Privacy concerns delay open banking in Brazil.
The Central Bank of Brazil has postponed for one year the full implementation of open banking, originally set to be concluded in August this year, due to the need to test the data-sharing system. The new completion date is set for September 2022.
Already a latecomer, Brazil is still only in the first phase of open banking, when banks can share data about products, service channels, services and branch locations for the purpose of developing new API services for customers. Brazil’s biggest banks, which currently hoard customer information, will share that valuable data. To customers, it means choice; to the banking system, it means competition. And the banks are competing with fintechs.
According to intelligence firm Distrito Dataminer, Brazil held more than 1,000 fintechs and the sector attracts more startup investments than any other. The Inside Venture Capital Report, by Distrito, reported $2.35 billion in investments for startups in the first quarter of this year.
Open banking, when it finally emerges, is expected to make life even better for fintechs. Although the postponement is disappointing, they gain time to advance data processing technologies such as artificial intelligence.
Loise Nascimento, head of the Payments and Fintech Committee of the Brazilian O2O (Online to Office) Association, doesn’t expect much harm from the delay, saying that customers will realize benefits in the long term, as competition to serve them deepens between fintechs and banks. “The one who gets to the customer first will get the prize,” she says.