Open Banking in Brazil - past and future, with TecBan

What is the status of Open Banking in Brazil and where do you see it going?

Open Banking in Brazil is regulated by the central bank and has 4 phases of implementation. On 13 August 2021, the second phase was implemented in which people can share their registration data and, by the end of September 2021, they will be able to share information about financial transactions with any financial institution that is participating in the Brazilian Open Banking ecosystem. Also, on 30 August 2021, Open Banking’s third phase should be live, and people will be able to initiate payments from different devices. Lastly, the fourth phase comprises sharing of information on investments and insurance. 

It’s important to mention that in 2022, Open Banking will also be joined by the Open Insurance initiative, which is being undertaken by SUSEP (Insurance Authority of Brazil), giving customers a broader agenda in Open Finance. Therefore, I believe that the Open Finance initiative will transform the financial system in the next decade, providing new business opportunities, competition, and innovation.

What are your thoughts regarding fintechs partnering with banks? 

Open Banking is based on 3 fundamental pillars: Regulation, Standardisation and Collaboration: (i) the Central Bank has a fundamental role in terms of regulation; (ii) standardisation is a responsibility of the associations, and (iii) collaboration will be essential between participating institutions and fintechs to provide customised products and experience.

Open Banking presents a new context for the financial market, in which people are no longer clients of one bank, but instead, they are clients of the entire financial system. And to expand the distribution of financial products, banks will need fintechs to reach audiences that are currently outside the financial system and, in turn, fintechs need banks to lend their balance sheets and their ability to offer and guarantee credit.

What interesting Open Banking use cases have you seen in Brazil?

The expectation with the beginning of the second phase is for new products and services to be launched using Open Banking APIs and not screen scraping, but we are yet to see those. But we can wait with enthusiasm: just to exemplify, we can use the experience we had during the Hackathon on Open Banking that we hosted in July 2020. 

The event was a huge success with more than 1,000 applications. Of those, 200 people were elected to participate and had their access granted to TecBan’s Open Banking Sandbox where we emulated 40 different current accounts and all of these data were exposed using Open Banking APIs. By the end of the 48-hour marathon, we had 40 different prototypes of products and services, all using data and APIs made possible by Open Banking.

The marathon winner was the ‘Bicos’ (pickup jobs) use case, an application targeting informal workers, who in Brazil have their work popularly known as ‘Bicos (Pickup Jobs)’. The service is an application connecting those informal workers to people that need to hire them. Through the app, people could hire their services and pay directly from their bank account. In addition, by using the app, the solution would create a credit history for ‘informal workers’, enabling them to apply for microcredit. The main idea was democratising access to Open Banking for those who were previously invisible to the financial system. 

What makes TecBan stand out in the Brazilian market? What unique initiatives do you propose?

We have been following the Open Banking initiative around the world since 2018 and we’ve been helping its implementation and clarifying the opportunities within. Given the fact that TecBan is connected to hundreds of financial institutions, we have defined our role as an enabler of Open Banking for financial institutions, taking away from them the burden of implementing Open Banking, and the costs arising from said initiative. We were the first platform in Brazil to be functional with an active client in Open Banking and we have helped several institutions to expose their data securely and in compliance with regulatory rules and standards. Also, we’ve been helping institutions to receive, consume, and interpret the data they are receiving from their customers so that they can provide customised services to them.

This article was originally published in The Paypers` Open Banking Report 2021.

About Tiago Aguiar

Tiago Aguiar is Superintendent of New Platforms (Digital Innovation) at TecBan, Head and Strategist in Open Banking Lead. He is a Lawyer, Master of Law by PUC-SP (Brazil) and specialised in International Business by New York University.

About TecBan

For 39 years, TecBan has been offering technological solutions that contribute to physical-digital convergence, making the financial ecosystem in Brazil increasingly efficient. In the last 10 years, BRL 4 billion were invested to promote access to financial services for all social classes, in all states of Brazil.