Open banking is changing how money works in Latin America. It’s creating new ways for people to use financial services. This change means that institutions can safely share data, similar to what happened in the UK. Inevitably, it leads to creating better financial solutions, and it’s even more impactful in developing nations. Key players in this field are platforms like Belvo, a top open finance company, and Prometeo Open Banking, which is great at collecting data and making payments. Together, they are helping to boost growth and reshape how money works in the region.
The Rise of Open Banking in LATAM
We are seeing more and more open banking in Latin America. This is because of new rules and agreements between banks and fintech companies. Brazil is leading this trend thanks to the Central Bank’s 2020 open banking regulations. These laws have led to a more united and competitive money market and have supported the creation of new fintech solutions.
Mexico also saw some impressive progress with its 2018 Fintech Law. This is the law that sets up an open banking framework, letting customer data be safely shared between institutions. Unsurprisingly, it’s leading to more competition and new services. By focusing on data sharing and system compatibility, Mexico is making it easier for financial businesses to grow in a transparent environment. But, the biggest winners are the customers.
Top Open Banking Platforms in LATAM
In Latin America, there are several leading companies emerging around the continent because of the timing of these law changes. Very quickly, they’re changing how money works. Belvo, based in Mexico, is one of them and is seen as a leader in open finance. Its special API makes it easy to access financial data and make payments in countries like Colombia and Brazil, and this is bringing South America closer together economically. Belvo’s broad coverage and trustworthiness make it a great partner for top banks.
Prometeo Open Banking is another big player. It’s catching people’s attention with its unique take on collecting data and making payments. Prometeoapi makes it easy to access financial data across the continent through its unified API, which also makes it easy to make payments from one account to another. This smart model has made created a lot of value in the regional market.
In Brazil, Quanto is also a company to watch. It’s known for combining open banking with accounting and ERP systems. This helps fit into a broader solution for businesses, connecting different departments and areas of the company to a central system. Fintoc, working in Chile, and Truora, a competitor in Colombia, are also positively impacting the open banking ecosystem.
Together with Belvo and Prometeo, these platforms are driving the growth of open banking throughout Latin America. Advanced financial services are being unlocked, which drives fresh ideas and boosts financial access across different regions.
Innovative Features and Use Cases
These platforms give birth to new aspects and ways to use it. For an example, let’s take a look at Belvo. They teamed up with Citibanamex to make it easier for people in Mexico to get credit. This works by Belvo verifying job records with the help of data from Mexican companies given to the Mexican Social Security Institute (IMSS). So, this lets Citibanamex offer credit and credit cards even to those who have no past credit records or struggle to prove their monthly income. The lending market then becomes more efficient.
According to a survey (the 2021 National Survey of Financial Inclusion) only one-third of people living in Mexico can use formal credit. Many say that not meeting the criteria is a main hurdle. Open finance is letting fintech companies and banks access and work with financial data of customers to solve this. New providers are letting them directly make payments from user’s bank accounts. So, this helps more people to get credit, even if they don’t tick all the usual boxes.
In this case, it works by using job data and allows financial institutions like banks to reach out to those usually ignored. The social inclusion and economic benefits come soon after.
Challenges Ahead
There’s one key hurdle in the way of open banking in Latin America though – there’s no standard set of rules between countries. Yes, there are efforts by groups like the Pacific Alliance to make everything uniform, but national rules are still different. This doesn’t mean there aren’t internationally companies, it’s just not as efficient as it should be and it makes life tough for fintechs trying to work across different markets. It also puts the brake on fresh ideas and slows down growth.
But there’s hope. Regulators, banks, and fintechs are coming together more and more to discuss such matters. Many remain hopeful of an EU-style financial system between Latin American nations.
Final Word
Open banking can spark considerable growth and fresh ideas in Latin America’s financial sector. It already has, but there is room for improvement when it comes to coordination. More cooperation between banks and fintechs is creating new products that promote social inclusion and interesting solutions to age-old financial frictions.
Leave a Reply