Colombia’s Financial Superintendence (SFC) launched its open finance strategy in the middle of this year, outlining a two-year plan for the country to be on a par with nations such as Brazil, the United Kingdom, Australia and India. Curiously, some experts consider that it is not necessary to invest so much in something that starts almost from scratch, since what is really needed in these cases is that operating standards are defined.
Regulation is good, but there must be a defined standard, and the big problem with open banking in Latin America is that there are no standards here, and everyone does it as they want. If that happens, it is very expensive, but if a standard is defined for them to work, as in Europe for example, which has ISO 20022, everything will be easier,” said Pablo Pereyra, CRO of 2Innovate
The cases of Brazil, the United Kingdom, Australia and India have been mentioned, which in Pereyra‘s opinion are very different from each other, but which somehow have “some detail that fits the Colombian reality”. Despite this, he clarified that, if a hybrid of everything is made, there would be a lack of the standards he referred to at the beginning of his interview with Forbes.
Hence, the great challenge of these processes is that everyone agrees with the objective, and it is from that side that it is possible to understand in detail why standardizations do not work in Latin America. In Pereyra’s opinion, the big banks “do what they want,” and his argument is: why should I open APIs to the world, if I am the owner of the market? By doing this, they will most likely lose market share with new players, so the lobby will aim to ensure that this does not happen.
The dilemma? That the tech giants are coming behind them, implying that all the information from each sector of the economy, including the financial sector, will be all on the internet, and therefore, they will stay with the market. “It’s going to come to Google, it’s going to come to Twitter, and everybody’s going to be left with the financial service. The key is logistics, as well as what Amazon does,” he explained.
That’s why, when ordinary people think of digitalization, the first thing that comes to mind are mobile applications, a tool that companies like the one Pereyra represents oversee, because they are behind any channel orchestrating transactions.
“You can click the button to make a PSE payment through domestic or international systems, and we are in all of that, so it is like a convergence of modern payments in the cloud where you can link any type of payment on the platform, and in addition, you can develop it at low cost,” he said.
In Pereyra’s words, it’s like a ‘Lego’ piece that gets in the middle to sort out the transaction. However, that leads to a new question: for what kind of transactions? This is the difference between the business and how it gives added value to offer transactional services, especially when interest rates give little margin to make money today. In short, the margin is small, and the competition is high.
Hence, the executive stressed that the digitization of the apps that we see and imagine when we think of a digital bank are just the tip of the iceberg, since behind are all the processes that come hand in hand with open finance, required for things to happen and be cost-effective.
“Banks that migrate to do a digital transformation can really reduce their costs somewhat. This process is not worth a fortune, it’s something you can do and it’s not impossible,” he concluded.
Original article: https://forbes.co/2023/12/28/economia-y-finanzas/lo-que-necesita-colombia-es-que-se-definan-estandares-para-implementar-el-open-finance