Central Bank Governor Hector Valdez Albizu says the Central Bank of the Dominican Republic is taking steps to to foster the country becoming a hub for financial innovation. He spoke during the seminar “Fintech and Financial innovation in Central America,” organized by Latam investor magazine.
Fintech is the term used to refer to innovations in the financial and technology crossover space, and typically refers to companies or services that use technology to provide financial services to businesses or consumers. The financial services technology companies provide financial services through software, cloud services or other technology and include anything from mobile payment apps to cryptocurrency.
During his speech, Valdez Albizu announced that the BCRD is taking steps to implement, in the short term and with the support of international organizations, a Financial Innovation Hub that will allow private initiatives in this area to be analyzed, tested and evaluated in a controlled environment, before their formal process of approval and implementation.
He explained that innovation hubs already exist in countries such as the United Kingdom, Israel, Chile and Mexico, to mention just a few, and have proven to be a very useful platforms for the exchange of information and experiences. These serve both the regulator and the regulated parties to jointly promote innovative ventures that benefit the population and support equitable access to financial services.
Valdez Albizu took advantage of the forum to present a complete report on the transformations that have taken place during the last decade in the Dominican financial sector, the regulatory challenges, the changes in the needs of financial users, the emergence of new players in the ecosystem, together with the need to preserve financial stability and user protection.
The governor highlighted that banks have definitely moved their operations to digital environments. At the same time, technology has given rise to the emergence of companies that offer fully digital and innovative financial services and products directly to customers or through banks, known as financial technology companies – fintech’s.
He said in the number of users of internet banking in the country had risen from 1.4 million users in 2014 to 4.9 million by March 2021. He remarked fintech companies had increased from around 20 in 2018 to more than 40 today, providing services in various segments such as digital payments, personal and business finance management, alternative financing, financial assets, and capital markets management.
Valdez Albizu pointed out that, as financial inclusion is a strategic objective of the BCRD, technological innovation has been an indispensable tool to achieve it. However, he indicated that it would not have been possible without a regulation that seeks a balance between technological innovation, the provision of financial services, new players in the ecosystem, all within a framework of stability and user protection.
Valdez Albizu emphasized that the BCRD is attentive and exhausting a previous phase of analysis on digital currencies issued by central banks (CBCDs), exploring their nature, monetary impact and functionality of these schemes. He outlined the Payment Interconnection System of Central America and the Dominican Republic (SIPA), of which the BCRD has been the institutional manager since 2011, as well as the Instant Payment system, which has proved to be a key tool during the times of pandemic, through which 18.4 million transactions have been carried out up to April of this year 2021.
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Central Bank
20 May 2021