The Central Bank of Brazil foresees open banking in full operation at the end of 2021

May 4, 2020
Periodista en Valor Económico
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Banco Central Do Brasil
Model was regulated on Monday by the monetary authority.

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The Central Bank (BC) and the National Monetary Council (CMN) regulated this Monday the open banking in Brazil.

According to the BC director of regulation, Otavio Damaso, the implementation will be carried out in four phases, until October 2021, with open banking fully functioning at the end of next year.

“The schedule is adequate, even with a lockdown”, completed Damaso.

Larger financial institutions, in the S1 and S2 segments, will be required to participate. But all the institutions authorized by the BC to operate can participate, if they want.

In an online press conference, Damaso mentioned some benefits of open banking, such as: greater empowerment of the financial consumer; increased efficiency in the financial system; and greater innovation. "Open banking is a priority theme of Agenda BC #, it has been discussed for a while," he said.

For Otávio Damaso, director of BC, open banking will increase the efficiency of the financial system - Photo: Valor

"We are creating the basis for fintechs to innovate and create better products and services," said Damaso, noting that sharing customer data between institutions can lead to a drop in interest rates at the end.

Also present in the interview, the director of organization of the financial system and resolution of the Central Bank (BC), João Manoel Pinho de Mello, stated that open banking and the Instant Payment System, Pix, are “two totally structuring agendas” and will have their deployment schedules maintained.

In the interview, Pinho de Mello highlighted that the scope of open banking proposed by the monetary authority "is quite ambitious" compared to that of other countries.

Also on Monday, the BC and the CMN regulated the issuance of electronic duplicates. According to Pinho de Mello, this mechanism may represent what payroll loans represented for personal credit in the mid-2000s.

The regulation establishes that the duplicate issued is registered with an entity regulated and supervised by the BC.

In a statement, the BC states that "holders of electronic duplicates will find it easier to share information about these receivables with several financiers, favoring competition and reducing the spread in operations with this credit security".

The next step will be the approval of a specific agreement between the bookkeepers.

From this convention, large companies, with revenues above R $ 300 million, will need to adapt to the rules of electronic issuance in 360 days. For medium-sized companies, with annual revenues between R $ 4.8 million and R $ 300 million, and small (R $ 360 thousand to R $ 4.8 million), the terms will be 540 days and 720 days after convention.

The regulation of Open Banking creates an environment conducive to the emergence of new solutions for inclusive, competitive, safe and customized services to the customer profile. It is an important step in the digitalization process of the financial system, promoting better and greater access by families and companies to financial services and products and represents one of the main actions on the BC # agenda.

The new regulation allows, as long as there is prior consent from the customer, the standardized sharing of data and services by opening and integrating systems, by financial institutions, payment institutions and other institutions authorized to operate by the Central Bank.

Open Banking aims to allow the integration of financial services to different clients' digital journeys and to reduce the asymmetry of information between financial service providers, thus favoring the emergence of new business models and new forms of relationship between institutions and between these and your customers and partners. In this context, they are examples of new services that can be offered: comparators of financial products and services, financial advisory services, financial management and initiation of payment transactions in a more familiar and convenient environment for consumers.

The premises of the Open Banking model that will be implemented in the country are that the individual or legal client is the holder of their personal data and that their experience in the process of sharing requests must take place in an agile, safe, precise and convenient, through the institutions' electronic channels.

Based on these premises, the approved normative acts bring rules regarding the scope of data and services covered, the participating institutions, the client's consent and authentication, the convention to be celebrated between the participating institutions to define the technical standards and operational procedures for implementing Open Banking. In addition, it provides for the responsibility of institutions, including with regard to the availability and performance of interfaces and meeting customer demands and supporting other participants.

The Open Banking discipline will be implemented in a phased manner, starting on November 30, 2020 and ending in October 2021, based on the following phases:

  • Phase I: public access to data from institutions participating in Open Banking on customer service channels and products and services related to demand deposit or savings accounts, payment accounts or credit operations;
  • Phase II: sharing between participating institutions of customer and representative registration information, as well as customer transaction data about the products and services listed in Phase I;
  • Phase III: sharing of the payment transaction initiation service among participating institutions, as well as that of the credit operation proposal forwarding service between financial institutions and correspondents in the country that may have been contracted for this purpose; and
  • Phase IV: expansion of the scope of data to include, among others, foreign exchange operations, investments, insurance and open supplementary pension plans, both in terms of publicly accessible data and transaction data shared between participating institutions.
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Hub, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

The Central Bank (BC) and the National Monetary Council (CMN) regulated this Monday the open banking in Brazil.

