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El Salvador

No Open Banking

A Central American country that has embraced cryptocurrency.

According to Kepios, 51% of Salvadorans had access to the Internet in 2022.

As yet, there is no news about Open Banking or Finance specific regulations. There are initial movements on the Financial Inclusion Law and the adoption of Bitcoin as a legal currency with Dollar parity in 2021.

According to The Global Findex Database, 36% of Salvadoran adults had bank accounts in 2021, leaving 64% unbanked. 

Statista ranks El Salvador as the third largest market of Fintech users in Central America, with around 2.4 million digital payments users and 210,000 customers of personal financial services. 

El Salvador established itself as a pioneer in cryptocurrencies with its 2021 adoption of Bitcoin as a legal tender in the country (p. 8). President Nayib Bukele has fully embraced Bitcoin with promises of no income tax on cryptos and plans to build a geothermal-powered city to try to attract Bitcoin mining. The International Monetary Fund has urged El Salvador to reverse course, citing concerns about the country’s financial stability. The move to legal tender status is widely seen as a risky experiment, with credit rating agencies downgrading the country’s debt ratings. The move has also raised concerns related to AML (Anti Money Laundering) and KYC (Know Your Customer) compliance.

Open Banking is hoped to provide more services for the unbanked Salvadorans.

There were 13 Fintech in El Salvador in 2021. In the 2020-2030 digital agenda, the government of El Salvador is attempting to modernise the state. The plan focuses, for example, on personal data management, cybersecurity, and digital inclusion through Fintech.

The state-owned Banco Hipotecario has teamed up with open-source API specialists to help provide Bitcoin-enabled Open Banking services.

Mastercard announced the launch of a new financial inclusion program in Guatemala, El Salvador, and Honduras in 2022 that will accelerate the company’s objective of including five million unbanked individuals and digitise and provide credit access to one million micro and small businesses (MSMBs) over the course of five years in the three countries. 

Demand for highly-trained professionals in digital technologies outpaces supply in El Salvador. Digital service providers cite low-quality training and education programs as the main barriers to hiring talent. The government is working to provide comprehensive digital skills programs in the formal education and training sector. Closing both, the digital divide and the labour demand-supply gap is critical.