Open Banking: The Power of Information in Consumers’ Hands
Open banking innovation is likely to bring about many changes in the dynamics of the Brazilian banking industry's operations – a situation that had already been taking shape, partly thanks to the evolution of technology and partly due to the emergence of fintechs, who introduced new ways to meet clients’ needs and concerns. With the competition – and also cooperation – of these startups, the banking system began adapting to businesses’ dynamic needs.
Through this process, businesses will also need to adapt. However, building the model and infrastructure required for working with Open Banking data requires an extremely high level of resources and investment. Therefore, global technology companies will be allies and facilitators of this process for other companies, in addition to presenting additional advantages: instead of making all the necessary adaptations internally, they will be able to focus their own resources on the elements that involve direct contact with their clients (application interfaces, new products, etc.), consuming already processed data – and enabling faster results and more innovative solutions.
This is all taking place in a phased approach – in Brazil, for example, Open Banking began to be implemented in 2020 in stages (around the world, the process has been similar, with the United Kingdom being the main reference until then). And, as Open Banking initiatives and regulations are implemented and absorbed, the open data economy should gain strength, bringing a wave of change – Brazil is expected to become a reference in Open Banking, with the world’s largest ecosystem. As the space evolves, Mastercard is taking a developer-centric approach to provide a unique set of technology platforms, best-in-class APIs, data connectivity and infrastructure combined with data privacy and security principles to enable all ecosystem players.
Traditional banks and institutions – in addition to fintechs, neobanks, big-techs and other not-so-traditional players – are getting ready to participate in this new market, as Open Banking enables choice and allows for greater democratization of financial services. Open banking allows consumers and small businesses to initiate payments using any linked account, a key component of Mastercard’s multi-rail strategy. Mastercard’s trusted connectivity and solutions put control in the hands of individuals, empowering consumers and small businesses to draw actionable insights from their financial data, move money more easily and securely, and access capital by clearly demonstrating creditworthiness. Deeper insights and greater control help the industry to build and deliver more tailored products and services with consumers at the center.
While we have just begun to scratch the surface of open banking innovation, Mastercard is uniquely positioned to leverage its multi-rail expertise and build a global open banking network with trust at the center. As consumer expectations, technology, and the competitive landscape evolve, Mastercard continues to enhance its open banking platform by increasing data sources, data availability and data quality, and deepening data intelligence and analytics to better serve consumers and changing needs.