Economy

Brazil's Central Bank changes open banking implementation schedule

In all, open banking has four phases of implementation in Brazil. The first phase, which began in February this year

Brazil's Central Bank. Photo: Agência Brasil
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On Thursday, Brazil‘s Central Bank published a new resolution that slightly alters the country’s schedule for implementing open banking. The document was published after the National Monetary Council decided that only the Central Bank can define the program’s deadlines.

In all, open banking has four phases of implementation in Brazil. The first phase, which began in February this year, sets the compulsory participation of all financial institutions in the program and the sharing of standardized information on banking products and services between them. At this stage, no customer data is shared.

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The second phase starts on July 15th. At this stage, customers will have a more active role and will be able to authorize the sharing of their data and financial information between institutions.

The third phase, which starts on August 30th, is one of the phases that have changed. At this stage, consumers gain access to services such as payments and credit proposals beyond the channels of their own financial institutions. But not all services will be available.

As the Central Bank explained in the new resolution, this year, only transfers via PIX (Brazil‘s instant payment system) will be available in this open banking integration scheme. The initiation of payments via other methods (transfers between bank accounts and debit, for example) will have specific deadlines not yet defined by the monetary authority.

The digital offer of credit by digital correspondents, which would also be part of the third phase of the program, has been postponed until 30 March. According to the Cenbank, it is necessary to adjust the current regulations related to the service before allowing its offer.

The beginning of the fourth and final phase, called open finance, scheduled for December 15 this year, is maintained, but will also take place in stages. Banks will be able to offer investment, insurance and foreign exchange products to clients of other institutions this year. But customers will only be able to share their data with these banks, as a way to get better conditions, from May 31, 2022, onwards.

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Open banking in Brazil

Brazilian open banking is part of the “Agenda #BC”, a Central Bank agenda focused on tech evolution to modernize the financial system and the laws that govern it, and also to improve competitiveness and transparency. Brazilian open banking looks further ahead, aiming to open finance.

Although the regulatory agenda for open banking is a global trend, its design and implementation strategy change in each country. In Brazil, the Central Bank centralized management and the adoption of a communication standard via APIs (application programming interface) are great differentials in comparison with other countries.

The mandatory participation of big banks is also decisive for the success of the proposal. In a very concentrated market, if traditional banks did not participate, open banking would hardly be successful since these institutions have a gigantic volume of financial data and the largest share of users. Until now, 171 financial institutions have already joined the Brazilian open banking.

Open banking will challenge the Brazilian big banks’ monopoly: they will fight for 60 million customers with fintechs and other financial institutions and may have a loss of revenue of up to BRL 110 billion, according to an estimate by Roland Berger.

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