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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
Although these FinTechs have been increasingly implemented, some of them, especially those related to financing, have encountered detractors among traditional players, such as banks (please see letter e. i. above).
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
There are specific regulations for loan granting (limits on interest rates, mandatory prepayment conditions etc.) and factoring (specific requirements that invoices must meet before being assignable).
If the abovementioned services are not conducted with funds collected from the general public (i.e. banking activity), there would be no need for the FinTech to establish itself as a formal bank in Chile and thus would not be subject to regulations applicable to banks and financial institutions.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area
N/A.
Economic conditions
Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area
In terms of the types of markets where FinTech companies compete, the Lending segment has a 13% share of the start-ups identified (24 start-ups) .
Information regarding revenues number of transactions and customers is not readily available.
Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area
The scope of the services should be carefully analysed on a case-by-case basis in order to assess any potential risks relating to compliance with consumer protection, data privacy and other laws generally applicable to service providers.