According to the BC director of regulation, Otavio Damaso, the implementation will be carried out in four phases, until October 2021, with open banking fully functioning at the end of next year.

“The schedule is adequate, even with a lockdown”, completed Damaso.

Larger financial institutions, in the S1 and S2 segments, will be required to participate. But all the institutions authorized by the BC to operate can participate, if they want.

In an online press conference, Damaso mentioned some benefits of open banking, such as: greater empowerment of the financial consumer; increased efficiency in the financial system; and greater innovation. "Open banking is a priority theme of Agenda BC #, it has been discussed for a while," he said.

For Otávio Damaso, director of BC, open banking will increase the efficiency of the financial system - Photo: Valor

"We are creating the basis for fintechs to innovate and create better products and services," said Damaso, noting that sharing customer data between institutions can lead to a drop in interest rates at the end.

Also present in the interview, the director of organization of the financial system and resolution of the Central Bank (BC), João Manoel Pinho de Mello, stated that open banking and the Instant Payment System, Pix, are “two totally structuring agendas” and will have their deployment schedules maintained.

In the interview, Pinho de Mello highlighted that the scope of open banking proposed by the monetary authority "is quite ambitious" compared to that of other countries.

Also on Monday, the BC and the CMN regulated the issuance of electronic duplicates. According to Pinho de Mello, this mechanism may represent what payroll loans represented for personal credit in the mid-2000s.

The regulation establishes that the duplicate issued is registered with an entity regulated and supervised by the BC.

In a statement, the BC states that "holders of electronic duplicates will find it easier to share information about these receivables with several financiers, favoring competition and reducing the spread in operations with this credit security".

The next step will be the approval of a specific agreement between the bookkeepers.

From this convention, large companies, with revenues above R $ 300 million, will need to adapt to the rules of electronic issuance in 360 days. For medium-sized companies, with annual revenues between R $ 4.8 million and R $ 300 million, and small (R $ 360 thousand to R $ 4.8 million), the terms will be 540 days and 720 days after convention.

The regulation of Open Banking creates an environment conducive to the emergence of new solutions for inclusive, competitive, safe and customized services to the customer profile. It is an important step in the digitalization process of the financial system, promoting better and greater access by families and companies to financial services and products and represents one of the main actions on the BC # agenda.

The new regulation allows, as long as there is prior consent from the customer, the standardized sharing of data and services by opening and integrating systems, by financial institutions, payment institutions and other institutions authorized to operate by the Central Bank.

Open Banking aims to allow the integration of financial services to different clients' digital journeys and to reduce the asymmetry of information between financial service providers, thus favoring the emergence of new business models and new forms of relationship between institutions and between these and your customers and partners. In this context, they are examples of new services that can be offered: comparators of financial products and services, financial advisory services, financial management and initiation of payment transactions in a more familiar and convenient environment for consumers.

The premises of the Open Banking model that will be implemented in the country are that the individual or legal client is the holder of their personal data and that their experience in the process of sharing requests must take place in an agile, safe, precise and convenient, through the institutions' electronic channels.

Based on these premises, the approved normative acts bring rules regarding the scope of data and services covered, the participating institutions, the client's consent and authentication, the convention to be celebrated between the participating institutions to define the technical standards and operational procedures for implementing Open Banking. In addition, it provides for the responsibility of institutions, including with regard to the availability and performance of interfaces and meeting customer demands and supporting other participants.

The Open Banking discipline will be implemented in a phased manner, starting on November 30, 2020 and ending in October 2021, based on the following phases:

  • Phase I: public access to data from institutions participating in Open Banking on customer service channels and products and services related to demand deposit or savings accounts, payment accounts or credit operations;
  • Phase II: sharing between participating institutions of customer and representative registration information, as well as customer transaction data about the products and services listed in Phase I;
  • Phase III: sharing of the payment transaction initiation service among participating institutions, as well as that of the credit operation proposal forwarding service between financial institutions and correspondents in the country that may have been contracted for this purpose; and
  • Phase IV: expansion of the scope of data to include, among others, foreign exchange operations, investments, insurance and open supplementary pension plans, both in terms of publicly accessible data and transaction data shared between participating institutions.
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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Joint Resolution and Circular - Implementation and scope of data and services of Open Banking in Brazil

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