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The Open Banking Road in 2023

By José Luis López Amador - Finerio Connect
Co-CEO & Co-Founder


By José Luis López Amador | Co-CEO and Co-Founder - Wed, 02/22/2023 - 13:00

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After a year in which open finance regulations made inroads in key regions of Latin America, 2023 figures to be a period of crucial value in terms of strengthening and consolidating complete financial ecosystems for banks and other financial institutions.

It is not surprising that open banking is increasingly positioned as the ideal option for the provision of quality financial services. Its benefits are multiple, almost innumerable, due to the flow and exchange of information between financial and non-financial entities under the consent of the final users. 

In 2023, several banks are already working with open banking models, ensuring customer loyalty by offering financial products and services that position them above others as a result of better tools to meet the needs of each customer. 

However, there are still strategic activities to be carried out. For example, Mexico was one of the first countries in the world to generate connectivity infrastructure to make open banking possible. That is why some companies have all the elements to make open banking possible anywhere in the world. After all, in the country, a technical part of the regulation is required to make each process more efficient

Open Banking in Latin America

Latin America has significant challenges to meet in the coming months. The case of Colombia and Chile are quite particular, as both countries already have a specific deadline for the delivery of rules that regulate open banking in their regions. This makes them  leaders of the model in the Southern Cone. 

Colombia is consolidating its position as one of the strongest countries in open banking, as the willingness to innovate is one of its greatest motivations. In addition, people are willing to use technology, so banks are forced to work on its integration. And finally, the law is doing its job in addressing data, payment systems and financial services.

In contrast to other countries, in Colombia there is an invitation, not an obligation, to work from the financial entities in favor of open banking. In Brazil, a country with a high level of progress and acceptance of open banking, there is a model based on reciprocity that proposes a simple way to get all entities to join: "If you want to consume APIs, then you have to offer APIs." 

In other latitudes, such as Peru, Guatemala and the Dominican Republic, the first efforts to think about finance from the perspective of open banking are beginning to appear. This is ideal to prepare the ground for action. The worst scenario is to ignore what will change the world's financial future. 

As I mentioned above, in Mexico the technical part is expected to be published as soon as possible. These differences in the progress of open banking in each country mean that the connections are made in different ways. Open banking laws require regulatory APIs, while their non-existence in other areas leads to data collection through web scraping methodology. 

Toward an Innovative Financial Ecosystem

Looking ahead, the idea is to be able to create a financial ecosystem in which all the elements that integrate it work perfectly. A good open banking ecosystem must contemplate regulatory APIs based on complex laws, thought through in depth, that address the main needs of this model.

Creating an ecosystem that includes all open banking services is a way to quickly and easily integrate banks and other financial institutions into the universe of open finance.  For example, think about how to offer any financial entity the possibility of integrating  open banking at great speed: if these processes took four years, how can we solve it in only six months? Let's think about making everything more agile.

Open banking is not isolated. It is, therefore, important to know that open banking is an opportunity to cooperate, as it allows banks and other entities to come together to achieve better goals. This is where the value of strategic alliances lies. It is an excellent starting point to create products together. And it also makes it possible to reach new markets, with segments that had been left behind, forgotten, or in some way blocked. 

Some Use Cases 

With open banking, two things happen: data and payments. Initiating payments reduces costs because it eliminates intermediaries: making a transaction is much less expensive and more secure. Making a purchase online with credit or debit cards prevents people from using their personal information on sites that can be fraudulent, because the payment is made in the apps of the bank or fintech with which you want to pay, and once the user is authenticated, then the purchase is processed securely. 

In 2023, the open banking in a box model is intended to help any country create an open banking strategy, from regulation to implementation of APIs, and more, to ensure that this model works better than anywhere else in the world. 

Open banking can change people's lives. The implementation of this ecosystem offers us a universe of opportunities. And yes, we are still seeing the tip of the iceberg, so we can only hope for better things. Open banking is a process that we can do smoothly, with a lot of enthusiasm, while creating confidence among people. 

Photo by:   José Luis López Amador

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