III Financial Inclusion Report

Latin American Banking Federation (FELABAN)

The Latin American Banking Federation (FELABAN) has published its third report on Financial Inclusion in Latin America, analyzing the effect of the digital revolution in financial service provision, the variables for accessing financial services and aspects of public policy linked to financial inclusion in Latin America.

The report finds that with regard to the digital revolution in financial service provision, and while there have always been changes in technology in the financial arena, on this occasion there are also new players who leverage the lack of a regulatory and supervisory framework as their main advantage.

The report has referenced the work done by the Inter-American Development Bank (IDB) indicating that 60% of fintech firms in Latin America sprang up between 2014 and 2016, proof of these new players’ short track record, most of whom need capital and financing.

The paper also comments on the findings of the study conducted by the US Treasury Department which indicate that in fintech lending, there is no secondary market enabling them to cover firms’ borrowing risks, upgrade the risks associated with changing duration terms, or for securitizations, and that the absence of regulation means that the role of the participants, including rights, obligations and scope, cannot be demarcated.

The risks associated with fintech firms are as follows: (i) more credit supply; (ii) markets increasingly online-only; (iii) data security; (iv) the impact on monetary policy; (v) regulatory arbitrage; and (vi) money laundering and the financing of terrorism, and their regulation.

Meanwhile, FELABAN has developed an analysis of the main financial inclusion indicators, which have made significant progress overall, despite a challenging macroeconomic scenario and the low profile of financial inclusion in the public agenda. The Federation highlights the principles recognized at the G20 meeting in June 2017.