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Contxto – Traditional banks in Brazil, beware! Your time of data hoarding is growing short. The country’s Central Bank and National Monetary Council (CMN for its Portuguese acronym) announced last Monday (4) that as of November 2020, open banking regulations will come into effect.
It was believed that these regulations would be delayed due to the coronavirus (Covid-19) pandemic. However, government officials have come forward and basically said, “Nay, this legislation too shall pass.”
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Note that this regulation rollout will take place in four phases, the first starting on November 30. Each stage grows in complexity and covers a different area of interest for users, fintechs, and the banks themselves. Ultimately, authorities hope to have open banking fully addressed by October 2021.
Open banking in Brazil: 4 phases
It’s important to remember that with open banking, data on products and services offered as well as customers’ transactions related to them are “openly shared,” among financial institutions. Of course, people must give their consent for their data to be passed on this way.
But, after getting a users’ good blessings, fintechs have access to their information and as a result, can develop or offer solutions that are of that person’s interest.
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That being said, here’s a quick rundown of what each of the stages for open banking in Brazil covers:
- Refers to accessing data from banks’ customer service channels. It also pertains to the products and services banks offer such as deposits, savings accounts, as well as credit lines.
- Addresses customer transaction data derived from the products and services mentioned in the previous stage.
- Cites disclosing of “the payment transaction initiation service” between participating financial institutions. It also requires banks to share “the forwarding service for credit transaction proposals.”
- Covers basically “everything else that’s leftover,” both in terms of products that are offered by banks, as well as users’ transaction data. Examples of these “leftovers” include investments, insurance policies, pension plans, foreign exchange operations, among others.
Mexico had been the first to address open banking in its 2018 Fintech Law. However, with this recent development, Brazil will likely hold onto its fintech crown in Latin America.
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