Banking in Brazil Enters a New Era

They’ve compared it to the Internet. It’s the newest, greatest, most groundbreaking advancement in years. Or so they say. Starting this month, a system known as Open Banking will allow for the sharing of financial information among banking institutions. And the consumer - whether an individual or a company - will get to decide what information gets shared and with whom.

It promises to be secure. It promises to be free. And most importantly, it promises to put control in the hands of consumers. Sounds great, right? Perhaps for some, particularly those who need their credit information shared among lenders. But how does it help the average person?

Maybe a focus on improving cybersecurity in the financial services sector could have been a better use of resources. Or preventing bank fraud. What about improving customer service at banks? There’s a reason why so many Brazilians are now looking to fintechs rather than traditional banks for their financial needs.

And of course, there’s the issue we hear about all the time from foreign investors about not being able to open a bank account without having residency. How does an American citizen who owns a house in Brazil pay the utility bills and property taxes if they can’t even open a bank account?

Improvements to the banking system in Brazil, in whatever form, are worthy of praise. But thought should also go into prioritizing services that will have the greatest impact on consumers. Open Banking may in fact be innovative, but it certainly won’t solve Brazil’s banking problems.