Steps, not gaps: the case for intermediate banking licenses in Chile

Introduction 

In Chile’s financial system, the current regulatory framework forces a binary choice: one is either a non-bank issuer of payment cards with a minimum capital of 25,000 UF (Unidad de Fomento, a Chilean inflation-indexed unit of account, approximately USD 1,000,000 as of April 2025), or a fully licensed bank with a capital requirement of 800,000 UF (approximately USD 32,000,000 as of April 2025). There are no intermediate licenses that allow for a gradual progression in the provision of financial services. This regulatory gap presents a structural barrier to innovation, hinders the responsible growth of emerging players, and traps many firms in a legal and operational limbo. 

In an increasingly digital and financialized world—with consumers demanding personalized and accessible financial products—Chile urgently needs a scalable licensing regime, as seen in other jurisdictions. This article outlines the current regulatory limitations, highlights successful international models, and proposes potential reforms to enable a more inclusive, competitive, and modern financial ecosystem. 

II. The Chilean framework: two floors and no staircase 

Under Chilean law, non-bank issuers of payment cards operate under a regulatory framework established by Law No. 20.950 and detailed in the regulations issued by the Commission for the Financial Market (CMF), including capital requirements and operational restrictions. 

They are not authorized to take deposits in the banking sense—that is, they must fully safeguard user funds and cannot intermediate them or use them for lending purposes. Additionally, they are not authorized to offer credit services directly using their own funds or under conditions equivalent to those of licensed banks or financial institutions. 

Conversely, obtaining a full banking license requires a minimum capital of 800,000 UF and compliance with a complex set of prudential regulations, including governance, risk management, liquidity, solvency, and consumer protection standards. The leap from non-bank issuer to full bank is not just financial—it is institutional, technological, and organizational. 

As a result, Chile lacks a regulatory ladder that would allow firms to scale responsibly, test financial products under controlled conditions, and grow in proportion to their size and risk profile. The absence of proportionality limits competition, discourages innovation, and forces firms to contort their business models to fit unsuitable regulatory molds. 

III. What do other countries do? Scalable license models 

The concept of tiered or proportional licensing is not new. Multiple jurisdictions have implemented frameworks that allow financial entities to evolve gradually according to their business models, size, and systemic relevance. Key examples include: 

United Kingdom: The "restricted banking license" allows fintechs to operate under conditional authorization before becoming fully licensed banks. This "mobilization stage" gives startups time to develop operational capabilities and gradually meet prudential standards. The UK also provides several alternative license types for institutions to begin operating on a limited basis such as: Electronic Money Institutions (EMI) like Revolut – in its first stages – and Wise; Payment Institutions (PI) for money transfers, issuers of payment instruments, and electronic payments; or even using novel commercial approaches through Banking-as-a-Service structures like Railsr.   

Brazil: The Central Bank has created several new legal entities—Payment Institutions, Direct Credit Societies (SCDs), and Peer-to-Peer Lending Societies (SEPs)—with tailored regulatory frameworks. This has enabled many fintechs to evolve into more complex financial institutions. 

United States: Multiple state and federal licenses exist, and ongoing debate surrounds the creation of a "special purpose national bank charter" for fintechs, which would allow them to engage in specific financial activities without becoming full-service banks. 

Colombia: Financial companies can operate through alternative licenses such as “Sociedades Especializadas en Depósitos y Pagos Electrónicos” (SEDPEs) or as “Compañías de Financiamiento”. SEDPEs are authorized to offer electronic payment services, such as digital wallets and prepaid cards, but they are not allowed to provide loans or collect deposits directly from the public (i.e., Movii, the first fintech to operate as a SEDPE in Colombia). Compañías de Financiamiento can grant loans and offer credit products, subject to limitations when compared to full-service banks. An example of this model is Nu Colombia, a subsidiary of Nubank, which obtained its financing company license to expand its digital financial services in the country. 

These international experiences share a common vision: enabling innovation under proportional risk frameworks. While the legal vehicles vary, they all aim to offer supervised spaces for growth, experimentation, and market entry, reducing the cost of regulatory compliance for smaller players without compromising oversight. Chile, with its high digital adoption and strong institutional framework, is well-positioned to adapt these models to its financial ecosystem. 

IV. What could Chile do? Possible regulatory pathways 

Chile could adopt one or more of the following options to introduce proportional licensing: 

1. Digital Financial Institution License: A new license that permits the offering of basic deposit-like accounts (e.g., provisioned accounts), remunerated savings, and limited credit products, with lower capital requirements and proportionate risk controls. This license could cap the size of operations or restrict the types of clients served. 

2. Progressive Licensing Model: Inspired by the UK, a staged authorization model could allow firms to operate under predefined limitations before scaling up to a full license upon meeting operational and compliance benchmarks. 

3. Legislative Reform or Special Regulation: Chile could institutionalize intermediate licenses through amendments to the General Banking Law or a standalone regulation, empowering the CMF to define requirements and oversight mechanisms. 

   
   

Introducing scalable licenses does not mean deregulation. On the contrary, it means regulating smarter—tailoring oversight to each actor's size, complexity, and systemic importance. A tiered model could improve monitoring and market transparency with the right safeguards. 

Regardless of the path chosen, the system should be guided by three principles: proportional regulation, consumer protection, and business scalability. It must also include clear rules on access to payment systems, interoperability, financial crime prevention, and effective supervision. 

V. Conclusion 

Chile's lack of intermediate financial licenses is a regulatory blind spot that impedes the orderly development of new actors, stifles competition, and excludes potentially millions from innovative and secure financial services. 

This is not about weakening supervision. It is about acknowledging that not all financial models pose the same risks. A fintech offering remunerated accounts backed by central bank custody does not represent the same systemic threat as a universal bank with a diversified credit portfolio. 

Chile has an opportunity to build a regulatory staircase—to enable financial innovation to grow step by step, responsibly and under oversight. Moving toward scalable licensing is not just a technical upgrade. It is a strategic decision for the country’s financial future. 

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