*by Leonardo Enrique
Open Banking is already a reality in Brazil. With the first phase of implementation concluded since February, banks and other institutions in the sector have made available to the public standardized information about their service channels and the characteristics of the products and services they offer.
So far, from the first public consultations to the first phase of Open Banking, much has been discussed about technical and regulatory aspects of an open financial system, which is natural for any initiative under implementation. But it will be on July 15, the start date of the second phase of the project, that consumers will begin to see the new processes established by Open Banking in full operation.
Now, it is necessary to advance in the discussions about what, in fact, will make consumers understand, engage and broadly adopt this model, which has the potential to bring benefits to them and to the entire financial market. For this, it is also necessary to discuss the business opportunities that can be created as a result of Open Banking, as well as how each player will be able to transform the available data into insights for new products, solutions and services to those who matter most: customers.
The Open Banking movement reflects the power that the processing of financial data from customers, with their consent, will have in generating new business, new information and, with that, better products and services to their consumers.
This potential is summarized in a report published by research firm Allied Market Research. The work shows that open system related initiatives around the globe generated US$ 7.29 billion in 2018 and are expected to reach US$ 43.15 billion in 2026, growing at a compound annual rate of 24.4% from 2019 to 2026.
But how will this be done in practice? First, a robust technical and legal framework needs to be put in place. The Open Banking operation will involve customers, financial and payment institutions authorized to operate by the Central Bank that offer them services and also companies that will develop tools aimed at engagement, management, analysis and refinement of data in order to assist them in this process.
United States and United Kingdom are at the forefront of Open Banking and, based on their experiences, it is possible to foresee some necessary solutions to better use its potential. A survey of 290 industry executives involved in Open Banking in 12 European countries indicates that some of these solutions are credit and risk scoring algorithms, income verification and financial management tools, among others.
Open Banking aims not only to democratize access to the financial segment, but also to generate business, more opportunities for players that are structured for this, and thus enable better results and leadership for companies that know how to extract value from this data.
In this line, banks and fintechs need to be ready to deal with data processing to face the revolution in their segment in Brazil. This transformation in the financial market demonstrates, in practice, how the sector has evolved in terms of innovation. And whoever doesn't move in that direction will be left behind.
After all, in the information age, nothing is as valuable as the power of data to generate good new business for everyone.
*Leonardo Enrique is Executive Manager of Credit Services and responsible for Open Banking at Serasa Experian
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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