In Latin America, specifically Mexico, the ecosystem is gaining major momentum with the introduction of open banking regulations.
What are some of the key changes in the Latin American banking sector? How has open banking influenced financial inclusion? And has Mexico’s startup culture received a boost with the introduction of open banking norms?
Watch Javier Chavez-Ruiz, Founder and CEO of IST Solutions, a leading digital strategy and transformation boutique consulting firm based in Mexico; Michel Bouffier, senior thought leader and consultant in the IT strategy and digital transformation space; and Puru Lingaiah, Vice President of Partnerships and Latin America Business for Banking and Financial Services at Virtusa, share their thoughts and experience on Open Banking in Latin America.
Digital transformation trends in the Latin American market
Latin America is no different than the rest of the world when it comes to digital transformation trends and strategies. Mainly, market players and stakeholders in the financial sector are all seeking for the same things:
Key factors driving the open banking ecosystem in Latin America
The Latin American FinTech ecosystem is dynamic and growing, addressing financial inclusion beyond G2P social programmes. The vibrant FinTech sector, with a rising number of start-ups, is developing financial technology solutions to expand access and usability of financial services, improve efficiencies and reduce costs in the financial sector, and tackle the problems such as the lack of credit provided to subject matter experts in the region.
How FinTech law sets the framework for regulation
The FinTech Law sets the framework for FinTech regulation. It is based on seven premises
Similarities between the Latin American open banking ecosystem and other open banking initiatives around the world
Giving consumers control over their data. There is a growing movement across the world to make consumers control how their data is used.
Increasing competition in the financial services market. Even today, in many countries banking is an oligopoly with only a few players controlling the majority of the market. This is perceived to result in higher costs over time.
Fostering innovation. Creating a platform for third parties to create new products by allowing access to financial data. The hope is that newer products and services can be built for the customer, be it around managing the financial health of customers or around financial product exchanges.
The financial ecosystem evolution in Mexico
The expected evolution after Open Banking Secondary Laws are published will allow:
The potential demand for financial solutions is also increasing the interest of digital giants, retailers, consumer-goods companies and telecommunication to take part in the financial industry. Likewise, the government has identified the importance of financial and digital technology to provide solutions to existing financial inclusion problems.
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