Nubank joins Open Finance

Friday 9 September 2022 11:10 CET | News

Nubank, a Brazil-based neobank, has joined Open Finance, a Central Bank system allowing institutions to share among themselves customers’ financial data.

According to the official press release, the feature is still in its testing phase and will be released gradually. It will soon be available to all 62.3 million customers in Brazil.

Despite having a base of tens of millions of customers, the institution's participation was not mandatory. Only institutions classified as S1 and S2 by the Central Bank are forced to participate and Nubank is S3.

By joining the Open Finance platform, Nubank seeks to offer its customers greater control over their financial lives through a transparent and accessible experience – allowing them to manage their finances and personal credit and account information autonomously.

With Open Finance, Nubank will learn about its customers’ financial behaviour, credit limit needs, expenses, products and services they use. This will allow the neobank to improve its portfolio.

Nubank’s sharing of banking and non-banking data provided through Open Finance will follow all the guidelines set by the LGPD law and will have the supervision and regulation provided by the Central Bank, to which only duly authorised institutions can adhere.

Open Finance in Brazil

Open Banking is a novelty in the financial system that is being gradually implemented in the country. The term came to be called Open Finance in Brazil because, in addition to banks and fintechs, other payment services will also integrate into the system — such as insurance and investments.

Nubank, a Brazilian neobank, joins Open Finance, a Central Bank system allowing institutions to share among themselves customers’ financial data.

Through Open Finance, the customer decides on their own which data and can be shared with other financial institutions and for how long. This will be possible through a technology called application programming interface (API). In a simplified way, it is a technological mesh that allows different platforms to communicate with each other.

Open Finance allows customers of a bank (or a fintech, broker, exchange company, pension fund, etc.) to have the freedom to gather their financial history and take it wherever they want. As a result, it is no longer necessary to start a relationship with a new financial institution from scratch. In practice, the idea is to make the financial system more transparent and for Brazilians to be free to take their information wherever they want.

The state of Open Finance in Latin America

Latin America is home to more than 2,482 fintech companies, targeting a market of more than 650 million people across 33 countries. In some of them, like Mexico, still, over 50% of the population doesn’t have a bank account.

The recent emergence of new financial infrastructure providers, such as Open Banking APIs, payment gateways, or service aggregators in the region, that are acting as underlying building blocks for these new fintech products and services are changing the paradigm.

Moreover, Latin America’s established banks are increasingly partnering with fintech firms and launching API platforms to remain competitive. As fintechs reach consumers that the traditional banking sector does not, they open up the ecosystem and create opportunities for collaboration.

The next step will be to include new alternative sources of data from different industries into financial services, under a model that’s already called Open Data. 

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Keywords: Open Finance, neobanks, central bank, financial data, data
Categories: Banking & Fintech
Companies: Nubank
Countries: Brazil
This article is part of category

Banking & Fintech


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