Experts Say Open Finance Will Play an Essential Role in Financial Inclusion in Brazil

Brazil is now at the forefront of Open Finance in the world, and the implementation of the open financial system has the potential to positively impact financial inclusion. This was the main theme of a discussion led by industry pioneers at an virtual Campfire organised by Open Banking Excellence (OBE), the global centre of community and knowledge driving change in Open Finance.

In the UK, a study of unbanked people and those who only use basic accounts found that Open Banking could save 0.8% of their total income simply by reducing fees. For “overstretched” and heavily indebted people, savings grew to 2.5%.

During the discussion, Helen Child, Founder of Open Banking Excellence (OBE), correlated this data with a survey by Instituto Locomotiva which points out that 34 million Brazilians do not have a bank account or hardly use one. “If those 34 million people were taking home a minimum wage, it would be a total savings of almost R$ 4 billion”, she argued. “So whatever stats you look at, and by whatever your stitch you’re measuring, I think we can all agree that this is worth doing and worth doing right. Something that we can all be very proud to play a part in.”

In the opening session, Julia Koch, Business Development Manager at the British Consulate in Brazil, and Luana Soratto, Head of Product and Use Cases for Open Finance at PicPay, took a deep dive into the Brazilian context for financial inclusion. “We are a developing country, and even before talking about the unbanked, we need to talk about the digitally excluded. It is very difficult for someone to be included in the financial system without being inserted in the digital environment. And that’s 15% of the population today”, reflected Luana.

The conversation was followed by a panel moderated by Ricardo Pandur, Business Strategy Senior Manager at Accenture, in which a group of experts approached the opportunities to use Open Finance to advance financial inclusion. Ísis Galote Souza e Silva, Open Finance Group Product Manager at Itaú Unibanco, spoke about the importance of the market being inspired by the not so optimistic statistics raised in the opening session. “When we look at our society and look at these statistics, we feel uncomfortable. We need to use the regulatory track of Open Finance to create solutions and use cases here to achieve and change these statistics to a more positive scenario for our society as a whole”, suggested Isis.

Aaron Morais, Payments Compliance Officer at Google, argued the regulator plays an essential role in this construction: “Due to the Central Bank’s very strong agenda of innovation, openness and development, financial inclusion today is one of their key objectives and the regulatory aspect ended up guiding many of these agendas. I see benefits for citizens, who will have new and better products, more suited to their reality. And I see possibilities for the market agents themselves, who today create products based on regulatory innovation, like Open Finance.”

Fabricio Violin, Open Finance and Innovation Executive Manager at Banco BV, even highlighted opportunities that he already sees at his institution. “35% of the customers who shared data with BV had some increase in income. This is very promising. Obviously, still on a not so large scale, but it gives an idea of ​​the potential for generating value for both sides”, he highlighted.

“From the moment we see a more open market, financial services offers with no fees, which are important to include individuals in the system, we believe that there will be a more sophisticated offer from the point of view of a deep understanding of the client, also due to the leverage that Open Finance brings in terms of obtaining data”, added Marcos Xavier, FX/FI/Credit/Derivatives Sales Trader at BTG Pactual.

Expectations for 2023

Participants raised the main points they would like to see materialized in 2023. “I would like Open Finance to grow in terms of use cases, not only in financial inclusion as a whole, but so we can continue to grow as the largest Open Finance market in the world”, Pandur.

“The structure and the rules are in place, and I think it’s fundamental that in 2023 we start to see Open Finance as part of people’s lives”, added Aaron Morais, Payments Compliance Officer at Google . Ísis went further: “I would like us to expand this agenda to other sectors other than finance. We are experiencing the potential within the financial market, but there is a lot of potential for Open Data as a whole.”

When it comes to the technical implementation, Violin mentioned variable recurring payments as a key feature. “It’s something that could drive a lot of cool ideas, a lot of use cases that we could build. Everyone here in the room is full of ideas to use this when it becomes available and I think it will be another step towards integrators. It’s going to be something that will simplify the lives of many customers.