Following the news that Ueno Bank in Paraguay has collapsed overnight, Rhys Hicks, Associate Banking and Payments Analyst at GlobalData, publishers of RBI, said: “The overnight collapse of Ueno Bank, Paraguay’s largest digital lender, has raised questions around the governance of fast-growing digital banks in emerging markets. Nearly three million customers have woken up to find themselves without access to their accounts. The scale of this disruption underscores that digital banks are becoming systemically important long before the correct governance is implemented.
“The failure is particularly significant as the apparent causes behind it seem to have very little to do with technology. Investigators are looking into $146m in lending linked to the bank’s controlling group. This appears to be a governance failure delivered from a newer digital platform. Digital banking massively lowers the costs of new customer acquisitions and cuts the time for sign up, allowing lenders to accumulate deposits much quicker than their risk controls and capital base can mature.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
GlobalData 2026 Consumer Survey
“Supervisors typically judge a bank’s systemic importance by the size of its balance sheet, but Ueno’s collapse shows that customer reach should also be an important factor. When an estimated 60% of a country’s adults rely on a single institution for its payments and savings, its failure becomes a huge public confidence event, regardless of asset size. The exposure of Paraguay’s state pensions, with about $355m invested in the bank, compounds the problem by tying public finances to private governance. According to GlobalData’s 2026 Consumer Survey, 86.7% of consumers across six other Latin American markets use digital banking at least monthly, and 38.1% now prefer to use a banking app for everyday tasks, the highest share of any surveyed region.
“This collapse also tests the limits for deposit protection; guarantee schemes were designed to absorb the failure of smaller institutions, not a lender serving the majority of the population. Any move to try and stretch the fund to cover public money risks reducing the resources that protect ordinary savers in the event of future failures. Concerns around the independence of supervisors, given the central bank governor’s role at the bank’s predecessor, further weaken the confidence at a time when it is needed most.
Ueno collapse demands fundamental change in regulatory thinking
“Supervisors should be classifying digital banks as systemically important based on customer numbers and payment activity, not assets alone. There should also be stricter rules applied on the bank’s ownership structures and related party lending as they scale.
“Ultimately, the Ueno Bank collapse reinforces the message for financial services leaders: the speed and scale of digital growth must be met with the appropriate levelling up of governance, or innovation will simply allow risks to spread further.”
