Fernando Moreno - Fico
By Fernando Moreno, Director of Business Development at Fico for Latin America.

The so-called Open Banking, known in Spanish as the Open Financial System, is the cornerstone of this historic moment that will reform the concept of Digital Transformation of our financial system.

This is a generational change almost from the very invention of money, which will help the generation of a completely new market, with different rules and with different actors. Open Banking will allow the end consumer to be empowered, by making him the owner of the data that, although they were his, were protected by one of the financial entities with which he worked.

Open Banking puts the user at the center of all this information and allows him to use it in different entities, financial or non-financial, in the way he considers best. By opening it to third parties, you will be sharing it with many of the existing entities, with some new ones, and with others that will be created to consume that information and offer new services or improved services.

Thanks to this new system, it seeks to achieve a true democratization of financial services. Although the amount and variety of information shared depends on the specific regulations of each country, a wide variety of uses and benefits are contemplated for the financial and non-financial industries.

In any case, Open Banking will promote an unprecedented data integration with the ultimate goal of empowering consumers, who will have more options to choose from among a range of new players within a traditionally restricted market.

This great revolution is already a reality in some developed countries, such as England, where the government regularized this new environment, forcing entities to adapt to it. In the case of Latin America, the schedule of the Open Financial System has different agendas and implementation dates in each country, which has delayed the integration process.

In countries where it is already established, Two types of implementation have been observed: a normative one, in which the government regulates, and a market one, in which the actors reach agreements without there being a binding regulation. The case of the European Union and England is normative, while in the United States a market variant is used.

API, services to consume and share data in real time

From a practical point of view, Open Banking will make banks operate with open platforms, consuming and sharing data in digital form through APIs (Application Program Interfaces, for its acronym in English), which are services exposed based on a pattern defined and accessible with any online software. The consumer may, for example, allow a bank of which he is not a customer to access his financial history and generate an offer of products that he already has, or not, with more competitive interest rates or better financial conditions than those he has in the actuality.

The worldwide API market will reach about $ 763 million by 2022, according to Market Research Future. In addition, a study by Boston University showed that the adoption of API predicts an increase in the value of a company in the market of 10,3%, and it is estimated that by 2025, 30% of global revenue will be generated through of this new channel.

Open Banking is a consequence of the Digital Transformation in which new opportunities arise that are translated into new sources of income, cost reduction and new types of business that are going to be generated.

As a result of all the transformations that Open Banking is going to generate in the financial system, not only the final consumer will benefit from this variety of options that they did not have before. It is the country itself that, with the impetus of technological progress that this requires, must develop and prosper at similar levels. Although it is true that the implementation and adaptation to this new reality is not without its challenges and difficulties, entities must act proactively and work on strategic, technological and business plans from this moment on.