As we highlighted in one of our recent ‘Back to Basics’ articles, over the last few years, the Open Banking ‘revolution’ has spread all around the world. From Europe and the UK to Australia and New Zealand, from Singapore and Hong Kong to Nigeria and the MENA region, Open Banking rules, standards, and services are rapidly emerging to transform the banking sector for the better and to give customers more control over their own money. Despite all the Open Banking related news coming from all over the globe, 2021 has been thus far the year of Latin America and – more specifically – Brazil. This is the reason why, next week, we will be launching our new Open Banking Excellence chapter in the largest economy of Latin America. But why and how is Brazil considered now the hottest Open Banking frontier? Here below, we will try to give you the best answer you could find whilst ‘googling’ about Open Banking in Brazil. The regulatory strategy behind the launch of Open Banking in Brazil The Brazilian Open Banking initiative was firstly introduced by the Central Bank of Brazil in August 2019 with a public consultation focusing on a regulatory proposal for the implementation of Open Banking by financial institutions, payment institutions and other organisations licensed by the Central Bank. Following this consultation, which officially ended in late January 2020, in May 2020, a Joint Resolution made by the Central Bank and the National Monetary Council of Brazil provided the overall regulatory basis for the establishment of Open Banking in the country. In fact, amongst the several aspects discussed in this Joint Resolution we can find:

• The establishment of the minimum scope of participating institutions and the data and services to be included in the initial phase.
• The data-sharing requirements and responsibility.
• The initial governance model for the implementation of Open Banking.
• The implementation schedule.

Finally, in line with this Resolution, in May 2020, the Central Bank of Brazil published a Circular which disciplined the scope of data and services of Open Banking. As of today, these three main documents form the overall regulatory strategy for the development of Open Banking in Brazil. View full size infographic The four phases of Open Banking implementation in Brazil In alignment with the roadmap defined by the Central Bank of Brazil, the implementation period of Open Banking in Brazil consists of four phases, which will see the gradual opening of the banking and financial services sector:

• Phase 1 (February 1, 2021) – Information regarding products and services, as well physical locations, and other channels.
• Phase 2 (August 13, 2021) – Customer data and transactional data.
• Phase 3 (August 30, 2021) – Payments’ initiation and credit operations forward services.
• Phase 4 (December 15, 2021) – Open Finance scope, including pension funds, foreign exchange, investments, and insurance products.

Compared to what has happened in the UK, which saw the introduction of Open Banking standards in January 2018 and will probably witness the end of the Implementation Period in late 2021/early 2022, the Brazilian Open Banking implementation period is very ambitious. Concluding successfully all four phases in less than 12 months is surely an exciting challenge to deal with. As Aristides Andrade Cavalcante Neto, Deputy Head of IT & Chief of Cybersecurity & Technological Innovation Office at the Central Bank of Brazil explained: “The implementation of each stage of Open Banking in Brazil is not an end in itself, but the beginning of a deep transformation of how financial services are conceived and delivered to consumers. We’ve learned a lot from other jurisdictions and especially throughout our implementation journey, making adjustments when necessary. In this way, we expect to continue contributing to this theme, together with other institutions such as the OBE”. Brazil is a land full of opportunities for Open Banking With an adult population of over 160 million people and with the number of Brazilians using the internet growing rapidly, Brazil is poised for mass adoption of Open Banking standards that will open up a multitude of opportunities for innovation, consumer-centric financial services, competition and economic activities. In 2020 alone, Brazilian fintechs achieved US$ 1.7b in investments in 90 deals as opposed to US$ 910m in 2019. They also took third place behind the US and China for the number of mega-rounds (US$ 100m+) closed. With traditional Brazilian players and large incumbents still unprepared for the changes brought about by the Open Banking ‘revolution’, this is a great space for Brazilian fintechs to play.  It is not a surprise then that, according to Roland Berger, the introduction of Open Banking in Brazil will soon lead big financial institutions and fintechs competing for around 60 million customers and will cause a revenue loss up to BRL 110 billion (around $20 billion) for those large banks that don’t embrace the revolution. Finally, Open Banking will also bring an opportunity to address the big problem of financial exclusion. In Brazil, there are around 34 million unbanked people. Financial exclusion, if measured from the declaration of current account ownership, is 52%, according to research by UFRJ (Federal University of Rio de Janeiro), based on raw data from the POF/IBGE (Brazilian Institute of Geography and Statistics, 2018 data). The exclusion is even greater if we consider credit card ownership (60%). The opportunity for new Open Banking players to develop innovative and inclusive Open Banking-powered products and services is massive. To achieve the four main objectives (encourage innovation, promote competition, increase efficiency in credit and payments markets and promote financial citizenship) set by the Central Bank of Brazil, we all need to work together. OBE will be part of this incredible story As our founder, Helen Child keeps arguing, “collaboration is key”. On Wednesday, 1 September, our organisation will enter the large Brazilian market and we will kick off our journey there with an exciting Campfire. For this reason, we can’t wait to share our expertise and knowledge and help Brazil become a new reference in the sector. We are thrilled to be at the forefront of the new relationship that the UK and Brazil are building in the field of fintech and Open Banking and we are honored to have developed strong ties with several leading actors. As Spencer Mahony, Deputy Trade Commissioner for Latin America & Caribbean at the Department of International Trade said about our launch in Brazil: “We are delighted to see this initiative that will help deepen Open Banking cooperation between the UK and Brazil. As part of the 4th Economic and Financial Dialogue (EFD) held in December 2020, the UK and Brazil committed to enhance collaboration on issues related to the development of fintechs and innovative banking solutions in Brazilian and British markets. The UK has reinforced its commitment to this financial ecosystem through regulatory workshops with the Brazilian government, and we look forward to working together as both our countries apply the principles of open banking to other sectors, including insurance”. Join us at our upcoming Campfire next 1st September,  where we will be launching a local chapter in Brazil to support the development and growth of the country’s open financial system.