Nine Out of Ten Fintech Companies Could Cooperate with Banks by 2025

By 2025, nine out of ten fintech companies would create and maintain partnerships with other financial institutions and other segments to provide services through companies outside the financial sector, so open finance will be fundamental, according to a study conducted by Mercado Pago and Finnovista.

Due to the trend, the study “Agenda fintech Rumbo a 2025”, also points out that nine out of 10 banks have already begun to implement open finance strategies, according to Finerio Connect, which consists of the exchange of financial information from any entity in the financial system.

“The ability of fintech companies to operate as a technological layer, coupled with their willingness to collaborate with financial and non-financial entities, will transform the industry into an interconnected ecosystem,” the study notes.

However, Finnosvista in a previous report had estimated that 58% of fintech companies in Latin America have some kind of collaboration with financial institutions, and the dialogue perceived by fintech companies with other entities was difficult, according to information collected from several firms.

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Regulating to develop the cooperation between fintech companies and banks

On the other hand, in the presentation of the study, participants highlighted that in order to foster the development of a collective financial system in which open finance exists, the participation of entities with regulators is necessary.

“Part of what we do is anchored to traditional banks, we need their help to operate in the financial system, once the collaboration of fintech companies with traditional banks is combined, in a stable regulatory framework, there is an environment that allows the development of the industry,” explained Pedro Rivas, general director in Mexico of Mercado Pago.

The research indicates that in terms of regulation, open finance is one of the main issues for regulatory bodies in Latin American countries, mainly Mexico, Colombia, Chile, Argentina, Peru, and Uruguay, which are in the process of building a regulatory framework, while Brazil is at the stage of measuring the benefits, security, and efficiency of open finance.

In Mexico, it is noted that open finance is in the implementation stage and that the regulations have not received updates since March 2020, on secondary and complementary rules.

“Authorities have the responsibility to continue learning and remain open to sit down with startups and in that way understand the new mechanisms, collaboration with financial platforms has had a great relevance and evolves more naturally,” explained Pilar Madrazo, professor at the Universidad Anáhuac.

According to forecasts, at least five Latin American economies will have successfully implemented open finance regulation in the next three years.

The infrastructure for the exchange of information and the use of Application Programming Interfaces (APIs) would trigger the development of financial services in the region, mainly benefiting payments, digital credit, and investment management segments.

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(Featured image by mohamed_hassan via Pixabay)

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First published in EL ECONOMISTA, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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