Open banking: A perspective from Brazil

The gradual “opening up” of information flows in Financial Services is pushing the innovation agenda forward. By allowing customers to share data securely, open banking brings more productivity to the ecosystem and may impact post-COVID recovery.

A more comprehensive view of the customer, along with the power of AI, starts to change the nature of “banking experiences.”

Top technology advisors indicate that most heritage services will no longer exist by 2030, which is far from certain, but the transformative power of open banking can already be felt in many countries.

Open banking perspective in Brazil

Brazil is no exception and the local Central Bank maintains its phased implementation schedule for 2020 and 2021. As deadlines approach, however, open banking discussions seem to gravitate toward regulatory and technical issues, as opposed to business opportunities.

There is no doubt that the Central Bank’s lead in establishing data sharing standards is key, but compliance directives should not be at the center of the debate. Above all, local players must rethink their position and truly explore service possibilities in a new and more fluid data system.

The evolution of the Brazilian open banking program still depends on further agreement on exchange methods. APIs will play a central role in this new framework, and they should be viewed as the building blocks of value creation (“API-as-a-Product ” concept).

Based on international benchmarks (i.e.: UK), local service providers should not expect a complete and final set of guidelines from the government at this stage.

Integration capabilities

As such, organizations should make the best possible use of Integration capabilities now and “iterate” as the process evolves.

Open banking in the region must also address the chronic issue of “unbanked” citizens. In this sense, the Central Bank’s decision to include Instant Payment (“PIX”) as part of the 2020 requirements may effectively stimulate financial services without relying on the traditional system.

The concept itself is not new (i.e.: China’s WeChat, Sweden’s Swish,…), but the fact that the Central Bank will manage the base platform itself is remarkable (i.e.: consolidation of QR codes). Will “PIX” finally put an end to costly transfers (and even cash)?

Embedded services

All in all, customer value will continue to change as “personalized” and “embedded” services become more common. Offers that rely on “open data” concepts have been in place in Brazil for years (i.e.: account info sharing), but the system envisioned by the Central Bank will take them to the next level.

Once customer consent becomes the norm, we should see the re-invention of all kinds of services based on the availability of enriched “real-time” data (i.e.: smarter lending).

And if that’s not enough, the open banking experience and benefits in Brazil may well pave the way for the “open data” movements is notoriously inefficient areas (yes, why not open everything?).