FinTech Business Guide 2024

Autores

Dario Bregante

Associate Director, EY Law
María del Pilar Sabogal

Leader, EY Law

7 minute read 08 jul. 2024

Temas relacionados

EY Law - Servicios legales

Servicios financieros

Finanzas

Digital

Download the Fintech Business Guide 2024

FinTech Business Guide 2024, learn about the main legal, financial and accounting aspects to develop FinTech businesses in Peru.

EY Law presents the FinTech Business Guide 2024 prepared to provide information about the industry, the perspectives of regulators, the main legal, financial and accounting aspects to develop FinTech businesses in Peru, as well as an overview of the ecosystem in the region.

Over the course of 2023 we have witnessed that technological development and financial innovations have driven the emergence of new businesses in the Peruvian FinTech sector, whether regulated or unregulated. Thus, according to the EY Peru FinTech Index 2023, as of October 2023, there are 203 FinTechs nationwide, which represents an approximate growth of 32% over last year.

Dario Bregante

Associate Partner, EY Law

Technological and digital infrastructure

The consolidation of digital transformation in financial services is becoming increasingly evident. Part of this digital transformation is based on the internet access growth in the country, a vital element for FinTechs and companies in the financial sector for their digital transformation process. According to a report released in June 2023 by the INEI, for the first quarter of 2023, Metropolitan Lima has the highest level of households with internet access, reaching 77.8%, while the rest of the urban areas have 58.7% and the rural area 19.3%. On the other hand, the mobile internet has been constantly growing; According to statistics from OSIPTEL, 91.6% of the population uses a cell phone to access the internet.

Increase in the number of Fixed Broadband Connections by Region

Regions

March 2022

March 2023

Paticipation as of March 2023

Percentage Change

Ancash

77 372

80 074

2.4%

+3.5%

Apurímac

13 029

18 480

0.6%

+41.8%

Callao

165 098

149 751

4.6%

-9.3%

Huancavelica

7 480

9 262

0.3%

+23.8%

lca

86 778

121096

3.7%

+39.5%

Lambayeque

103 702

133 567

4.1%

+28.8%

Lima

1752 654

1805 653

54.9%

+3.0%

Loreto

10 156

12 177

0.4%

+19.9%

Moquegua

18 753

22 976

0.7%

+22.5%

Pasco

7 056

5 878

0.2%

-16.7%

Puno

40 756

36 524

1.1%

-10.4%

_{Source: Stadistical Report OSIPTEL - May 2023

Prepared by EY}

According to the National Statistics and Information Institute (INEI), in 2023

of the population over 6 years of age makes daily use of the Internet.

of the population surfs the Internet to communicate.

Among the technologies used to access to the internet

access through his cell phone.

EY Perú FinTech Index 2023

The FinTech industry in Peru has been developing consistently.

Number of FinTech companies in Peru: 203

Payments & Transfers: 56
Loans: 44
Crowdfunding: 7
Factoring: 6
Currency exchange: 29
Insurtech: 2
Finance Management: 16
Wealth Management: 9
Virtual Asset Services: 14
FinTech as a Service (FaaS): 20

At present, Peru recorders an average annual growth of approximately 32% of the FinTech companies amount compared to last year. Is relevant to highlight that the number of Payments and Transfer FinTech companies increased to 56, surpassing the Loans vertical, which registers 44 FinTech companies. Today the main FinTech verticals in Peru are Payments and Loans and Exchange Houses, respectively.

Financial inclusion & FinTech

Interview: Humberto Ortiz Ruiz
National Directorate’s senior member for Research and Promotion of Free Competition (INDECOPI)

Ortiz Ruiz shares some recommendations from the market study that can easily be implemented and would have a greater impact in terms of financial inclusion. In addition, he comments on the main markets identified, risks to competition, and mergers in FinTech companies.

Interview: Oscar Orcón Hinojosa
Financial System and Capital Market’s Director, General Directorate of Financial Markets and Private Social Security (MEF)

Oscar Orcón, comments on the key points for increasing the levels of financial inclusion in Peru, as well as on the current initiatives related to banking and financial inclusion that the MEF has been implementing.

