Brazilian Paytech PicPay creates Open Finance hub and will launch payment initiation

October 13, 2022
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About a year and three months ago, PicPay announced the purchase of Guiabolso, in a transaction that revealed the fintech's ambition to be a protagonist in the then Open Banking, which evolved into Open Finance.

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That's because the financial management app - founded in 2012 by Thiago Alvarez and Benjamin Gleason - pioneered a data-sharing technology when there was not even discussion of regulating Open Banking in Brazil.

"We invented the [concept of] Open Finance ten years ago and created a marketplace of financial products. With the sale to PicPay, in two months we had already brought in all the [marketplace] partners. In parallel, we were working on the regulated structure of Open Finance," says Thiago, to Finsiders. With the sale of Guiabolso, the executive became director at PicPay, responsible for the business unit of Open Finance (his partner, Benjamin, is undertaking again with Kamino).

Since then, PicPay has been paving its Open Finance platform, which now has its first functionalities, such as the so-called "Open Finance hub", an environment within the application to manage consent, that is, it is possible to manage the data sent to other institutions and the information shared with PicPay. Soon it will also be possible to track payments via Open Finance.

PicPay is also testing a financial management tool, for now available to a small group of customers and expected to be officially launched in October. The functionality consolidates all accounts and cards connected by users, in a similar way to the PFM (personal finance manager) developed by Guiabolso.

"It is a 'mini Guiabolso' within the app. When we think it is mature, we will launch it to the entire base," explains Thiago.


Payment initiation

Another ongoing project in the company is payment initiation, which is part of phase 3 of Open Finance. "We are also going into payment initiation", says the executive. Because it is a regulated payment institution (PI), PicPay's path to being a payment transaction initiator (ITP) is different compared to that of unlicensed fintechs. It is necessary to make a communication to the Central Bank (BC) about the intention to offer the service, 90 days in advance.

Since last year, the fintech can have payments initiated by other participants, as part of the mandatory phase 3. "Being initiated we are already mandatory, as account holders. Now we are developing to be an initiator as well," explains Thiago. "We have already made the communication to the CB. The second step, after implementation, is to be certified and do testing with four different institutions. We haven't done the testing with all four institutions yet."

PicPay has joined as a voluntary institution the Open Finance phase 2, in which institutions allow users to share their financial history from checking accounts, credit cards, loans, and registrations. Therefore, all users are already able to share their data from other banks and institutions with PicPay, and the fintech's account data can also be shared with other institutions.

The conversion rate of consents is over 80%. That is, for every ten users who choose to share their data in the fintech with other institutions, eight make the complete journey, from end to end. For Thiago, this is a metric that shows the quality of Open Finance's specifications in PicPay and its capacity as a data transmitter. The result is the result of the combination of technology and user experience (UX), says the executive.

The executive does not believe in building just one or two products or services from Open Finance, but in this infrastructure running throughout the company, allowing the offer of solutions more suitable to each customer. "It has a side of being able to speak in a contextualized and specific way, as well as also adjusting the product for each customer. For example, increasing the limit or suggesting a specific investment or insurance. That whole personalization is going to happen."

In this regard, he says PicPay is developing a 'plug and play' platform, from which all areas have access to those who have already made consent, in a simple way. "The idea here is that Open Finance goes through the entire PicPay customer journey," says Thiago. "We are trying to solve things in a structural way."

Super app

With more than 71 million registered users, of which more than 32 million are active customers, PicPay today operates on five fronts: financial services for PF; financial services for PJ; financial marketplace; PicPay Store; and recently entered crypto and Web3. The strategy is to be a super app, inspired by the successful example of WeChat in China.

After a corporate reorganization, PicPay recently also became a multiple bank, taking advantage of the license of the former Banco Original do Agronegócio, as revealed in an exclusive report by the Fintechs Brazil portal in collaboration with Finsiders in July.

On the bottom line, PicPay reached the end of the first half of this year with a loss of R$663.2 million, up 87.3% compared to the same period in 2021, according to financial statements published in August. Revenues, on the other hand, grew more than 3.5x, to R$1.3 billion.


Open Finance

Since the start of implementation, Open Finance has already added almost 10 million customer data sharing consents and about 350 million API calls per week. In all, there are more than 800 institutions participating in the system.

