Latin America Advisor

Financial Services Advisor

A Daily Publication of The Dialogue

Is Open Banking Living Up to its Promises in Brazil?

Brazil’s central bank (pictured) over the past two years has been rolling out open banking policies, which aim to increase competition. // File Photo: Rodrigo Oliveira, Brazilian Central Bank. Brazil’s central bank (pictured) over the past two years has been rolling out open banking policies, which aim to increase competition. // File Photo: Rodrigo Oliveira, Brazilian Central Bank.

Over the past two years, Brazil’s central bank has implemented its new open banking policies in phases, with the fourth and final phase being rolled out last December. With consumers’ consent, the new regulations require banks to share their clients’ information with competitors such as financial services start-ups. The open banking policies are designed to bring down high borrowing costs in Brazil by increasing competition. How smoothly has the rollout gone, and how successful have the new policies been since they started taking effect in 2020? How likely is open banking to significantly increase competition in Brazil’s financial services industry? Have any problems or unintended consequences surfaced since the new policies were first put into place?

Peter Baumgaertner, partner at Holland & Knight LLP: “Open banking in Brazil has begun to move forward in a deliberate manner; accordingly, the impact on customers and the emergence of business models by banks are still forthcoming. In other words, open banking should be viewed as a medium- to long-term undertaking. Even though Covid delayed Brazil’s open banking rollout, its progress has surpassed other countries in Latin America. The growth of open banking has been partly fueled by the accelerated growth and interest in the fintech sector. Fintech companies, such as Nubank (which recently completed an IPO that raised approximately $2.6 billion) offer a digital platform that supports customers who do not have access to a physical bank branch. As fintechs reach consumers that the traditional branch banking sector does not, digital participants have created opportunities for collaboration among APIs, traditional banks and fintech organizations…”

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About the Financial Services Advisor

Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.


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Erik Brand

Publisher
P. 202-463-2932
E. ebrand@thedialogue.org

Gene Kuleta

Editor
P. 202.463.2920
E. gkuleta@thedialogue.org

Leticia Chacón

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E. lchacon@thedialogue.org

Mark Kennedy

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E. mkennedy@thedialogue.org

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