Financial Inclusion Status

According to the SBS December 2022 Report on Financial Inclusion Indicators of Insurance and Pension Financial Systems, it can be noted that there has been a large increase in the number of virtual banking operations between December 2021 and December 2022, involving an increase of more than 190%. It is worth mentioning that these operations include, among others, payments through the internet, corporate software, client software, telephone banking, and mobile banking. However, with regard to the amounts of these operations, there is a reduction, going from S/340,016 million in December 2021 to S/330,679 million in December 2022.

Financial System operations’ amount in virtual banking (in millions of soles)

Digital wallets’ use and retail payments

In 2021, through Law No. 31120, the DNI-Account was created with the main objective of providing citizens, among other functions, with savings, payments, returns and transfers’ operations. To date, there are more than 13 million Peruvians that has an account and 2 million that has an active account.

State Initiatives on Digital Transformation

The Peruvian State, through the Secretariat of Government and Digital Transformation (SGTD), is committed to enhance the digital transformation at all levels. In such a way, it has been promoting an articulated regulatory agenda, which, among other objectives, seeks to facilitate the digital transformation of financial services, remove barriers, and monitor changes and trends in the market in its commitment to reduce the financial inclusion gap in the country.

This year, the National Policy for Digital Transformation to 2030 (PNTD) was approved with the aim of solving the "Low exercise of digital citizenship". It comprises various capacities that our citizens should have to be able to participate as an active agent in a digital environment and society, such as "the operation in banking and other financial digital services".

Regulator's Perspectives

Peruvian Superintendency of the Securities Market (SMV)

Through a written interview for the FinTech Business Guide 2023/2024, the SMV shares some comments on the main advances made in the field of crowdfunding (FPF) in Peru, including the amendment to the SMV's Sanctions Regulations made in July 2022 to complete the regulatory framework for the FPF activity.
Currently, there are four FPF platform management companies that are operating in Peru and one that is requesting an authorization before the SMV. Thus, since April 2022, when the first operating authorization was granted, more than 230 projects, both personal and business, have been financed through FPF's activity, for an amount of more than S/18.3 million.
The SMV has continuously monitored the development of the industry seeking to respond quickly to the dynamics and needs of the market, and to promote actions that lead to an industry’s organized and sustainable.

Check out the full interview in the "4.6 Crowdfunding" section of the guide.

Written Interviews

Roberto Vargas
Peru’s FinTech Association

Roberto Vargas discusses the current landscape of the FinTech ecosystem, his opinion on recent regulatory updates, and some trends in the FinTech industry.

Check out the full interview in the "1.1 FinTech" section of the guide.

Carla Sosa
Ministry of Transport and Communications (MTC)

The Deputy Minister, Carla Sosa, comments on the main challenges and actions taken in terms of connectivity and digital infrastructure for greater and better-quality access to the Internet in several Peru’s areas. In addition, Sosa shares the contributions of the Digital Access Centers to financial development and inclusion.

Check out the full interview in the "2.3. Technological and Digital Infrastructure" section of the guide.

Claudia Quintanilla
Rextie

The co-founder of Rextie, Claudia Quintanilla, shares what she considers to be the key points for a FinTech business to remain positioned within the lending vertical, as well as some strategies to achieve it.

Check out the full interview in the section "4.2. Currency Exchange" in the guide.

Milton Vega
Central Reserve Bank of Peru

Milton Vega comments on the main drivers for the development of digital payment instruments in the country, as well as the actions that will be carried out by the BCRP in relation to the challenges that the National Payment System is currently dealing.

Likewise, Vega points out in the interview the importance and impact of the the Central Bank Digital Coin, as well as the strategy that the BCRP would follow in case of its implementation.

Check out the full interview in the section "4.1. Payment and transfer solutions" from the guide.

