Open finance, a new phase of open banking, is approved by the CMN

The CMN (National Monetary Council) approved this Thursday (24) a resolution that marks the official launch of open finance, an evolutionary project of open banking.

Open finance, or open financial system, provides for the integration of non-banking services into the model, expanding the sharing of personal, banking and financial data between institutions –with prior authorization from the citizen– for various sectors, including insurance companies, investment brokers, foreign exchange and pension.

To consolidate the migration, the Central Bank and the CMN are updating the regulatory treatment for this new nomenclature.

“This is expected to facilitate understanding by the general public, since the profusion of terminologies (open banking and open finance) makes the understanding of the initiative more complex, and may even affect, on the part of customers, the predisposition to the use of products and services”, said the monetary authority in a note.

Another change determined by the resolution refers to the definitive open finance governance structure, whose model must be submitted for approval by the BC by June 30th.

“There was a need to clarify some of the attributions and duties of this structure for monitoring and solving problems arising from non-compliance by institutions with their obligations within the scope of the open finance ecosystem”, he said.

Good governance practices, such as internal control policies, risk management, auditing, transparency and other provisions aimed at the proper functioning of the system were also incorporated into the regulation.

“Open finance participants are subject to compliance with rules established by the National Monetary Council and the Central Bank, as well as obligations established within the scope of the agreement signed between the participants. The latter are embodied in contracts, precedents, guides and other documents that detail technical and operational aspects of regulated topics, in addition to other internal documents related to the governance of the convention”, he indicated.

The CMN is a collegiate body formed by the president of the BC, Roberto Campos Neto, by the Minister of Economy, Paulo Guedes, and by the special secretary for the Treasury and Budget, Esteves Colnago.