One of Brazil’s most important resolutions forecasted for the second half of 2020 is open banking. But what exactly is this?
The Central Bank of Brazil defines open banking as “the sharing of data, products, and services by financial institutions and other licensed institutions, at the customers’ discretion as far as their own data is concerned, through the opening and integration of platforms and infrastructures of information systems, in a safe, agile and convenient manner”.
In other words: with the customer’s authorization, financial institutions will be able to process data from another organization. This will enable customers to proceed with financial transactions from any app, and not necessarily from their institution’s internet banking website or app.
Benefits of open banking in Brazil
This new resolution will bring many benefits to Brazilians. We’ve listed below how this ground-breaking innovation will impact the financial lives of the population!
Lower transaction costs
Lower transaction costs are one of the main benefits Brazilians may expect from open banking, especially when considering the instant payments system, which is also being developed by the Central Bank of Brazil and is forecast for November 2020. Both initiatives combined will encourage competition and help reduce account maintenance and processing fees charged by financial institutions.
Larger range of financial products and services
Because open banking will provide integration between institutions, customers may count on a larger set of financial products and services.
As an example, we can mention the partnership between two major organizations in Brazil that has allowed customers to have more control over their own money. One of the largest banks in Brazil, Banco do Brasil, and business software company ContaAzul, now allow small businesses to integrate their banking information to the software – such as account balance and credit card invoices.
Open banking will allow similar solutions. The system will be regulated and open to all financial institutions, meaning customers will be able to integrate their banking information into multiple platforms, regardless of their institution.
Convenience and financial inclusion
With the initiative, customers may count on the convenience of taking out financial operations from any app. This includes digital wallets and accounts, financial management apps, mobile payment platforms, and so on.