Senate chamber approved by a large majority bill to regulate fintechs

By Finance Ministry of Chile

This is a machine translation of the original press release issued in Spanish

With 39 votes in favor and 6 abstentions, the bill that regulates the Fintech was approved in particular and dispatched by the Senate Chamber, thus fulfilling its second constitutional procedure.

This initiative seeks to expand financial inclusion by increasing competition in the industry and promoting innovation, and establishing a regulatory framework for open finance, placing Chile at the forefront of this type of product.

“Within the same open finance system, the digital identification of customers will be allowed and facilitated, which will facilitate the entire operation of the transactional system for low-value payments that, at the same time, will interact with the regulations that issued the Central Bank to allow the interoperability of the different low value platforms in the Chilean market. This will create a regulatory base from which it will be possible to produce greater innovation and competition in the provision of financial services”, assured the Minister of Finance, Mario Marcel, after the vote.

The Secretary of State thanked the parliamentarians for their support, especially those who are part of the Senate Finance Commission, whose technical teams reached an agreement on a package of instructions that made the processing of the project viable.

Regarding the item of financial information, Minister Marcel stressed that the articles contemplate a definition that is limited to the products that are used by clients, ruling out that details of particular transactions may represent a risk.

Finally, he stressed that this project was supported by the Commission for Financial Markets (CMF) “which has proven to be extraordinarily professional and rigorous on issues such as access to and use of information. For the fulfillment of this project, the CMF will reinforce its capacities. It is a very solid institution that will allow this project to be deployed with all the potential of the benefits it has for citizens”.

The Fintech Law project is an initiative that mainly seeks to increase competition in the financial market through greater innovation, and deepen financial inclusion. Its objective is to establish a regulatory framework for all those companies that today provide financial services through the development of technology and innovation, in order to strengthen the ecosystem and provide better conditions in terms of regulations, economic conditions, legal certainties and security, both for market players and users.

With this bill, it will be possible to settle the absence of an existing regulatory framework in the national financial industry, which in turn would allow Chile to position itself at the forefront of financial technology, remaining on a par with developed countries. This is due to the fact that the Fintech Law also includes an Open Finance System, better known as Open Finance.

In this way, the development of technology and innovation that already operates in Chile in the financial industry will leave behind the barriers to entry to the market, so that they will be able to provide their next-generation services to more citizens. In addition, the project safeguarding personal data will allow Fintechs to cover a larger public that today does not have access to financial services, which could improve their standard of living, whether it be having access to insurance, investment tools, among others.

The next step in the process will be the Chamber of Deputies, which must decide whether or not to accept the changes made by the Senate. If they agree, the text would be in a position to become Law.