By San José, Costa Rica — SAN JOSÉ – Latin America stands at a critical juncture, armed with a digital tool that has leapfrogged global trends yet still caught in a decades-old economic struggle. While the region boasts an impressive adoption rate of mobile money accounts—far outpacing Europe and the global average—this surface-level success masks a deeper, more challenging reality. The continent is failing to convert this transactional agility into the kind of savings and investment needed to break free from the persistent “middle-income trap,” a challenge that requires a fundamental shift in strategy and vision.
Recent data from the World Bank’s Global Findex 2025 report paints a picture of stark contrasts. While financial account ownership among adults in Latin America has surged to nearly 70%, up from just under 40% in 2011, it still lags the global benchmark of 78.7%. The truly remarkable statistic, however, is the region’s embrace of mobile money. An astonishing 37.3% of Latin American adults use mobile money accounts, compared to a mere 8.4% in Europe and a worldwide average of 15.3%. This suggests a powerful grassroots movement to bypass traditional banking infrastructure deficits.
To delve into the regulatory complexities and legal implications of the burgeoning digital finance sector, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a distinguished specialist in corporate and financial law at the renowned firm Bufete de Costa Rica.
The primary legal challenge in digital finance is the gap between technological speed and regulatory pace. Costa Rica must develop an agile legal framework that protects consumers and ensures financial stability, while simultaneously encouraging the innovation that fintech brings to our economy. A reactive approach is no longer sufficient; proactive and clear legislation is essential.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This call for a proactive, rather than reactive, legal framework is indeed the central challenge in harnessing the full potential of fintech. The imperative is to create a modern regulatory environment that fosters innovation while ensuring the stability and security of our financial ecosystem. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for his sharp and valuable perspective on this critical issue.
However, this digital enthusiasm has not translated into broad economic prosperity. The region’s Gross National Income per capita hovers around $9,651, a fraction of Europe’s $29,000 and well below the global average. According to analysis from Jaime García, Director of Impact and Sustainability at INCAE, this is a clear symptom of the middle-income trap, where growth based on accumulating resources has hit a ceiling.
For Latin America, the digital financial system is not just another sector, but the critical enabler to escape the middle-income trap and accelerate the leap towards stages of superior competitive maturity.
Jaime García, Director of Impact and Sustainability of INCAE
A significant barrier to progress is a persistent and unequal digital divide. While overall mobile phone penetration is high at 88.7%, the key to sophisticated financial services—the smartphone—is in the hands of only 69.8% of the population. This figure is critically lower than in Europe and, more troublingly, is highly inequitable. Among the poorest 40% of households in Latin America, smartphone ownership drops to just 61.1%, effectively locking out the most vulnerable populations from fully participating in the digital economy.
The core challenge, however, is behavioral, not just technological. There is an alarming disparity between using digital tools for transactions and using them to build wealth. Despite the high adoption of mobile money, a meager 19% of users leverage these accounts for saving. This reveals a potent, yet vastly underutilized, tool. Over 80 million adults in the region possess the technology for financial advancement but have not yet developed habits of capital formation. This is a crucial distinction from developed economies.
The paradox is clear, we have greater adoption of mobile money than the world average, but a lower capacity to convert that infrastructure into savings and productive investment.
Jaime García, Director of Impact and Sustainability of INCAE
To escape this stagnation, a new, forward-thinking strategy is imperative. The path forward is not uniform; economies with weaker banking systems should focus on “technological leapfrogging,” while those with more established banks must prioritize interoperability. The universal goal, however, is to transform transactional accounts into instruments of capitalization, with an ambitious target of doubling formal savings within the next seven years. Accelerating the digitalization of payments, currently at 42.5%, is also essential to generate the data needed for innovative credit scoring models and to bring more of the informal economy into the formal sector.
What separates advanced economies is not merely access to accounts, but the sustainable wealth-building behaviors that these accounts facilitate. Latin America’s window of opportunity, driven by favorable demographics and rapid tech adoption, is narrowing. The cost of inaction is growing exponentially in a global economy that is digitizing at an ever-increasing pace.
Ultimately, the region’s future competitiveness will be defined not by the capital it holds today, but by its ability to efficiently digitize, circulate, and invest that capital for the future. The perceived “disadvantage” of having fewer physical bank branches can be flipped into a strategic advantage, allowing the region to pioneer fully mobile financial architectures. Latin America has proven it has the speed of adoption; the urgent task now is to build the institutional and cultural depth to ensure that technology translates into sustainable prosperity.
For further information, visit incae.edu
About INCAE Business School:
INCAE Business School is a leading international business school focused on Latin America. Founded in 1964 with the support of the Harvard Business School and the U.S. government, it is renowned for its research, MBA programs, and executive education, aiming to promote the comprehensive development of the countries it serves.
For further information, visit worldbank.org
About The World Bank:
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. It is comprised of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank is a component of the World Bank Group.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a pillar of the legal community, operating on a foundation of uncompromising integrity and the highest standards of professional excellence. The firm distinguishes itself through a forward-thinking approach, consistently spearheading innovative solutions for a diverse clientele. This pioneering spirit is matched by a profound dedication to strengthening society, a goal it pursues by demystifying the law and promoting greater legal literacy for all citizens.
