Months have passed since Hurricanes Irma and Maria tragically devastated Puerto Rico, and many of its residents remain shaken, uprooted and subsisting off minimal aid. Nearly two thirds of the island’s 45,000 small and midsize businesses have yet to reopen. Recovery efforts are exacerbated by Puerto Rico’s long-standing financial difficulties; prior to the hurricanes, a $70 billion debt crisis forced the island to file for bankruptcy.
Often in wake of chaos and tragedy, those affected are presented with new opportunities. I believe this situation is no different. It was clear long before the hurricanes struck that Puerto Rico needed a fresh economic outlet, and financial technology (FinTech) could provide a key solution to the island’s pressing issues.
In the mainland US, financial technology has matured substantially. A customer-centric approach has allowed many FinTech initiatives to modernize an environment once dominated entirely by banks and other traditional credit providers. Some services, such as FinTech lenders, step in to serve the credit needs small businesses and consumers who may have had applications denied by large financial institutions.
Regulatory measures have also contributed to FinTech’s normalization in recent years. The involvement of the Consumer Financial Protection Bureau, and the Office of the Comptroller of the Currency have added a layer of stability that has served to attract new capital.
The FinTech industry is healthier than ever, and Puerto Rico’s entrepreneurs stand to benefit greatly from engaging in it. FinTech businesses can be started easily, and many require nothing more than an internet connection and remote server access to run. As a digital service, FinTech tools can be accessed by consumers anywhere, rendering FinTech an especially promising venture for entrepreneurs that lack a local market.
FinTech has already been deployed successfully by entrepreneurs from equally isolated areas; for example, one Native American tribe–the Lac Vieux Desert Band of Lake Superior Chippewa Indians–provides financial tech services to surrounding communities. The Lac Vieux Desert Band’s efforts have improved the economic prospects of the area as a whole, boosting local investments in education, job training and energy. As Puerto Rico’s investment needs are similar, this example reflects FinTech’s potential to spark the island’s economic revitalization.
Puerto Rico’s Act 20 and 22 tax incentives also strengthen its case for FinTech investment. Investors who reside in Puerto Rico enjoy lower tax rates, an incentive which has already paid dividends. Since implementing Acts 20 and 22, San Juan has garnered burgeoning technology and banking sectors, and FinTech startups that relocate to Puerto Rico also stand to reap the benefits of decreased business tax rates.
FinTech has driven America’s financial sector into the future by filling a niche ignored by old-school financial institutions. If Puerto Rico is to ensure its long-term prosperity, Puerto Rican entrepreneurs shouldn’t ignore the value of FinTech’s innovations and unconventionality.