Toward Efficient Regulation of Fin-Tech in the LAC Region - Alternative Finance for MSMEs

This project studied Alternative Finance for Small and Medium Sized Enterprises (SMEs) in Latin America and the Caribbean with specific attention to FinTech. The study focused on Brazil, Mexico, and Colombia, as agreed upon by the client and SIPA Capstone team as a representative sample of the most mature FinTech ecosystems in the region. The projects served to aid the Inter-American Development Bank (IDB) by providing with a suite of policy recommendations.

The SIPA team focused on determining how to best regulate FinTech companies that provide alternative finance to SMEs in Colombia, Mexico, and Brazil. For the preliminary research, the team conducted a landscape analysis, compared macroeconomic metrics across the region, and examined existing barriers for SME financing in each country. In addition, the team analyzed opportunities for regional FinTech growth long-term.

In order to provide policy recommendations, the SIPA team reviewed FinTech regulation and complementary policies from around the globe, assessing the strengths and weaknesses of different approaches, and narrowing down the policies that help develop a friendly ecosystem for FinTech growth. The research culminated in the development of a “toolbox” of policies, against which the team benchmarked Brazil, Mexico, and Colombia to determine any gaps in regulatory best practices.

Much of the research utilized throughout this project’s development was derived from existing data collected by the IDB, International Finance Corporation (IFC), and the World Bank. Examination of FinTech policies in other countries relied on legislative texts as well as analyses provided by government agencies in partnership with consulting firms like Deloitte and Ernst and Young. Primary data comes from interviews with entrepreneurs, industry experts and regulators.