Being a benchmark in the region, Mexico announced that during this 2021 open banking will be integrated into more than 2,300 entities of its financial system, unlike model countries in this matter where it is only applied in the main entities.
Open banking comes with the promise of integration of financial services in favor of clients, access to more personalized products and services, as well as credits in less time through 100% digital processes.
The data belongs to customers, not banks, and it is this power to share them with third parties that open banking raises, promoting that financial institutions open their platforms so that other entities can connect.
In this regard, FinTechs will strengthen the financial sector with open banking as a catalyst by generating greater innovation and financial inclusion.
This methodology was born in 2015 when the United Kingdom created the Open Banking Working Group (OBWG) that established standards for open interfaces, the so-called Application Programming Interfaces (APIs) aimed at banking.
Currently, Mexico is the only country that has a specific regulation on open banking that is included in the so-called Fintech Law, which indicates that FinTech and banking entities must share information for the benefit of users.
FinTechs must also open their data via APIs, making Mexico the only country in the world to establish this exchange of information in a bidirectional manner.
Likewise, it will give users the ability to use the value of their data for their benefit, allowing them to access a greater quantity and above all quality of financial products and services.
However, one of the main challenges that this model will present will be the security of the information as it requires reinforced authentication in the delivery of data, this with the prior consent of the client and through a series of APIs.
According to a study by Boston University, it was shown that the adoption of APIs predicts an increase in the value of a company in the market of 10.3%, and it is estimated that, by 2025, 30% of world revenues will be generated through this new channel.
Types of APIs
1. Information: access is given to information on the profile of authenticated users (individuals or companies), speeding up registration
2. Product: those that give access to detailed information on the entity's available products, such as currencies, loans, or investment products, among others.
3. Payments: they allow the entity to obtain all the information related to the payments made as well as to execute operations on behalf of the user in a secure manner.
4. Accounts: They allow obtaining details of the account of individuals or companies such as transactions, balance, balance, and the history of movements.
5. Investment: They give access to information on users' investments, investment portfolios, products, or financial market data
6. Cards: They provide information on the movements made with the cards and the status of availabilities and deferrals
7. Loans: They provide information on the granting of loans and the credit analysis of clients.
8. Movements: Companies that are authorized PISP (Payment Initiation Service Provider - PISP) can request permission to connect to a bank account and initiate payments on behalf of the client, from their bank account.
As part of this strategy, FinTechs offer extensive experience in the use of APIs, which are a set of computer functions and protocols that facilitate connecting technological applications to native systems.
Antit is a FinTech development company with great experience in the creation of APIs that adjust to the client's needs, with highly qualified personnel capable of giving that extra boost to the most ambitious of your projects.
In the case of Mexico, the information that will be shared will be data: financial, aggregated, and transactional.
- Open financial data are those related to products and services; location of offices, branches, as well as ATMs.
- Aggregated data, are data processes and presented in summary form, from different sources for statistical purposes
- Transactional data refer to the operational information of a person, for example, what they spend on, how much they spend, how they spend, what movements they have in their financial products, etc.
At the same time, FinTechs will benefit from having access to this data to create new and better products for their users.
Likewise, since the users are owners of their information, they will be able to have control and visualization of their bank accounts, loans, cards in a single information system, regardless of whether they are from different banking entities.
However, to have access to said banking information of the user by third parties, you must always have the prior authorization of the client and only the actors selected by the same.
Within this framework, the user must be informed of the data to be shared, specified the purpose of said data, limited the time in which the third party will have access, and easy to revoke the permission.
Main benefits of open banking
Optimization of the user experience: access to bank loans in a simpler and faster way, without long waits, tedious studies, and without paperwork involved.
With open banking, the data will be connected to other applications that analyze and classify the data in just a few seconds.
Best offers: the user can take their information to the entity of their choice to offer credit under the best conditions, in a more personalized way to their needs and appropriate according to their consumption and financial health.
Through these bank details, entities can have a deeper knowledge of the financial situation and behavior of people, creating a credit profile that allows them to offer products according to their specific needs.
Fraud prevention: by improving the authentication and identification of customers in the control of operations.
Fairer competitiveness: companies in the financial market have difficulty attracting new customers due to the difficulty of evaluating them accurately, creating a competitive disadvantage that would correct open banking.
Antit, as a FinTech developer company, will allow you to improve your management capacity, transforming your platforms into simpler and above all efficient ones for the user, forging products of value and competitiveness in the financial industry.