Fintech ecosystem in Costa Rica is rapidly evolving. Not only because technology is being applied to the finance sector, but because systems are being improved, becoming more efficient, equitable and accessible.
Furthermore, Costa Rica is currently a center of technological convergence. Large shared services, IT, outsourcing and customer service companies turn to this country to make large investments. This is the product of Costa Rica’s political and democratic stability, its quality telecommunication services, high educational levels and excellent geographical position.
Here’s what you need to know about the fintech developments in Costa Rica.
Costa Rican fintech legislation
In Costa Rica, there is still no legislation that directly regulates the fintech sector. Most of the time fintech development occurs first and legislation comes later. However, despite the lack of regulations, there are some applicable to fintech initiatives in the country.
Although there is no specific law, fintech companies can face different regulations depending on their segment or type. For example:
- Data Protection Law: Applies if data is collected and transferred to other legal entities.
- Legitimation of Capital and Activities for the Transfer of Narcotics Law: Applies to activities that provide credit facilities.
- Law of Regulation of Non-Bank Financial Companies: Applies to all companies that carry out financial intermediation.
Future supplementary legislation for fintechs in Costa Rica will enable innovation without neglecting due compliance.
Initiatives to support fintech in Costa Rica
Costa Rica has not yet established a formal institution that supports this type of technology or entrepreneurship. Nevertheless, technological development in this sector comes from startups and private companies that collaborate with international institutions and associations. These associations are made up of companies and professionals in the financial industry.
Likewise, Costa Rica leverages the Fintech Association of Central America and the Caribbean as a source of knowledge to better understand fintech regulations. This regional association also provides clarity on how fintech influences education, regulations and research and technology initiatives.
From traditional to digital banking
Although fintech initiatives mostly arise as technological solutions promoted by private startups, traditional banking institutions have also leveraged their opportunities. Thus, traditional banks have begun implementing fintech to provide more accessible solutions for its clients.
Both public and private banks have begun experimenting within some segments of fintech to offer its clients a better experience managing their assets. This makes fintech a key to providing more competitive solutions, such as payment solutions, business finance management, alternative financing platforms and alternative scoring.
According to the Inter-American Development Bank, it is necessary to strengthen the entrepreneurial ecosystem in the public and private sectors to support initiatives in the initial stages.
How to strengthen the fintech sector in Costa Rica
The Inter-American Development Bank conducted a study called ‘Fintech in Costa Rica, Towards an Evolution of Financial Services‘. Although Costa Rica has a solid institutional framework and efficient financial regulations, the country still lacks an institutional framework in the entrepreneurial sector.
This framework could unite the efforts supporting entrepreneurship in Costa Rica to eliminate or reduce certain processes that entrepreneurs constantly face. The framework could also expand financing sources and grant better bank loans to early-stage ventures.
The creation of public policies is also key to the development of fintech startup initiatives in Costa Rica. Public notaries facilitate and provide support to entrepreneurs as they define their business model. Finally, Costa Rica should follow the example of Brazil, Colombia and Mexico, to create more specific regulation on fintech issues.
Take advantage of the fintech ecosystem in Costa Rica
Costa Rica’s internet penetration and mobile telephony ease the adoption and use of online financial services. There are plenty of opportunities in the upcoming Fintech industry in Latin-America. To learn more about Fintech in Costa Rica, get in touch with Biz Latin Hub.
At Biz Latin Hub, our team of multilingual experts are equipped to provide personalized business solutions to clients and keep track of new market trends, such as monitoring the rise of fintech startups in Costa Rica. Our variability of market entry and back-office services is completely customizable to your business’s aspirations.