While Open Banking started in the UK as primarily a mandatory step for the nine top banks (CMA9) under the directive of the Competition and Markets Authority (CMA) through the CMA Order, none of us involved in the initial steps of Open Banking could have imagined the global impact that this initiative would have.
Countries across the globe are understanding that this initiative is more than just a regulatory requirement. It is a structured way to embrace innovation through three key pillars: collaboration; common data standards; and a strong regulatory framework to support it.
There is no better example of this than what is happening across the Americas, primarily in Latin America (LATAM). Mexico is leading the world by undertaking a full revamp of its financial sector, implementing the Mexican Fintech Law. This law is not only about the banking sector; it intends to tackle 20 subsectors with over 2,265 varied financial institutions – a much higher number than the UK CMA9 undertaking.
While Mexico will initially not have transactional data as part of its remit (read only data), the fact that it is embarking on the data standardisation of 20 subsectors will launch Mexico to the forefront of Open Banking innovation through the possibility of sector/cross-sector products and services.
What makes this country even more impressive is that it has a very strong fintech community from young ‘just out of college’ to highly-experienced teams that are actively participating in this movement. Additionally, Mexico’s private sector is embracing the endless possibilities for innovation by motivating these fintechs through a number of different channels such as hackathons.
Mexico has the potential to be a financial sector hub for the region. Open Vector has delivered phase one of the Mexican Fintech Law and is proud to be part of the conglomerate of experienced firms that were awarded the tender to deliver phase two.
While Mexico is leading the way, other nations are seeing the many benefits and opportunities and embarking on Open Banking strategies primarily from in-country fintech associations. For example, we are working with the Colombia Fintech Association to create an Open Banking roadmap for the country. Colombia benefits from a strong fintech community but also from a financial sector that realises the opportunity is there to make Colombia an attractive country to do business in, reducing past negative history around corruption and drugs.
Additionally, FinteChile is preparing to bring Open Banking to Chile after earlier presidential elections. Chile enjoys the benefits of a stable economy and government which makes this country ideal to compete as the South American hub in the financial sector and Open Banking. Having said this, the fintech associations of Argentina, Brazil and Peru are also having discussions about bringing Open Banking to their countries as well.
In the north, Canada has taken a major step forward by submitting a consultation paper on Open Banking to see how individuals and organisations see Open Banking and if there is general interest. While we await results, it would seem very probable that Canada will also see the opportunity that this initiative will bring and join this global movement.
In summary, the Americas have woken up to Open Banking. Governments realise the opportunity for social and financial inclusion that this initiative will bring, while fintechs and financial institutions see vast opportunities ahead. We are very excited to be involved across the region and look forward to the opportunities this will bring, not only to fintechs and financial institutions, but to consumers – the reason Open Banking was created.
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