Open Finance: BCRA, Banks and Fintechs are looking for a common model to expand credit

In the midst of exchange volatility, the government began to take the first steps towards the Open Finance implementation In Argentina. Last week, the Central Bank (BCRA) He held the first encounter with banks and fintechs to discuss the bases of the Open Finance System (SFA)which seeks that financial data cease to be under exclusive control of banks and become directly administered by users.

In this way, each client may – voluntarily and with express consent – authorize that their information is shared between banks, fintechs and insurers, with the aim of accessing better products and credit conditions.

The objective of the BCRA and the risks to avoid

Today the BCRA barely registers the debts through the debtors center, and something similar occurs with private bases. The SFA aims to go much further: Allow banks and Fintechs to access – always with a client authorization – to a more complete panorama that includes regular consumption, expenses by card, employment situation, housing conditions or heritage history.

With this information, the central objective It is enriching the credit profile of the Argentines. Those who are outside the formal system could demonstrate their ability to pay and access loans that until now were forbidden. In turn, those who already have credits would have the possibility of improving their profile and obtaining financing in more favorable conditions of rate, amount or term.

The benefit is not limited to users. For financial institutions, having a more precise history reduces the risk of loans. Especially for the Fintech – who today apply rates greater than 100% to cover themselves to possible breaches – to have more rich information opens the door to offer more accessible products.

An international model with local seal

The initiative has a global history. The Open Finance was born as a public policy in the European Union and was then replicated, with variants, in different jurisdictions. In the region, Brazil It became a reference model with the Open Banking.

In Argentina, the challenge will be to design its own scheme that generates confidence in users from strict personal data protection measures.

In the last presentation of the Fintech Chamber, entitled “The challenge of Open Finance”the main risks that the Argentine system must attend, several of which were present at the table with the BCRA were reviewed:

• Abusive practices: prevent the greater availability of data in the sale of inappropriate products, especially to customers with low financial education.

• Real consent: Ensure that the transfer of data is always voluntary, without undercover pressures or penalties.

• Reciprocity: Ensure that both banks and Fintechs share information on equal terms, to avoid concentration of better profile customers in few actors.

• Cybersecurity and governance: Establish robust data protection standards, with legal support and the participation of public bodies such as the CNV, the Superintendence of Insurance, the ANSES and the Access to Public Information Agency.

In dialogue with scope, Eduardo Segovia MattosLegal Advisor of the Fintech Chamber for Open Finance, highlighted the legal challenges of the initiative and stressed the importance of these first public-private work tables.

“The experience in other jurisdictions showed that, if the project has design errors in its conception, it is then very difficult to implement, manage and evolve. In addition, costs are increased,” he warned.

Mattos remarked that the position of all the actors is that the implementation is not coercive. “In other countries, it was thought of as a coercive measure to correct alleged market failures linked to the lack of competition. In many cases the experience was traumatic, especially when defining what information was shared and who financed the cost of the project. In Argentina there is already competition between banks and fintechs, so the focus of the BCRA is put to improve credit evaluations and expand the offer of services to users,” explained.

A long -term path

The meetings are just beginning. The meeting of last week was just the initial kick of a process that will demand multiple rounds of debate between regulators, banks and fintechs. The challenge is double: Include more Argentines in the financial system and, at the same time, generate a competitive and transparent framework that improves the quality of credit and reduce costs.

“With the clear objective, it should be easier to agree on the technological infrastructure necessary for users to manage their information in a simple way. It is likely that there is the greatest challenge. We have experience as an industry to work side by side with the regulator to innovate,” Mattos concluded.

However, beyond the regulatory framework, the Macroeconomic context will be decisive. Lower rates and access to more competitive credit products will only be possible with an orderly economy. And that, they coincide in the market, is the weakest point of the initiative.

For now, the government is committed to the Open Finance become a medium and long term public policy. The next meetings between the BCRA and the financial system will mark how quickly – and with what consensus – the project can advance.