With a fintech law already approved, firms that provide financial services and technology are looking forward to the implementation of an open finance system in the country in the future, so that people are owners of their financial data. This week is key for progress in the area.

“Here in Chile we have to define once and for all whether we are pro-business or pro-market. I think it is the second,” says the former Chilean Minister of Finance, Ignacio Briones before a forum of almost a thousand people in Santiago.

Briones launched this phrase while remembering the discussion that took place at the time the country discussed its fintech law, eventually approved in October 2022 after just a year of congressional debate. The law went into force since January 2023. And the old fight between incumbents and new actors always comes in the context of breaking with the status quo.

His statements were given during the inauguration of the Chile Fintech Forum 2024, an event that brings together the main actors in the Chilean fintech world for two days.

Today, the sector has a new challenge, which is to launch the open finance project associated with the fintech law. This seeks to hand over the power of financial data to people and away from banking entities. Kind of a game changer in the way you look at data ownership.

The measure is not new. Countries like the United Kingdom have already adopted it. In Latin America there is only one country that has this system working: Brazil. Mexico was about to have it and finally Banxico decided against it.

So far, in Chile, this project is proving to be a real battle between consumers and traditional banking.

In his speech, former Minister Briones highlighted that the creation of the fintech law installed the idea of greater competition in the banking market. “Banking did not oppose this change, and I think that is good to highlight. It participated in the debate. Those who did oppose, as always, and until the end, because they have blocked everything, is financial retail. Luckily they lost,” he stressed.

Briones compared that previous fight with what could happen in the future with open finance, recalling the opposition from certain sectors.

On the contrary, the key to success will be information and the ability to manage it, said the former minister.

“The financial sector, the financial world, all its aspects and products, is an information business. This later translates into offering financial solutions or products to small, medium, large, and natural persons. The big difference today compared to twenty years ago is that we can process that information at a low cost, and there are fintech companies that, with small scale, but talented people, good algorithms, good technology behind them, are capable of offering solutions in a way very efficient,” he said.

For Briones, what is coming in open finance is something very simple: changing the paradigm regarding who is the owner of the information. Banks, insurance companies, financial intermediaries, as has traditionally been the case, or people.

“If you think about it in the banking business, on paper it is taking money, lending money and earning a difference, and that is true. But at its core, it is an information business. That's the business. And the question is whether that information is going to be housed in a limited group of incumbents, or are we going to open it to new actors who can challenge the incumbents,” said the former minister.

PART OF THE FINTECH LAW

“Open finance is a state policy that allows people to be the real owners of our information and we can deliver it to them regardless of who captured it, a bank or whoever, we can deliver it to another institution so that they can make us an offer of a financial product,” José Gabriel Carrasco, president of Fintech Chile, tells AméricaEconomía.

“In Brazil there are great exhibitors that decided to take the law to heart and go help people, like Nubank. Nubank is playing a beautiful game in Brazil, and there are many learnings from what they are doing there,” he adds.

Open finance regulations are currently contemplated by the fintech law, which also contains the issue of open banking and open data.

We are living crucial days for this. According to information from the Financial Market Commission (CMF), Wednesday, May 15, is the deadline for public consultation on the open finance system standard. Once the public consultation concludes, work starts on issuing final regulations by July, in accordance with the schedule of the fintech law.

For Sebastián Salazar, CEO of ProntoPaga, a fintech that collects and distributes payments, the resentment that the project arouses among some actors in the ecosystem is part of the normal reluctance that certain companies or institutions may have in the face of technological advances.

“It is normal that these doubts exist, but the consultations and subsequently regulations that the CMF is issuing answer precisely those doubts, since it allows the participants and incumbents to offer their approaches and observe the regulations in consultation and eventually the CMF accepts them,” he explains to AméricaEconomía.

According to his vision, the system regulates how personal data is shared. “Therefore, it is good that all of us who participate in these processes double-click in order to protect this data, which is the property of people. Over time, all incumbents will become participants due to market effects, so regardless of the position of rejection or acceptance of the system, I believe that everyone will become part,” emphasizes the CEO.

Meanwhile Jacob Levin, Business Development Manager for Latin America of Galileo (US), a platform that offers both the issuance and processing of cards, having an open finance standard will help them their management, “because, precisely, transparency of data and making all this information possible for our clients or our partners obviously makes our work easier,” he says.

For now, it is difficult to know the full impact for companies and people, since the Brazilian case is the only precedent. Yet, Levin sees its benefits in advance.

“Without a doubt, providing this information to all these issuers with whom we work and having it within reach and having this information clear, concise and secure, makes it possible for us to do data messaging and the implementations of our platforms in a much more efficient, agile and simple way,” adds the Galileo spokesperson.

Returning to FinteChile, the trade association is comfortable with this regulation, because, contrary to popular belief about fintechs, these firms are not looking for fewer rules, but rather an ecosystem where they can play with more innovation.

“So, we as finechs, as a union, believe that the highest security standard, standard, is what should apply. It gives certainties to all of us, it gives certainties to people, it gives certainties to companies. And to that extent, we did not innovate in that part. Innovation, yes or yes, has to focus on experience and that is typical of each Fintech,” he specifies.

The president of the Chilean fintechs thinks that people will especially win with this rule.

“And when people win, it means that you are making companies compete. Those who compete with precarious value propositions, those who compete with cost inefficiencies, always lose (...) The point is that, naturally, those who have those inefficiencies, those who have that most precarious position in their value proposition and have a large amount of clients, they put themselves in certain dominant positions and they do not have to make these systems work,” concludes Carrasco.