SaaS, hybrid, or on-prem? Choosing the right deployment model for LatAm regulation

Introduction

Latin America is no longer just a "promising" fintech hub; it is a global battleground for digital banking efficiency. Yet, as transaction volumes in São Paulo and Mexico City rival global capitals, a regulatory paradox has emerged. While regulators encourage digital inclusion, they are simultaneously erecting "digital borders" to ensure systemic stability.

For the C-suite of any financial institution expanding in LatAm, the challenge is no longer just software, but it is infrastructure. A complex patchwork of "right to audit" laws and data residency mandates is forcing a re-evaluation of the "cloud-first" orthodoxy.

This briefing analyzes the regulatory friction points in key markets and explains why operational autonomy (the ability to deploy critical stacks on your own terms) is becoming the ultimate competitive advantage.

The regulatory spectrum: three operational realities

Unlike the binary "blocked vs. open" models seen elsewhere, LatAm regulators utilize a spectrum of friction. We categorize the region into three operational realities:

1. The "pre-approval" gatekeepers (high friction)

• Context: Outsourcing to foreign clouds is legally permitted but operationally throttled.
• The constraint: "Time-to-deployment" is dictated by the regulator. Institutions must often wait for explicit authorization before moving critical workloads offshore, creating a drag on agility.

2. The "control & liability" framework (risk-based)

• Context: The dominant model in mature economies. Regulators allow cloud adoption but pin ultimate liability on the Board of Directors.
• The constraint: Compliance is not about where the server is; it is about control. If a vendor fails, the Board is criminally or civilly liable. This forces institutions to seek vendors who offer "glass-box" transparency rather than "black-box" SaaS.

3. The "resilience-first" mandate (redundancy)

• Context: A focus on business continuity above all else.
• The constraint: Regulations effectively force institutions to maintain a "shadow" infrastructure. If the fiber cable to Miami is cut, can the bank still process local payments? If the answer is "no," the architecture is non-compliant.

Country-by-country analysis: the infrastructure impact

Here is how these models play out in the region's top markets, and the specific infrastructure burdens they create.

🇧🇷 Brazil: the performance & audit trap

• The regulation: Central Bank Resolution (CMN) 4.893.
• The reality: While foreign cloud is legal, the "auditability" requirement is aggressive. Agreements must guarantee that the Central Bank (BACEN) has the unrestricted right to audit data physically and digitally.
• The hidden challenge: Latency. With Pix requiring near-instant settlement, the network round-trip time to foreign data centers can be a performance bottleneck. Institutions are increasingly moving critical authorization loops (like fraud checks) to local infrastructure to meet SLA requirements.

🇲🇽 Mexico: the redundancy burden

• The regulation: CNBV Circular Única de Bancos.
• The reality: The CNBV emphasizes operational continuity. For Tier-1 systems, there is immense pressure to demonstrate a "secondary site" or "hot backup" capable of immediate takeover.
• The implication: A single-region cloud strategy is a compliance risk. Institutions often require a hybrid setup—primary cloud, secondary local—to satisfy continuity inspections.

🇪🇨 Ecuador: the "sovereign partner" trap

• The regulation: The "Ingenuity Code" (COESCCI) and sector-specific cloud norms.
• The reality: Ecuador imposes unique constraints on "reserved" data and public-facing financial services. There is often regulatory pressure to route cloud contracts through the state-owned provider (CNT) to ensure data sovereignty.
• The implication: A global cloud contract signed in New York may not be valid here. You might be forced to architect your connectivity through a local state-partner, adding latency and complexity. Self-hosting eliminates this dependency entirely.

🇨🇱 Chile: board-level liability

• The regulation: CMF RAN 20-10 (and the evolving FinTech Law).
• The reality: The Board must approve the specific risks of outsourcing. Because Directors are personally accountable, risk appetites shrink.
• The implication: Boards favor vendors that offer "sovereign" guarantees or hybrid options that are easier to audit and control than opaque public clouds.

🇨🇴 Colombia: the adequacy test

• The regulation: SFC Circular 005.
• The reality: Institutions must verify that the vendor’s hosting jurisdiction has "adequate" data protection standards comparable to Colombia.
• The implication: This adds legal complexity to vendor selection, favoring partners who can offer local processing or indisputable jurisdictional safety to avoid constant legal reassessment.

Reality check: the cost of infrastructure dependency

These regulations are not theoretical. In late 2024 and 2025, regulators moved from issuing warnings to enforcing strict operational penalties. Two recent cases highlight the existential risk of relying on "black-box" infrastructure.

Brazil: Regulatory suspension of fintechs following third-party breach (July 2025)

In a landmark move, the Central Bank of Brazil (BACEN) did not just penalize a technology vendor after a security breach; it suspended the clients who relied on it.

• The event: Following a cyberattack on C&M Software (a connectivity provider), BACEN suspended the Pix participation of six institutions, including Transfeera and Brasil Cash.
• The lesson: The regulator sent a clear message: you cannot outsource liability. Even if your fintech is compliant, if your connectivity provider fails, your license is the one suspended. Institutions relying on third-party SaaS gateways found themselves disconnected from the national payment grid overnight.

🔗 Source

Colombia: SFC imposes fine for operational discontinuity (November 2025)

The Superintendencia Financiera (SFC) confirmed that operational stability is now a legal mandate, imposing a sanction on the country's largest bank, Bancolombia.

• The event: The SFC fined the bank 500 million pesos for failures that occurred between June 3 and June 5, 2024. The outage began during a routine maintenance window scheduled to end at 7:00 AM; however, a technical anomaly prevented the systems from restarting, leaving the mobile app and web platforms offline for three consecutive days.
• The liability: While Bancolombia argued the failure was a technical issue outside their immediate control (potentially involving third-party infrastructure), the SFC ruled that the bank failed in its duty of foresight. The regulator established that "technical glitches" are not a valid defense for denying users access to their funds.
• The lesson: Infrastructure resilience is a consumer right. Whether the fault lies with a vendor or an internal update, the bank bears the ultimate regulatory penalty for any discontinuity.

🔗 Source

The strategic pivot: operational autonomy

A clear trend links these disparate policies: regulators are moving from blocking the cloud to insuring against it. They are effectively asking: "If the vendor turns off the lights, do you still own your data, and can you still operate?"

For the C-suite, this necessitates a shift in procurement strategy:

1. Architecture must be audit-ready: In Brazil and Mexico, a "right to audit" clause is useless if the architecture is too complex to inspect. "Black-box" SaaS solutions are becoming compliance liabilities.
2. Vendor optionality is critical: A vendor that forces you to host data in a specific US region introduces geopolitical risk. Financial institutions must favor partners who can deploy locally or in hybrid environments to de-risk the jurisdiction question.
3. Control is the new baseline: Technology that offers sovereign key management (where the bank, not the vendor, holds the encryption keys) is the path of least resistance for Board approval.

The Marble approach: deployment freedom

In a market defined by regulatory flux, rigidity is a risk factor.

Most fintech vendors force you into their cloud, subjecting you to their compliance limitations. Marble takes a different approach.

We offer the only financial crime platform with true deployment optionality. Whether you need the speed of SaaS, the control of a private cloud in Mexico City, or the sovereignty of an on-premise server in São Paulo to slash latency, Marble adapts to your infrastructure, not the other way around.

We allow you to keep your most sensitive data (AML/CFT) within your regulated perimeter, giving you the auditability regulators demand and the control your Board expects.

‍Is your infrastructure ready for the next regulatory audit?

‍👉 [Book a 30-min strategy session] to review your deployment optionality with our solutions team.

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