Brazilians welcome open banking

In the two years since open banking was approved by Brazil’s Central Bank, there has been a great deal of progress, despite a few set backs. Here, we look at how CIP, in partnership with Banfico, is helping spearhead the change.

Originally due to be implemented in 2020, the COVID-19 pandemic pushed back the launch of open banking in Brazil to early 2021. While a phased rollout began in February, in July the second phase of implementation was delayed by a month, as financial institutions within the country adapted their systems.

Phase three – which relates to instant payment system Pix - has subsequently been postponed until the end of October. Full rollout in Brazil is now expected by September 2022, nine months later than planned.

At the forefront of the open banking revolution in Brazil is Felipe Domenico Negri, Open Banking PO at CIP. CIP is a not-for-profit association and regulatory body, that integrates the Brazilian Payments System. Its solutions and services portfolio includes technology, innovation and security for financial transactions made in Brazil. In partnership with Banfico it has launched its open banking platform, with capacity to process up to 1,000 transactions per second.

Felipe, a former fintech CEO, joined CIP in 2020, bringing with him expertise in creating cross-border payments, especially for e-commerce, in Brazil. With more than 1,400 financial institutions within Brazil to be integrated into open banking, he saw it as an ideal opportunity to put into practice what CIP was set up to do.

“Open banking is a great step forward for all financial institutions in Brazil,” he said. “It is in CIP’s DNA to help financial institutions connect with each other, and not only connect, but support transactions too. It is a huge motivation to upgrade how we interact between them, promoting the decentralisation of bank customers.”

Partnering with Banfico

CIP was looking for a partner to help create a platform for its open banking ambitions. Felipe heard about Banfico at a webinar about open banking in the UK. He was impressed with Banfico’s experience and how it dealt with the challenges it had faced.

“We saw a lot of solutions on the market and they all say they do everything, but actually they do not,” explained Felipe. “Banfico’s solutions were much more ready for the Brazilian market.”

Felipe was also impressed with the transparency in the information he received from Banfico. “It is difficult to find partners who share their good and bad points,” he said.

Linked to the CIP system that Banfico has provided, customers and banks will have robustness, security and full alignment with Brazil’s regulatory requirements.

Felipe says he has been impressed with the fast integration, delivery capacity and quick responses that Banfico has provided, particularly as Brazil’s Central Bank has continued to make change requests throughout the process.

The main features of the platform are:

  • Characteristics suitable for each banking segment
  • Processing up to 1,000 tps
  • Whitelabel - 100% customisable
  • Complete system for consent management
  • Modularised solution
  • Development of new APIs, supporting customers in their search for new opportunities

What next for open banking in Brazil?

Felipe says he is looking forward to the next steps, as financial institutions across Brazil become part of the open banking network and start to share data and innovate.

“This is only the beginning,” he said. “We are creating new opportunities in Brazil not only in the financial market, but in different segments such as health and technology - with the data sharing processes we are building.”

Open banking could already be making a difference to financial institutions in Brazil. The latest annual survey from the Brazilian Banking Association shows IT spend by Brazilian banks increased by 8% in 2020 compared to 2018. The research says that factors accelerating this trend could include the implementation of open banking.

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