Today (1) the first of four phases of Brazil's Open Banking implementation has started, as part of the country's broader agenda of modernization of the national financial ecosystem.
The initiative, led by the Central Bank of Brazil, also aims to boost market competition and increase financial education in the Latin American country. Under the model, use of open application programming interfaces (APIs) enable third-party developers to build applications and services around the participating financial institutions, with consumer data shared with their consent.
The participation of large and medium-sized Brazilian banks with significant international presence in the Open Banking initiative is mandatory. For the other institutions, participation is optional.
"Open Banking will encourage innovation and tends to boost value to customers with new products and services, accelerating the digital transformation of the financial market. The expectation of the banking sector with its arrival is very positive", says Isaac Sidney, president of Brazilian Banking Federation (FEBRABAN).
The first phase commencing today will see banks delivering the foundations for the market to create business models and services - the aim is to make it easier for customers to compare different financial products and services available in the marketplace.
In this initial phase, there will be no sharing of data on customer registration or transactional activity. Instead, companies participating in the OpenBanking ecosystem will need to open data on their service channels and the characteristics of banking products and services through open APIs.
In the second phase, which starts in July, participating institutions regulated, authorized and supervised by the Central Bank will start sharing customer data, with their consent. This will be followed by the third phase, which kicks off in August, where consumers will be able to pay bills and make money transfers outside their bank's environment.
The last phase, forecast for December, is still subjected to technical discussions between the banks. It related to sharing of additional customer details, in areas such as foreign exchange services, investments, insurance and salary accounts.
The Brazilian Open Banking project was approved by the Central Bank in early 2019. At the time, the plan was that implementation would start in the second half of 2020, a timescale delayed due to the Covid-19 pandemic.
As well as Open Banking, the modernization agenda of the financial system in Brazil led by the Central Bank includes the introduction of instant payments platform Pix, which went live in November 2020.