The regulatory director says open funding is a priority for BC. Understanding the system

Published 07/05/2022 21:04 / Updated 05/07/2022 21:11

In the wake of Pix, the expansion of Open Finance has become a priority of the Central Bank (BC) agenda. In order to encourage competitiveness in the National Financial System (SFN), an open banking system, which encourages the sharing of personal banking data, promises to bring more choices of financial products and services, at lower costs and more transparency to the customers, who will do so. Enjoy greater independence in your financial life.

Although it is considered a reality, with 5 million active approvals, the Director of BC Regulation, Ottavio Damaso, said this Tuesday (5/7), during the Open Banking 2022 event, promoted by the Brazilian Institute for Studies on Competition, Consumption and International Trade (IBRAC). ), that the system is still not operating “at full strength” due to inconsistencies in the information shared.

Sharing registration and transaction data for authorized clients with pre-approval has been operating in Brazil for nearly a year. This period, according to Damaso, was “short” in relation to the volume of typical thought. “It was not easy, the scope of open funding was much larger than in other countries, with a shorter implementation period. Perhaps the deadline was too tight for the scale of the project we wanted to implement in Brazil. A bold deadline brought challenges,” said the director.

While Open Banking encourages changes in the banking system, primarily affecting banks and fintech companies, Open Finance amplifies that for the financial system as a whole, while transferring this new flow of data to other companies involved in open banking, such as intermediaries.

In practice, the client owns his financial data and will be able to choose when and with which companies he will share it. The basic principle is user consent, that is, companies must, compulsorily, share information from the customer (whether natural or legal), if he requests and authorizes the transfer of data to another organization. This should facilitate account opening and should help the customer to purchase products and services at different establishments at the same time.

The United Kingdom was the first country to implement a similar system in 2018. Australia implemented the first phase of its program in July this year, and India has also taken the first steps towards establishing open banking. Countries like the US, Canada, and Russia are also looking at ways to integrate data sharing into their financial systems.

Data Security and Integrity

To ensure the security of data exchange, the Central Bank has established a gradual implementation of open finance in Brazil. Participating organizations implement their own functional certification process for APIs, a set of definitions and protocols for creating and integrating application software and financial products that will be shared to ensure the quality and security of data sharing.

According to the Regulatory Director, there are 700 million APIs per month. “It’s a big number compared to the experience of other countries. Our model has more scope, from the beginning we put more players on a mandatory basis, but we have a lot of people who participate voluntarily,” Damaso said.

The Director of Regulation also assessed that fraud and leaks on Pix, for example, which have been increasingly reported, usually occur for reasons beyond the security of the financial system.

According to Flávia Parra Cano, an attorney at Rennó Penteado Sampaio Advogados and a researcher at the Institute of Technology and Society (ITS Rio), since much of the data shared on Open Finance is personal data, the General Data Protection Act fully applies to treatments carried out on the account. “It is therefore important for the consumer to have a good understanding of their rights under local consumer protection law so that they can enforce them when necessary, including in the context of open financing,” he said.