Open Finance has come a great distance in Latin America, with lots of its main fintech ecosystems benefitting from the novel framework. In Colombia, nevertheless, it’s nonetheless a brand new idea. However the nation is catching up with a sequence of regulatory initiatives.
The third-largest fintech sector within the area, the South American nation, is transferring nearer to having the same framework. Open Finance establishes guidelines for exchanging monetary data amongst fintechs and banks. It’s anticipated to scale back data asymmetries and promote competitors within the trade. The overarching aim is to decrease prices for end-users.
The framework is changing into a development in Latin America. Brazil has absolutely applied Open Finance, whereas Chile lately handed a fintech legislation that encompasses the thought.
Final yr, the Colombian authorities took its first steps. It revealed a decree that opened the door to defining guidelines for banks and fintechs to trade data.
In consequence, Open Finance is now being thought-about in Colombia. However now, it could possibly be made necessary.
The brand new authorities has included this yr Open Finance as a part of its so-called Nationwide Improvement Plan. It’s a multi-year authorized roadmap for the following 4 years.
“It was potential to incorporate the duty of Open Finance in Colombia, which is lastly going to be a actuality for Colombians,” Gabriel Santos García, president of Colombia Fintech affiliation, stated to Fintech Nexus in an interview. “That is going to be very useful for your entire ecosystem.”
Danger of falling behind amid new wave of regulation
To make certain, the approval of the fintech legislation final yr in Chile shone new mild on fintech regulation in Latin America. It might spur a brand new wave of regulation.
Central banks are inspired to speed up such frameworks, with the trade proving a vital ally in fostering monetary inclusion. In such a dynamic sector, falling behind in regulation might hinder its potential to attract funding.
“Being the final to develop an open knowledge ecosystem might have reputational injury when it comes to funding,” Santos García stated. In line with him, Open Finance has confirmed to be a catalyst for innovation. “It fosters the creation of latest enterprise fashions,” he stated.
A rising fintech ecosystem in Colombia
The dialogue round regulation comes at a time of progress within the ecosystem. In line with the Inter-American Improvement Financial institution, it’s the third-largest market within the area. It accounts for 11% of all monetary expertise corporations within the space, with 279. That’s up from simply 84 in 2017.
The nation has attracted big-sized regional gamers too. Nubank, essentially the most outstanding digital financial institution within the area, has launched operations out there. It studies north of half 1,000,000 purchasers since its inception. Ualá, an Argentine-based neobank, has additionally set foot within the South American market as a part of its enlargement technique.
In line with a latest report by Deloitte, regulation could be decisive for a fintech firm pondering an funding. “For fintech corporations, this can be very essential to obviously perceive the present legislation associated to the sector, particularly for companies that search to broaden their operations past their nationwide borders.”
Open finance to streamline buyer acquisition in Colombia
Santos García says Open Finance is vital to decreasing prices and driving innovation. “New ventures within the ecosystem will now not must spend as a lot cash to accumulate new prospects,” he stated, “however somewhat on growing their merchandise.”
At any charge, regulation has an extended method to go in Colombia.
The fintech skilled warns in opposition to the chance of the initiative being diluted down the road or incorrectly regulated. On this regard, the instance of Mexico, the place the fintech legislation was vastly modern however then fell wanting expectations, is illustrative.
“Colombia is a rustic that has already processed well-intentioned rules, however that doesn’t absolutely perceive the specifics of the fintech sector in a neuralgic method,” stated García. “It’s higher to have broad and common frameworks than guidelines that set up a really complicated process that might find yourself ruining innovation.”
For Erick Rincon Cardenas, Director of TicTank and Professor on the Universidad del Rosario, ruling Open Finance as necessary is vital. “Open Banking wants an ordinary that not solely allows knowledge sharing but additionally progressively calls for that or not it’s made necessary,” he instructed Fintech Nexus.
He additionally voiced for regulation particularly aimed on the cryptocurrency sector. “The nation urgently requires a complete regulation relating to crypto property,” he stated.
