosystem through collaborations with public entities,
private and international.
Promote collaboration between banks and fintechs.
Attract national and international investment for fintech companies.
Maintain constant dialogue with regulatory bodies and promote a policy
favorable public policy for the fintech ecosystem.
Promote the market in Guatemala, the talent that exists in the country and the potential for
the fintech industry.
 Promote the financial inclusion of the country through fintech and the use of technologies.
disruptive business models.
Promote the role of women in the fintech sector.
Empower consumers through a safe and transparent experience.

Working Tables:
Legal and Regulatory: Act as a direct contact with the authorities and
interest regulators in order to promote and seek regulatory changes
beneficial for the members of the Association and the sector in general,
transparently exposing and following best practices the interests of the
fintech community.
Alliances and Promotion: Support the consolidation of the contact network of the
Association to generate key links that contribute to development of
ecosystem and the creation of benefits for the partners.
Digital Payments: Create a space where members can share their
knowledge and experiences for the development of the ecosystem in terms of
technological infrastructure and innovative methods.

Regulation:
Resolution JM-120-2011 Regulation for the provision of financial services
mobiles: It aims to regulate the minimum aspects that must be observed
banks, as well as companies specialized in issuance and/or management of
credit cards that are part of a financial group, in the provision of
mobile financial services.

The business model must be aligned with the business strategy of the
institution and its approval must be based on an operational feasibility study and
technological that includes the execution of prior tests with satisfactory results.
The business model must include, at a minimum, the following aspects:
Strategy of the institution to which the use of the model obeys
mobile financial services business;
Operational scheme of mobile financial services that includes, according to
correspond, the role of the institution, including banking agents, the
third parties that support the adopted business model and other participants, and
the phases of mobile financial services operations;
Procedure for enrollment in mobile financial services;
Procedures to follow for users of financial services
mobiles can perform the various operations outlined in the model,
such as cash inflows and outflows, transfers, and payments for goods and
services;
 Maximum monthly limits for amount per transaction, for accumulated amount and
number of operations; and,
Description of the technological platform, hardware and software to be used, the
computer controls that will be implemented to ensure the
confidentiality, integrity, and availability of information, security
IT that will be implemented and any other necessary aspects
for the understanding of the computing and security operation of the
mobile financial services.

Resolución JM-4-2016 Reglamento para la administración del riesgo

operational: Institutions must implement policies, procedures and
systems that allow them to permanently carry out adequate management of
operational risk, according to the institution's risk tolerance level,
considering the nature, complexity, and volume of the operations it carries out.

Institutions as part of their policies, procedures, and systems for

operational risk management should determine the risk factors
operational to which they are exposed, considering those related to
human resources, internal processes, information technology and factors
externals.

Las instituciones deberán gestionar los eventos de riesgo asociados a la tecnología de

the information, related to the interruption, alteration or failure of the
information technology infrastructure, information systems, databases
data and information technology processes, in accordance with the provisions of the
Regulations for the Administration of Technological Risk.

Resolution JM-104-2021 Regulation for Risk Management

technological: Institutions must manage the security of their information with
the objective of ensuring the confidentiality, integrity, and availability of data,
as well as mitigate the risks of loss, improper extraction, and corruption of the
information, must consider at least the following aspects:
Identification and classification of information according to criteria of
sensitivity and criticality.
Roles and responsibilities for information security management.
Monitoring of information security.
Physical security that includes controls and preventive measures for
properly safeguard the IT infrastructure according to its importance
defined by the institution according to the risk it is exposed to.
Logical security that includes controls and preventive measures for
safeguard the integrity and security of the IT infrastructure, the systems
of information and databases.
 Bibliography

Inter-American Development Bank (2018), Fintech: Latin America 2018: Growth

and consolidation.
(2017), Fintech: Innovations You Didn't Know Were From Latin America and the Caribbean.
Washington, D.C.: BID.
• Bancomext (2018), Fintech in the world: the digital revolution of finance has arrived
to Mexico. National Bank of Foreign Trade of Mexico.
Economic Commission for Latin America and the Caribbean (ECLAC), Data, algorithms and
policies: the redefinition of the digital world (LC/CMSI.6/4), Santiago, 2018.
• EY (2019), Global FinTech Adoption Index 2019. As FinTech becomes the norm, you
need to stand out from the crowd.
International Monetary Fund (2019), Fintech in Latin America and the Caribbean:
Stocktaking. Working Paper WP/19/71.
• IMF-World Bank (2018), The Bali Fintech Agenda: a plan to take advantage of
success the opportunities of Fintech.
Business Magazine (2021) FinTech A revolution for the financial industry?
Fintech Guatemala, An ecosystem for innovation.
• Superintendency of Banks (2011), Resolution JM-120-2011 Regulation for the
provision of mobile financial services.
• Superintendency of Banks (2016), Resolution JM-4-2016 Regulation for the
operational risk management.
Superintendency of Banks (2021), Resolution JM-104-2021 Regulation for the
management of technological risk.