The situation regarding fintech in the Dominican Republic is not very different from the rest of Latin America. Although there is not a substantial fintech presence in the Dominican Republic yet (there are no official statistics on the matter), given the rise in the use of the internet for e-commerce, social networks and the development of electronic platforms, there is no doubt that start-ups of this nature will continue to emerge more and more. Moreover, this reality is evident considering that multiple banks in the country have incorporated new technology into their lines of business. As evidence of this imminent development, in May 2018 the Dominican Association of Fintech Companies (ADOFINTECH) was incorporated, initially with 19 member companies, with the aim of promoting the growth of fintech finance in the country.
Although certain authors have highlighted several disadvantages of fintech, such as the vulnerability of users' financial information, these could be substantially mitigated through the approval, implementation and, above all, the execution of an appropriate regulation on the subject – a topic that we will address later. For this reason, fintech, beyond the intrinsic risk due to the high technological component of the industry, undoubtedly represents a great opportunity for the financial system and its related service providers. In particular, fintech provides an opportunity for growth and expansion to segments of the population where previously the use of financial services was unviable. In other words, it is expected that this developing industry will allow wide improvements in the Dominican Republic to accessing the financial system for those users who have not had it historically through traditional banking.
In the specific case of the Dominican Republic, the main challenge regarding the development of fintech companies is and will continue to be the regulatory aspect. The behaviour of fintech's development in the Dominican Republic to date, and the continuance of that development in accordance with expectations, raises not only the need for, but also the obligation to provide regulation duly adjusted to the nature of this new industry. This regulation will need to cover fintech's combination with financial services, the risks and the participants involved in the industry.
Given the above, a reaction from the corresponding government entities in the Dominican Republic is expected in the short to medium term to address the need for regulation that clearly and specifically establishes the obligations and rights of all participants in the fintech industry. We are very confident that the market will have appropriate regulation at its disposal for the consistent, stable and coherent development of financial services through fintech, in the face of the inevitable growth of this sector in the near future.
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