A lot of people have heard about Open Banking, Open Finance and these great news that are coming to the financial system, but they still don’t understand what it’s all about, how to participate or, even, whether or not to be part of it.
And nothing more normal. After all, it is a system that requires users to share data, at a time when it is increasingly recommended to be careful about what you share on the internet – and with whom.
So, first you need to understand: what is Open Finance?
Created and successfully implemented in the UK in 2018, the movement is the new trend in financial systems around the world.
In free translation into Portuguese, the concept means “open financial system”.
Basically, it is a system in which consumers share their data with the financial institutions they trust and, as a result, gain access to an infinity of products, services and facilities offered by several other institutions, tailored to their needs.
According to Glauco Sampaio, Head of Information Security, Risk Management, Fraud Prevention, Data Privacy and Technology at Cielo, Open Finance “is a movement structured and organized by the Central Bank of Brazil, with the active participation of national financial institutions so that end users, customers, can make use of financial services in a more intelligent and personalized way..”
Still, according to Sampaio, “Open Finance is an expansion of Open Banking, an initiative led and directed at Banks (mostly), but which now includes other types of institutions in the financial segment, such as means of payment companies, insurance companies and investment brokers, among others.”
Looking at it practically, with Open Finance, the systems of the participating companies are integrated and connected, making it possible to share data in a few clicks through websites and applications. In this way, the user navigates in a kind of “financial mall”, where he can hire various services, make portability more easily and purchase innovative products.
Thus, there is an exponential increase in the offer of personalized services, greater competition and, as a result: increasingly lower and attractive rates for consumers.
In addition, a window for innovation opens: “Over time, the interconnection and use of existing financial services will enable companies participating in Open Finance to also create new product and service offerings for their customers.” says Sampaio, from Cielo.
Entrepreneurs will also benefit directly, either as consumers or as providers of these solutions. According to Sampaio, “…the entrepreneur can act as a service provider, when, through synergy with financial institutions, he can generate new product and service offerings for his clients, becoming a partner of these institutions and not just a client of them.”
But to join Open Finance it is necessary to share data, currently the biggest concern of consumers.
Sampaio says that everyone can be very calm, since “the system was structured using the most modern and robust security standards on the market today, this makes the level of security required to be part of the movement bring the highest possible level of security. The privacy of shared data was also one of the most discussed and considered aspects during the definition of security standards. We also have a national law on the subject (the General Data Protection Law) that has several mandatory points that were strictly followed in the project.”
In other words, the customer who joins the movement remains in full control of their own data, deciding what to share and with whom, and commanding authorizations and renewals at all times.
Even so, Sampaio states that the safety recommendations do not change in relation to what should be done today: “...share only what is necessary for the provision of the service, be aware with whom you will actually share your data and request the deletion of your data whenever you stop using any service”.
The entire evolution of the Open Finance movement is directly linked to the evolution of technologies such as Cloud, Big Data and IoT, and now, with the arrival of the new 5G, the possibilities for innovation and the level of security promise to grow even more.
According to Sampaio, Cielo sees a new and exciting moment in the market and encourages its customers and partners to adhere to innovation:
“Once the market adopts mechanisms that allow us to have more complete information about our customers, we can add value to future solutions. Cielo is attentive to trends and innovations, monitoring and actively participating in Open Finance definitions. We are committed to making the payment journey simpler and more agile – always with an eye on security – and therefore, we are following market innovations, always studying new technologies, solutions and movements such as Open Finance.”
To learn more and download the free e-book on the topic, visit https://www.cielo.com.br/ebook-open-finance/
Source: CNN Brasil
