Alexandre Pinto, VP of Banking Products at Pismo, was a panellist at the Digital Money Meeting conference, an event that gathers banks, fintech companies, and regulators in São Paulo, Brazil, to discuss trends in the Brazilian financial ecosystem.
Alexandre joined other experts and business leaders in a panel to discuss the lending opportunities Open Finance creates for consumers and businesses in Brazil.
From Open Banking to Open Finance
While Open Banking focuses on sharing data between banks, Open Finance expands this concept by allowing consumers and businesses to share their banking data with other financial institutions. Participants of this data-sharing system include investment brokers, pension funds, insurance companies, foreign exchange services, and acquiring firms.
According to the Brazilian Banking Federation (Febraban), since its launch in Brazil two years ago, Open Finance has reached 17.3 million consents for sharing data, with 10.8 billion successful communications between institutions in this period. Specialists say the country will soon surpass the UK’s leadership in the Global Open Finance Index ranking.
Alexandre explains that although the number of consents shows Open Finance as a successful program, it still needs to generate relevant benefits for lending. Brazilian credit offers are typically unsecured loans requiring a high credit score for approval.
“Using Open Finance to gather data from the Central Bank and other sources, we can structure collateral-based loan offers. At that point, we will achieve the Central Bank’s goal of providing credit access and democratising financial services.”
Enabling competition
Alexandre says that before the Open Finance project, institutions with a lot of customer data had a competitive advantage over other companies. Since data is now shared through Open Finance, new entrants have a much better chance to succeed. This change has increased competition in the industry, benefitting consumers.
“Now we distribute data among several players. The competition consists of analysing this data and combining it with other sources of information. The result is more attractive financial products, and the winners will be the ones who make the best use of the available data.”
Driving innovation
As a technology provider, Pismo offers an infrastructure for payment processing, card issuing, and core banking. It integrates with partners and clients to perform transactions and generate a lot of data. For Pismo, Open Finance is a way to help clients offer a streamlined solution and the maximum benefits to end customers.
Alexandre mentions, as an example, Pismo’s Digital Lending Solution. “We cover all the stages of the lending cycle, from booking to repayment. When we connect our platform with our partners’ and clients’ solutions through Open Finance, we can make quick data analyses, create contracts, and carry out loan operations in the shortest possible time,” he explains.
“We focus on the user journey and how we can support clients to provide better products and benefit their end customers,” he concludes.
