Latin America’s Open Banking landscape varies greatly by country, with most of them developing frameworks—some via regulation like Brazil, while others like Argentina take a market-driven approach.
This heterogeneity translates into the service offering. In each country, one or two incumbents lead with strong OB offerings, but are the fintechs who generally provide a wider range of services.
Many companies are looking to embed financial services into their journey for many different reasons, as they advance in their digitisation and need to include payments, collections, or financing options in their customer offerings.
BBVA aspires to be acknowledged in the region as one of the main contributors behind the development of Open Banking and Open Finance. We have been exchanging insights and information with regulators across multiple nations, and we welcome the entry of new participants who will add value and enhance customer service.
Every LATAM country is following a similar path for implementing the OB and OF frameworks although at different velocities, and therefore facing the same challenges:
Defining how the participants can access the Open Banking schema and how the trust framework will be implemented: centralised or decentralised so that the right to participate and the requirements to comply with can be decided before participating. This is critical for the financial services provider that has the regulatory burden, to understand who can access the schema and which controls are needed to establish a relationship.
It’s also important to define who will be affected by the regulation: those offering financial services or those embedding those financial services into non-financial journeys. Customers increasingly demand this invisible finance, so regulators should facilitate access to financial services from non-financial journeys boosting innovation and convenience.
The main challenge for Open Finance is defining which data should be available, which kind of consent is needed from the data-subject (customer), and which standards should be followed to share banking and non-banking data.
We envision a threefold collaboration world:
Fintechs: BBVA collaborates with fintechs through our Spark area to bring innovation to the bank while helping them through investments (as of September 2024, BBVA Spark has over 1,400 clients and has generated over EUR 460 million in credit).
Other institutions, including regulators, bank associations, etc.: we try to get regulatory certainty and establish the balance between innovation and security for customers in the performance of their financial transactions.
Non-financial partners: at BBVA, we understand that Open Finance’s value arises when we enrich the end-customer journey at our partner’s web or app. The best way to enrich this customer journey is to co-create it with the partner, learn about its pain points and how financial services could help overcoming this challenges. Leveraging on partners’ customer trust could be key to attracting new cohorts while providing value to the partners in their own journeys and bringing new clients to the bank.
As for our most important lesson learned, it would be that truly innovative products and services come from mixing bank's expertise with partner’s pain points to improve customer's experience.
Most of the countries have already implemented regulatory frameworks or are in the process of doing so to foster innovation through Open Banking and Open Finance.
In fact, pioneers in regulation like Mexico with the Fintech Law, applicable only to product information (‘Open Data’) issued by the CNBV, fell behind due to delays in the development of second-level regulation (rules for transactional data have still not been released by regulators), and others like Brazil took the leadership role in the region (Open Finance regulation, sharing general informational data as location of branches or products' characteristics, customer's personal data and transactional data for deposit accounts and credit operations plus payment services).
Besides Brazil, other countries like Colombia showcase new regulations around Open Finance (in 2022, the first regulation on Open Finance was enacted and, in 2024, second-level regulation laying down requisites for third parties receiving Open Data, technical and security standards, data management and data-sharing obligations were published). The rest of the countries are in the middle zone with countries just hinting at OB as interesting like Peru (2022 – the first initiative declaring Open Banking as of national interest), Argentina (having taken some initial steps in the area of payments (regulating non-bank PSPs and mandating the interoperability of wallets), or waiting for more specific rules like Chile (the Financial Market Commission published the regulation that will govern the Open Finance System or Open Banking under the Fintech Law but will take effect by 2026) or Uruguay (first steps to work in a regulatory framework for Open Banking expected by end 2025).
We like to look at the scene from 3 points of view: change in customer behaviour, technological capabilities, and regulation.
Customers will increase the use of convenient services embedded in their everyday lives, and those services, in many cases for niches of clients will be provided by fintechs. This will require a close approach from regulators to clarify who will be an authorised player and for which types of services. In LATAM, with a considerable unbanked population, accelerating digitisation could be a key element to promote financial education and economic growth.
Technology allows the creation of startups offering financial services without the burden of regulation, where clarification of responsibilities is key.
Last but not least, new participants will come to the Open Finance and Open Data world, and here standards and regulations around how we will interchange those data with which type of customer consent will again be a key point to create regulatory uncertainty and, if wisely devised, foster innovation and Embedded Finance.
Financial institutions should participate and invest in the ecosystems as the landscape for the next decade will probably need to collaborate with those owning the customer journey to offer the service where, when and how the customer needs while keeping the customer data safe.
This editorial piece was first published in The Paypers' Open Finance Report 2024, the latest comprehensive market overview and analysis focusing on the key players and products within the Open Banking and Open Finance ecosystem. Download the full report to discover more insightful content.
Carmela has extensive experience in banking: Trading, Strategy, Corporate Treasury Solutions, Digital Business & Ventures, leading up to her current role as Head of Global Open Banking at BBVA. Acknowledged during Fintech Women Innovation in Finance 2017, she’s passionate about people connection, delivery, process digitisation, smart interactions, innovation, and standards.
BBVA is a global financial services group with a customer-centric vision, which currently has more than 71 million active clients and more than 121,000 employees. The bank is present in more than 25 countries, has a strong leadership position in the Spanish market, it is the largest financial institution in Mexico and it has leading franchises in South America and Turkey. In addition, it has an important investment, transactional and capital markets banking business in the USA.
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