Open Banking: a Slow But Steady Emerging Reality in Latin America

Q: How did Belvo start in Mexico and what solutions does it provide? 

A: Belvo started slightly more than a year ago, both in Barcelona and Mexico City, and we launched commercially in January 2020 in Mexico. We are also in Colombia and Brazil. We are an open banking API platform for Latin America. Our vision is developer-centered, innovative and focused on coverage that allows fintech businesses in Latin America to access and interpret the banking and financial data of their end-users. Our API is the easiest way to connect bank accounts or financial data with companies that need it. Our company can help any company that is creating a digital product and requires financial information. 

When an end-user applies for credit on the platform of a company offering financial products, that company can use Belvo's API to access the applicant’s transaction history when analyzing the person’s financial information. We also have held discussions with e-commerce companies that sell products like TVs or vehicles and that want to introduce a financing option at some point in the purchase process. By using our API to extract the end-user’s financial data, these companies can gain the necessary information to decide whether or not to grant the credit.

Overall, however, the fintech sector is at the forefront of our business because without the information we provide, they often cannot offer their products or those products are not optimized. At the end of the day, the main objective of a fintech company is to reach and retain its end users. This requires companies to create a layer of infrastructure that allows them to develop that product and offer the best service. The more they can rely on specialist third parties, the better. We are here to help companies create and strengthen their infrastructure so that they can focus on their core business.

Q: The pandemic accelerated digital adoption in all industries. How did Belvo take advantage of this opportunity?

A: We are a startup based on developing technology, products and working digitally. As a result, we have been able to adapt quite well to the new normal. In everything that has to do with communication, organization and day-to-day issues, we are highly flexible and have not been affected in the least.  Moreover, we have expanded Belvo’s team. We have seen an increase in our commercial success because there is a growing interest in digitalization. Prior to the pandemic, when people wanted to access certain financial products, they would visit a bank branch. In the midst of the pandemic, these same people were awakened to the digital universe and its many players, such as neobanks and credit companies. As a result, there is more demand from the end-user who, by necessity, becomes a digital consumer, leading to more and more demand for fintech services. Therefore, if fintech companies grow and do well, we benefit from creating an infrastructure for them. The acceleration in technology adoption has been evident and could become a permanent and complete paradigm shift.

What challenges still prevail for open banking in Mexico?

A: Both in Mexico and in the rest of Latin America, a challenge is the precarious infrastructure when accessing data from bank users. This is the reason behind what we do and the value of our product. Likewise, the low rates of banking penetration are also a barrier since in the end, you can only have financial visibility of the people who have a bank account. Being focused exclusively on Latin America, we are working to be able to offer greater financial visibility to more people. As much as there is an open banking agenda among traditional banks and the benefits are well-understood by all actors in the financial sector and by end consumers, at the end of the day, banks put up many obstacles to open banking becoming a reality in the short term.

We have been part of fintech in Mexico for more than a year and have a close relationship with the National Banking and Securities Commission (CNBV). In Europe, we have seen first-hand everything that has been done around open banking and how it has really boosted the financial sector, while also developing greater end-user empowerment. This experience also gives us the ability to guide regulators in the right steps and in what direction to take. One of the main concerns we communicate to them is the slow pace of implementation of the open banking agenda.