Effective since 2018, the implementation of Open Banking standards in the UK has established a model across the globe – particularly for ambitious Latin American countries looking to digitise their financial system.
Last week, Brazil released its new open banking rules aimed at enabling data sharing and services among financials, payment institutions, and other organisations licensed by the Banco Central do Brazil (BCB) through a secure approach.
“All the UK experience sets the basis for other countries, like a benchmark. Brazil is following a similar path,” said Bruno Diniz, co-founder at Spiralem, during a panel discussion at the Open Banking World Congress this week.
“We shouldn’t look at the UK as ‘is at all you did’ – it has set a benchmark. We should learn and grow,” said Carlos Figueredo, CEO and founder of Open Vector.
Brazil’s open banking initiative will be gradually implemented from November 2020 to October 2021, offering a “much broader, open finance scope and concept of reciprocity,” said Huw David, CCO at Ozone API.
Market leaders including the UK have acknowledged the benefits and possibilities of open banking, leading other jurisdictions to follow. In Brazil, the BCB has followed the EU model as it agreed it was “the right way to go,” said Samee Zafar, director at Edgar Dunn & co.
The BCB has become the “key driver for the open banking implementation in Brazil,” said Figueredo, allowing countries such as Mexico to follow a similarly ambitious approach as “Latin America looks at Brazil.”
Mexico’s new fintech law announced by the National Banking and Securities Commission (CNBV) will tackle the country’s lack of noncash transactions in a bid to join the rapid global growth of open banking.
Mariana Velazquez, a former Mexican regulator, said the increasing trust in data safety has enabled a wide implementation of open banking rules across Latin America.
“Consumers receive communication with their banks, and they are insecure about the idea of security and data privacy issues. They are traditionally very cautious about their privacy, but now that is has been proven to be safe, that they own their data and they have benefits in sharing their data, and it can be done in a secure way.”
Latin American countries should yet implement open banking standards at their own space and rely on technology to facilitate the widespread usage of the digitised financial system.
“Each country has its own market condition. It’s important to consider international experience and try to incorporate within our own framework what’s working around. There is no size all fits all model,” said Velazquez. “It is a paramount collaboration between experts and that collaboration will be crucial for the implementation of open banking and open finance.”
“Open banking does not work alone. We need to introduce technology as automation and machine learning,” added Jonathan Garzon, head of digital businesses & innovation at Cecoban.