Open Banking in Brazil is already the largest in the world and will change the customer’s relationship with financial services, says BC

João Manuel Pinho de Mello, José Berenguer and Luisa Garcia - InfoMoney at Expert XP 2021

(Art: Leonardo Albertino/InfoMoney)

SAO PAULO – Open Banking, a new ecosystem that allows customers to share bank details from one bank to another financial institution, began operating in Brazil this year. And the Central Bank’s ambitions are high.

“Open Banking in Brazil will have the largest scope in the world, including, in terms of number of participants, our project is already the largest in the world”, says João Manuel de Pinho Mello, director of the Central Bank. He participated in a panel on the topic at Expert XP 2021, this Tuesday (24).

“Our project is structuring and will change the relationship between clients and their financial service providers,” he said.

This is because the Open Banking implementation project in Brazil foresees a series of phases that range from registration data, such as name and telephone number, to the possibility of sharing insurance, pension and investment data. In the world today, no other country has such a diverse range of financial data sharing.

O InfoMoney produced a special report on Open Banking which shows the implementation challenges, the impacts for large banks, the possibilities for fintechs and provides an overview of the international scenario.

Summary of Open Banking Phases

The first phase, more bureaucratic and with little impact on end customers, began in February and the second came into effect more recently, on August 13th. This phase will be implemented gradually, but it is from there that consumers will be able to see the first effects and start sharing some data.

Also, on August 31, the third phase of Open Banking begins, which has also been staggered. “It is at this moment that Open Banking meets Pix, with the arrival of payment initiators”, says Mello.

O InfoMoney explained how this integration between Open Banking and Pix will work in a recent report. Still, the fourth phase, scheduled to start on December 15, will start what the Central Bank already calls Open Finance, that is, the inclusion of the sharing of data on insurance and pensions, and investments.

However, the BC is responsible for regulating and supervising the banking system, while the Superintendence of Private Insurance (SUSEP) and the Securities Commission (CVM) are responsible for the insurance and social security sectors, and investments, respectively.

Therefore, there are initiatives already underway that will work in parallel with Open Banking, Open Insurance and Open Investments. The first one a little earlier than the second, with the start dates of its first phase also set for December 15th.

Market impact

The same panel as Mello was also attended by José Berenguer, CEO of Banco XP, who commented on the impact that Open Banking will have on companies such as XP Inc. and the challenges that will come with the implementation of the system.

According to Berenguer, Open Banking, and later on, Open Finance, will naturally bring more technology, more empowerment for customers, and easier time to change financial providers. “And that makes customers have the tools in their hands to evaluate and choose the best deals,” he says.

It has a side effect, but which, according to him, is very important: to increase competition. “Open Banking will enable the entry of new players, offering even more diverse products to Brazilians, whether individuals or companies, and always supported by the issue of security and efficiency so as not to weaken a system that works very well today. The idea is to maintain and guarantee this security in the flow of information”, he says.

About how XP Inc. will position itself in this new wave, Berenguer says that the idea is to offer the customer a tripod: simplicity, agility and competitive prices.

“We have had our license for banking products for about two years and we are building the entire technological infrastructure to offer efficiency”, he says.

“We want the client to sign any document electronically, bring their credit operation in a simple way, and take it to other institutions, if our options don’t fit, also in a simple way. We want the contract to have a sheet that clearly explains what it is about and I want to aggressively price so that in the end the product is suitable for the customer. These are some of our challenges”, he says.

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