Alejandro Niquén
Peruvian Factoring Association (APEFAC)

Alejandro Niquen, president of APEFAC, comments on the initiatives that address the challenges faced by the factoring industry in Peru, as well as on the strategies for the industry’s growth, according to the actions adopted by the trade association.

Check out the full interview in the section "4.3. Factoring" in the guide.

Laure Schlesinger
Prestamype

The co-founder of the lending FinTech, Laure Schlesinger, shares her thoughts regarding the main needs of SMEs when granting them a loan.

Check out the full interview in the section "4.4. Lending" in the guide.

Alberto Rocca
Buda.com

Roca Pinto comments on the current cryptocurrency market’s situation in Latin America, the importance of the regulation of cryptoasset operations, and the impact of new blockchain-based solutions in Latin America.

Check out the full interview in the section "4.7. Services with Virtual Assets" from the guide.

The FinTech industry in the region

The FinTech sector is going through a moment of exponential growth not only regionally but also in Argentina. Currently, the country is home to 10% of FinTechs in Latin America and is the third country with the most digital banks in the region. With 330 registered companies, this industry is the creator of 30,000 direct jobs with the particularity of providing the possibility of working remotely, which represents an opportunity for the professionals located in the countryside.
The number of FinTechs experienced a continuous period of growth between 2012 and 2020, rising from 250 companies to 1,300 between those years. In recent years, the number of FinTechs has stabilized. Regarding the number of investments, there has been significant growth between 2019 and 2021, with 2021 being the year in which an all-time high in the number of investments in Brazil has been reached. As of 2022, the decrease in the number of investments in these types of companies has been notable.
Chile is a leader in the adoption of contactless payment technology in our region, with 70% of purchases (Ebook-Digital Payment Trends 2023). According to Payments and Commerce Market Intelligence (PCMI), Chile's e-commerce market will grow by 16% in 2023 to almost US$ 34.1 billion.
FinTechs in Colombia represent 15.3% of the top startups in the country. Both FinTechs and banks are venturing into technologies such as artificial intelligence, blockchain, cloud computing, big data, and decision engines, with the aim of transforming the way people and businesses access, manage, and use financial services. This provides an opportunity to increase financial inclusion in society, although it also raises challenges. The adoption of these technologies can reduce costs in financial institutions, create new strategies, and reach unexplored population segments.
The post-pandemic scenario that Ecuador is experiencing financially is very encouraging for the development and growth of FinTech companies within the country. Driven, in turn, by a greater economic activity of the new generations, who become active customers of the Ecuadorian financial and banking environment. As we will see, new users from younger generations leverage a growing preference for the use of digital channels to transact with banks, ideally from their mobile phones.

A fact to highlight is that Ecuador to date has more than 60 FinTechs, of which 13 have been founded by women.
In terms of regulations, the Law to Regulate Financial Technology Institutions ("LITF") published in March 2018 and amended in May 2021, aims to regulate the financial services provided by FinTechs, their organization, operation, as well as everything related to novel models. The LITF was supplemented by secondary regulations (Provisions, Circulars, Rules). These are intended, among others, to strengthen the LITF on issues such as: financial inclusion, technological innovation, financial stability, specification of corporate and capital requirements.
Despite the economic growth projected by the World Bank in the region, in which countries such as Panama, Guatemala, El Salvador and Honduras stand out, the FinTech industry in Central America has not grown at the same speed. It has been affected by the decline in funding provided by venture capitals, in response to some symptoms of recession in all economies. However, the current landscape suggests that the most popular segments in this sector are payments, lending, financial software, crypto, and, to a lesser extent, insurtech, neobanks, and financial trading.

Technological progress and its positive consequences allow us to move closer to financial inclusion as a region. It is important for regulators to move at industry speed to achieve more successful, reliable, and faster operations. Learn in detail about the situation in Peru and Latin American countries, as well as the public policies, regulations, trends and services related to the sector, by downloading the full version of the FinTech Business Guide 2023/2024, prepared by the Financial Regulation and FinTech team at EY Law Peru.