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.
This allows not only a greater democratization of financial services , but also a specialization of them.
When a bank enters open banking, it must allow other FinTechs or financial companies to access the user's banking history , to provide a certain service in better conditions.
However, this type of transaction must include a prior authorization from the client and subsequently from the bank, who will have the power to monetize this information that they keep, obtaining a new way of doing finances.
Consequently, this new modality allows the creation of financial services and products through third-party platforms, providing better experiences and differentiating itself from its competitors.
At the same time, a network effect is fostered in the financial sector, facilitating increased competition and, consequently, innovation in the banking sector , balancing the market in favor of consumers with the use of technology.
This with quality credit information that thanks to the use of APIs can be shared to various applications. APIs refer to an interface or communication protocol between the client and the server that provide greater financial transparency with clients in both their public and private data.
However, the bank should have a robust API platform that allows it to make a difference, making use of technology to be more efficient.
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.
Open Banking application in Latin America
The United Kingdom was a pioneer worldwide in the development of open banking with the support of regulations that allowed its application, to the point of being mandatory for banks.
However, the biggest gap in Latin America is the lack of regulation that determines how banks and FinTechs should act in an open banking scenario.
Currently, Mexico and Brazil stand out for the implementation of laws that have impacted on the growth of more mature ecosystems. Only in Brazil, 98% of indirect operations are processed from its online tools.
Thus, adding 56,000 new clients connecting to its system and more than 44 institutions, significantly reducing internal transaction times and credit approvals.
In the case of Colombia, which has more than 200 FinTech startups for 2019 according to Finnovista Fintech Radar, the country lacks official regulation for open banking although it has been modifying some laws and regulations.
On the other hand, Mexico already has the first rules for the open banking model as part of the “Law to regulate financial technology institutions” known as “Fintech Law”.
Since 2018, with its publication, it was a pioneer with its article 76, which establishes the obligation for the different actors of the financial ecosystem, to offer APIs in order to share information with each other.
In the case of Costa Rica, although it stands out in the isthmus with a 90% penetration of contactless payments, it does not have any type of FinTech regulation that benefits the strengthening of the sector.
Even in its Digital Government proposal it has had a stagnation that has prevented progress towards comprehensive policies, with respect to the digitization of banking.
“The existing limitations in the legal, institutional, regulatory and public policy frameworks of the region weaken the effectiveness of initiatives to close equality gaps and correct existing market failures,” indicated the Inter-American Development Bank (IDB), in its report " Towards the digital transformation of public banking in Latin America and the Caribbean 2020" .
This document highlights that in the case of Central America the greatest challenge is the cost of carrying out the activities that accompany these changes, and in those of the Caribbean, fundamentally the need to train personnel.
Consumers demand that their financial institutions integrate into digital ecosystems and mobile platforms, with simple and comprehensive experiences.
The members of the Latin American Association of Financial Institutions for Development (ALIDE) of the IDB, expressed in their last report that they have digitization initiatives underway, with different levels of progress and depth, 70% of them said they have a unit in charge of the digitization of the entity.
However, this report also revealed that in the strategic processes of digital transformation there is a degree of resistance on the part of the staff in the face of the lack of training in this regard.
In addition, the difficulty to replace processes and change the architecture of the systems, followed by the cost of the change process, including its design and leadership.
Therefore, allies such as FinTech are recommended for the exchange of knowledge and understanding of the market that is subject to continuous change.
Founded in 2016, ANTIT is a mobile development company specialized in Minimum Viable Product (MVP) and Time-To-Make (TTM) products with a portfolio strongly focused on the FinTech industry.
Our company has its own customized FinTech development service, which allows us to adapt to the needs of our clients, giving them the boost they require to enter the digital market competitively.