Recently open banking and open finance are landing in many countries, to empower the real owner of the financial data, the customers, by giving them the option to grant or reject, each payment for each interaction and also the opportunity to share data with other financial companies. To begin the process, countries have to provide the regulatory frame for the adoption. Each country is in different phase, because each government agenda is different, some are starting to share a draft with the public, others release the first phase regulation commonly known as fintech regulation and others have released secondary regulation providing more definition and technical definitions and others more advance are implementing more advance payments option on top of payment initiation.
Once the regulation is in place the harder part comes when all companies, especially financial institutions have to invest money and find the correct technologies that fit with the organization, usually with a tight deadline and trying to mitigate risk both reputation and financially.
Those working in the retail space have the grater advantage. Because most countries have set open banking as the financial inclusion driver, giving the opportunity to more people and small and medium companies to have access to financial services.
Where did all started? The pioneer of this movement is the United Kingdom, with more than seven years of experience and over 10 million transactions already in place.
Now the turn is for America, where the tendency is quite the same that more advance countries, this mean some are starting with regulatory definitions and others are driven by the market, but all want to reach the same goal, provide financial inclusions for more potential customers.
In the region, USA has now released the first regulatory draft and the goal is to release it in first semester 2024. But the market did not wait and is much mature and already have many aggregation and financial solutions for customers, at this moment mainly led by fintechs, nonetheless the DBX 2023 Report shows that more than 58 percent of banks are at top level of digital maturity. And even though a majority of banks don't feel ready for open banking, they're clear on its benefits. In the U.S. specifically, 53% of banks see improved data insights, as well as approved data sharing, through open banking services as a significant stream of revenue. This provides opportunity to the market to continue growing also in the community space, where Openfinty has lunch community services to help financial institutions adopt the regulation and open banking adoption.
Will other countries in the region make it?
México, for example, open banking it is an issue that has been on the agenda of financial authorities for several years. The Law to Regulate Financial Technology Institutions (Fintech Law), enacted in 2018, establishes the legal framework for the implementation of Open Banking. In addition, the National Banking and Securities Commission (CNBV) and the Bank of Mexico (Banxico) have issued various provisions and guidelines to regulate the use of users' financial data.
Colombia in the south hemisphere is aiming to have payments initiation in place by the second semester of 2025, with companies like NuBank and Red Hat participating actively to gain traction and provide new services to the market.
Brazilian being the most advance in the adoption in South America has many banks aboard and many companies working together in the ecosystem, it has been a big opportunity also for consultancy companies like Betbr specialist in modern digital identity and access models for financial institutions.
sources: bignewsnetwork | lanotaeconomica | pulzo | tekiosmag | einnews | ipnews
image: Photo by Lara Jameson