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How to Start a Fintech in Guatemala

Have you ever used an app to pay for parking? Or have you made a payment using a cell phone? Perhaps you have acquired a financial product digitally, without setting foot in the bank? If so, you have used the services of a fintech or financial technology company.

In the digital era, these solutions have grown considerably due to the advantages they offer companies and users in their day-to-day operations for payments, money transfers, invoicing, financing, among other functions.

 
Sector Overview

Between 2017 and 2021, the Guatemalan fintech industry grew by 683% going from, 6 to 47 companies. In 2021, they served around 189,121 clients. Of these, 96.2% are users who use technology to sell their products and services to consumers. The rest are organizations that use fintech to negotiate with other companies.

These clients do not belong exclusively to the formal economic sector. Techno-financial companies estimate that between US$60 and US$70 billion circulate annually from informal commerce, which is the equivalent to approximately 75% of all transactions in the country. Therefore, these organizations see a great potential for growth and an opportunity to offer their services to them.

 
Fintech Operations in Guatemala

If you are interested in investing in this growing market or learning more about it, here are some steps you should take to establish in Guatemala.

 
Choose the Type of Fintech You Want to Create

By the end of 2021, 47 fintech operated in Guatemala in 11 different segments. The main ones are:

Other industries that fintech are entering include financial asset and capital markets companies, insurtech (insurance), wealthtech (personal finance), cryptocurrencies, technologies for financial institutions, regtech (regulatory compliance), and crowdfunding.

 
2. Incorporate as a Company

The Guatemalan Commercial Code contemplates different options for incorporation. However, the most widely used for this industry is the sociedad anónima corporation, where there is flexibility in structure and risk management. Several shareholders may participate, thus facilitating investment and access to capital.

 
3. Develop Products and Services in Compliance with Existing Regulations.

While there is no specific regulation of the techno-financial sector in Guatemala, a fintech company may be subject to comply with important regulatory frameworks to obtain its licenses. Among them are:

  • Financial regulations
  • Prevención de lavado de dinero u otros activos
  • Protección al consumidor

 

They seek to ensure that services and transactions are fair and transparent. Depending on their application, these obligations may then incorporate elements of internal regulations, compliance programs, maintenance of certain records and coordination with regulatory bodies such as the Superintendency of Banks (SIB).

 
4. Mitigate Cybersecurity and Data Protection Risks.

As financial technology navigates the digital world, it is crucial to have clear cybersecurity measures for users. Guatemala does not have updated legislation that criminalizes digital crimes and promotes data protection; however, we recommend adopting specific policies and a series of measures to mitigate the legal liabilities that cybercrimes can generate. Similarly, your contracts should contemplate scenarios such as data breaches, especially due to the sensitive financial information that your organization will handle and store.

For more information about the industry and its regulations, do not hesitate to contact us.

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