Open Banking platforms grew worldwide at 381% in 2020 and Brazil was eager to embrace the wave of innovation. After building a dedicated open banking solution under the leadership of Eyal Sivan, Head of Open Banking at Axway, we launched our pilot implementation program at the end of that year with five Brazilian banks on board, with a few others to follow later.
Here are some takeaways from that journey that apply to banks everywhere as they roll out new frameworks for open banking business opportunities and services.
Compliance and governance make a good starting point
The banks in the program were all at the beginning or early stages of implementing an open banking strategy. The Brazilian government issued new Open Banking regulations in May 2020. That proved to be a key driver for the participating banks. Whatever their business plans, they were under immediate pressure to be compliant and avoid fees and penalties.
Because the Axway solution was based on similar standards developed for the UK and Europe, we came in well prepared to help the banks get their compliance and governance up to speed. Once they accomplished that, they could start to shift focus toward business opportunities.
Technology partnership takes a targeted focus
The program consisted of regular work sessions with IT leaders and managers from the banks. Together with our experts, they identified goals and constraints and created test environments where they could evaluate new technology before moving it to production. One thing that became clear is that each bank faced a unique set of challenges–not just with regulatory compliance but with foundational issues like systems integration, security, and consent management.
Some of the toughest challenges often arise from the unique characteristics of a given organization, whether that be its culture, structure, or changing business goals. This is an area where Axway’s depth of experience in enabling open banking solutions in Europe and our ability to serve as a trusted technology advisor came into play. A great deal of listening to the customer and give-and-take took place.
Eyal Sivan puts it this way, “Unique challenges demand a targeted focus, homing in on delivery constraints wherever they may lie, from strategy and technology architecture down to operations.”
Tools for the open banking journey
As the different banks moved forward in the pilot program, you could see why the “Open Banking Journey” is more than a buzzword or cliché. We’ve seen this play out around the world: some banks rushed new tools and processes into production and had to backtrack on their journey to stay on schedule. Others had to clear significant obstacles like upgrading backend systems not suitable to meet open banking requirements or support the needed APIs.
Throughout the pilot program, most of the banks also had to navigate changes in personnel, requirements, technology, and business goals. Standing up an open banking program is an ongoing journey, and not a series of quick fixes that can be accomplished in a day, a month, or even a year.
Sivan recounted this story at Sibos – the annual conference organized by Swift for the financial industry – in Amsterdam just recently, sharing the stage with Bruno Schmidt, Head of Technology at Banco ABC Brasil, which was another participant in the pilot.
Schmidt discusses his experiences implementing real-world open banking in Brazil, how to generate value from sharing data, and some of the challenges to come in the future. You can watch their replay from the event below.
A mature, robust open banking platform
The program’s biggest lesson of all was that a successful open banking journey begins with the right platform. The Axway Open Banking solution is built on our Amplify API Management platform, with various tools to perform the necessary integrations between different partners’ systems.
With an intuitive developer portal, pre-built open banking APIs, and a robust core focused on security, identity and consent, Axway Open Banking was ready to fulfill the requirements of Brazil’s General Data Protection Act (LGPD) and standards defined by the Central Bank (BC).
The Axway solution provides flexible and truly open infrastructure that financial institutions can scale and build out as their objectives change.
“We decided to look for an accelerator in the market, so that we didn’t have to implement all this infrastructure on our own,” said a Solutions Architect at Tribanco, one of the pilot program participants that has implemented the Axway solution. “After evaluating several partners, we identified Axway as the most robust and mature platform.”
Tribanco now plans to move beyond regulatory compliance and start acting as a payment initiator. They can consume API data to start the payment process and offer the service in the market. With the ability to share customer data from third-party institutions, they see unique opportunities to increase customer acquisition through their digital channels.
From Open Banking to Open Finance
This opening up enables banks to create new experiences, partnerships, and ecosystems of financial services by enhancing their capabilities, partnering with other financial institutions, as well as with third-party financial technology fintechs.
The pilot was a great start for Brazilian banks that are now positioned to capitalize on the open banking future.
“Brazil has done an absolutely phenomenal job over the past year going from very little to basically full-blown, regulated, live-in-production open banking, or at least a solid foundation for it,” says Sivan. “They’ve done it with the help of some very strong partners, often specialists who come from regions that have already done open banking, like the UK or Europe.
Looking ahead, there are some exciting developments in other LATAM countries such as Colombia, Mexico, and Chile, and South America will definitely be a region to watch alongside Africa and the Middle East.”
Building on the successful pilot in Brazil, Axway has since teamed up with Cloudentity to offer the first open banking production release to market with an authorization server that supports the latest FDX API 5.0, the de facto North American financial API standard. With financial-grade consumer data security, Axway Open Banking is now poised to support growing demand from the U.S and Canadian open banking market.
Banks and other financial institutions are fast gaining the ability to connect and combine their services in new and innovative ways. As “Open Finance” begins to expand on “Open Banking,” we’ll see continued change to the way financial services work, as well as a massive opportunity for all parties involved – financial institutions, fintechs, consumers, and commercial clients.
It’s about so much more than just regulatory compliance. See how other banks are driving value from open banking technology in 15 use cases.