Financial News

JD Duarte discusses how FinTechs are helping advance Latin American commerce

By: WebWire

Technological innovation has created new trends in financial technology, such as FinTechs. These companies have established themselves as low-cost alternatives that can meet the needs of all segments of society, even the most vulnerable. JD Duarte, an entrepreneur and business expert from Costa Rica, shares his perspective on the challenges that prevent digital financial inclusion in Latin America.

Latin America and the Caribbean have seen a rapid growth in FinTech, with a lot of attention to financial inclusion. This is evident in the fact that 40% of FinTech startups serve underbanked or unbanked SMEs as their primary client.

FinTechs, like any innovation, have shown in short periods of time their ability to change plans, integrate actors and create new products to meet the needs of customers, particularly those who do not have access to the financial sector. In order to address the financial inclusion gaps, CAF, Development Bank of Latin America, has created the Financial Inclusion Lab (FIL). This Lab seeks to identify and evaluate the top FinTech initiatives in Latin America for financial inclusion of vulnerable populations and SMEs.

Duarte states that FinTechs are a great opportunity. However, to increase digital financial inclusion in the region it is important to design and implement comprehensive policies that address both the demand and supply sides. Supply-side policies are necessary to ensure infrastructure is available and coverage for new technologies. To ensure data usage prices remain affordable and competitive, regulatory frameworks must promote competition and efficiency within the telecommunications industry.

This must also be true for the financial sector, and all actors offering digital financial services. Traditional banking as well as FinTechs are both required to ensure that the prices and fees associated with these services are affordable and competitive for everyone.

Duarte adds, “Telecommunications infrastructure is essential to ensure remote populations have access to the connectivity networks that enable them to access digital financial service. The same applies to the financial sector, as well as the many players that offer digital services for financial transactions, both traditional banking and FinTechs.”

In order to meet the multiple goals of financial inclusion policymakers, countries within the region should promote the development of appropriate regulatory frameworks. This regulation should safeguard investors and consumers, promote healthy competition, and protect against financial stability and integrity risks.

Policymakers will need to think of new approaches to ensure high-quality supervision and regulation, encourage the safe use of innovative technologies, and ensure regulation is appropriate to the risks involved. It is crucial to adjust regulatory frameworks in order to achieve the right balance between financial innovation, addressing risks and financial integrity, consumer protection, financial stability, and financial stability.

Duarte suggests that special attention be paid to the “need to foster the digital abilities and knowledge of those most vulnerable and those who are traditionally excluded from the finance system. In this way, financial inclusion public policies must consider the strengthening of digital abilities, and not just financial ones.”

It is important to remember the various dimensions and edges of financial digitization triggered by the COVID-19 pandemic. This will allow for greater inclusion and financial well-being of the population. This comprehensive vision must be maintained in order to ensure that the intended results are achieved. If not, existing gaps and financial vulnerability could be worsened.

About Jose Daniel Duarte 

JD Duarte is originally from Heredia, Costa Rica. He has been an entrepreneur and business owner for more than 20 years, and divides his time between his existing operations and researching new possibilities in which to invest. When he's not dedicating time to his businesses, he spends time with his supporting wife and two children.

— WebWireID290752 —


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