Open Banking shifts dynamics between banks and clients

Open Banking is a global movement that promotes the right for customers to share their own financial information with third parties, allowing banks to create new business models and transition from a vertical value chain to an open ecosystem.

This movement is a result of changes in technological, regulatory and, specially, customer behavior. Although Brazil is still at the beginning of the implementation process, Open Banking will accelerate and reshape the banking sector in a disruptive manner.

The Open Banking concept can be understood as part of a broader shift, which goes far beyond the industry itself, towards an economy that recognizes that data ownership belongs to the individual and not to financial institutions. Thus, traditional product-centered strategies are replaced by emerging propositions focused on customer value, resulting in a positive change for all players in the industry.

The financial market has been changing intensively over the past few years and some transformation drivers contribute to the Open Banking movement: technological innovation; changes in customers behavior and the entrance of new players in the market We can understand that the Open Banking is a catalyst for those changes, boosted by a new regulation that will enable new business models, facilitated by those forces, which will lead to sensitive changes in the market dynamics.

For Open Banking to work, financial institutions must see through the implementation of their guidelines beyond just regulatory requirements and mere compliance and demonstrate the real benefits provided to customers who join data sharing – especially the positive impact that the initiative can have on their financial health.

The financial industry in Brazil has been preparing for the arrival of Open Banking. According to the 2020 FEBRABAN Banking Technology Survey , carried out by Deloitte, more than 80% of the Brazilian banks already have Development Portals and APIs – application programming interface, that may be external and event monetized, The APIs will allow clients to consolidate their banking accounts, investments and other products from different banks and financial institutions.

We still have a long way to go until December 2021, the scheduled date for the full implementation of Open Banking in Brazil. As it is a relatively recent initiative, we cannot yet see the full effects of Open Banking, but there are some valuable lessons we can learn from other countries that have already implemented the concept: the most important of them is to understand the needs of the customers and their desires in a holistic manner – not only from the perspective of the banking experience, but also in defining the role of the bank in a new market context. The Brazilian banking industry, which has always been characterized by the search for best global practices and the technological vanguard, will certainly know how to see and take advantage of this great opportunity for transformation.

Sergio Biagini is the lead partner for the Financial Services Industry at Deloitte Brazil