Chile takes step along open banking highway

Chile’s government is sharpening its focus on open banking.

The country has already introduced a financial portability law – seen as an initial step on the path to establishing an open banking framework.

Now authorities will work with financial regulation and competition experts Ana María Montoya and Rosario Celedón on an open banking legal proposal, the finance ministry said. 

The proposal is expected to be built into a pending fintech bill.

Lawyer Celedón is a former commissioner at financial services watchdog CMF and Montoya is a former chief economist at antitrust agency FNE. 

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Other countries that have adopted a regulatory-driven, rather than market-driven, approach are the UK and Australia.

Chile’s fintech chamber FinteChile – which for several years has been urging the development of a local open banking ecosystem – welcomed the news, citing the role the financial technology sector can play in the country’s economic recovery.

Learning from other countries will be vital, it added.

“The key to this process will be carefully observing and listening to the successes and failures experienced by other geographies with their financial innovation laws, so that we achieve for Chile an exemplary fintech law,” the chamber said in a statement.  

Open banking gives users control over their data. Under the model financial institutions must share with third parties, such as fintechs, the data of a user, provided the user has given consent. Data is transferred through an API, which acts as an interface between the systems of the institution and that of third parties.

A key aim of open banking is boosting competition and transparency within the financial services space.

In Latin America, Brazil and Mexico are in the vanguard, with the former country scheduled to start implementing a regulatory framework this month.

Rumblings are also being heard in Ecuador, Peru, Colombia and Uruguay, the latter country outlining open banking plans in its recently unveiled roadmap for the development of its payments system through 2022.