"We still have a problem with data quality and homogenization, and we need to move forward on this. We have weekly meetings about this issue", acknowledged the president of the Central Bank, Roberto Campos Neto, in a recent event.

Original Article from Finsiders

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.

That's because the financial management app - founded in 2012 by Thiago Alvarez and Benjamin Gleason - pioneered a data-sharing technology when there was not even discussion of regulating Open Banking in Brazil.

"We invented the [concept of] Open Finance ten years ago and created a marketplace of financial products. With the sale to PicPay, in two months we had already brought in all the [marketplace] partners. In parallel, we were working on the regulated structure of Open Finance," says Thiago, to Finsiders. With the sale of Guiabolso, the executive became director at PicPay, responsible for the business unit of Open Finance (his partner, Benjamin, is undertaking again with Kamino).

Since then, PicPay has been paving its Open Finance platform, which now has its first functionalities, such as the so-called "Open Finance hub", an environment within the application to manage consent, that is, it is possible to manage the data sent to other institutions and the information shared with PicPay. Soon it will also be possible to track payments via Open Finance.

PicPay is also testing a financial management tool, for now available to a small group of customers and expected to be officially launched in October. The functionality consolidates all accounts and cards connected by users, in a similar way to the PFM (personal finance manager) developed by Guiabolso.

"It is a 'mini Guiabolso' within the app. When we think it is mature, we will launch it to the entire base," explains Thiago.


Payment initiation

Another ongoing project in the company is payment initiation, which is part of phase 3 of Open Finance. "We are also going into payment initiation", says the executive. Because it is a regulated payment institution (PI), PicPay's path to being a payment transaction initiator (ITP) is different compared to that of unlicensed fintechs. It is necessary to make a communication to the Central Bank (BC) about the intention to offer the service, 90 days in advance.

Since last year, the fintech can have payments initiated by other participants, as part of the mandatory phase 3. "Being initiated we are already mandatory, as account holders. Now we are developing to be an initiator as well," explains Thiago. "We have already made the communication to the CB. The second step, after implementation, is to be certified and do testing with four different institutions. We haven't done the testing with all four institutions yet."

PicPay has joined as a voluntary institution the Open Finance phase 2, in which institutions allow users to share their financial history from checking accounts, credit cards, loans, and registrations. Therefore, all users are already able to share their data from other banks and institutions with PicPay, and the fintech's account data can also be shared with other institutions.

The conversion rate of consents is over 80%. That is, for every ten users who choose to share their data in the fintech with other institutions, eight make the complete journey, from end to end. For Thiago, this is a metric that shows the quality of Open Finance's specifications in PicPay and its capacity as a data transmitter. The result is the result of the combination of technology and user experience (UX), says the executive.

The executive does not believe in building just one or two products or services from Open Finance, but in this infrastructure running throughout the company, allowing the offer of solutions more suitable to each customer. "It has a side of being able to speak in a contextualized and specific way, as well as also adjusting the product for each customer. For example, increasing the limit or suggesting a specific investment or insurance. That whole personalization is going to happen."

In this regard, he says PicPay is developing a 'plug and play' platform, from which all areas have access to those who have already made consent, in a simple way. "The idea here is that Open Finance goes through the entire PicPay customer journey," says Thiago. "We are trying to solve things in a structural way."

Super app

With more than 71 million registered users, of which more than 32 million are active customers, PicPay today operates on five fronts: financial services for PF; financial services for PJ; financial marketplace; PicPay Store; and recently entered crypto and Web3. The strategy is to be a super app, inspired by the successful example of WeChat in China.

After a corporate reorganization, PicPay recently also became a multiple bank, taking advantage of the license of the former Banco Original do Agronegócio, as revealed in an exclusive report by the Fintechs Brazil portal in collaboration with Finsiders in July.

On the bottom line, PicPay reached the end of the first half of this year with a loss of R$663.2 million, up 87.3% compared to the same period in 2021, according to financial statements published in August. Revenues, on the other hand, grew more than 3.5x, to R$1.3 billion.


Open Finance

Since the start of implementation, Open Finance has already added almost 10 million customer data sharing consents and about 350 million API calls per week. In all, there are more than 800 institutions participating in the system.

"We still have a problem with data quality and homogenization, and we need to move forward on this. We have weekly meetings about this issue", acknowledged the president of the Central Bank, Roberto Campos Neto, in a recent event.

Original Article from Finsiders

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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