Open Banking enables integration between traditional financial institutions and Fintechs, with the aim of using technology and data to empower consumers. These, in turn, end up gaining more freedom and independence over their financial control through the use of information in the search for the best options for products and services. In this content, we will bring some news that guide the national market about Open Banking Brazil, and the possibility of making a good management of investment funds from the use of this “open financial system”, in its literal translation.
News from Open Banking in Brazil
Since 2006, the Central Bank has been approving initiatives of the so-called Open Banking Brasil, enabling, for example, the portability of registration between banks. In order for the system to be used efficiently in the country, it is necessary that financial institutions seek the technology necessary to reach application developers, as well as the regulation of this new mechanism to give consumers more legal certainty, especially regarding the protection of their personal data.
According to Imran Gulamhuseinwala, head of the UK Open Banking Implementation Entity and one of the world’s leading experts on the subject, Brazil is on the right path.
The implementation schedule follows the following steps:
- first stage in progress, started in February 2021, which deals with the standardized sharing of information about traditional service channels, services and financial products;
- second stage scheduled for July 2021, where consumers will have control over the sharing of their personal financial data, and will be able to share it with institutions of their choice, whenever and however they wish
- third stage scheduled for August 2021, which will enable consumers to access services (such as payments and credit proposals) not only through the channels of their financial institutions;
- fourth and final stage, for December 2021, where the Open Banking concept will be expanded to include more data options that can be shared.
As the country is advanced with the theme even with the problem of the pandemic, as Bruno Diniz mentions, FDATA leader in Latin America in a lecture given at a Canadian institute:
“[…] this is because the country had already resolved the LGPD and because the open banking model in Brazil starts with something that is completely within the control of the Central Bank, which acts over regulated financial institutions .”
This “Open Bank” is nothing more than the integration of systems regulated by the Central Bank, where, through the user’s consent on the use of their data, there will be the sharing of information between financial institutions and platforms, in order for them to present offers of products and services with different conditions and rates. The action should stimulate the competitiveness of products and services, providing consumers with a better experience. Thus, the latter will be able, through a single application, to decide the options best suited to their profile, without having to commit to a single institution. To better illustrate this new mechanism, we will give a practical example: Suppose you have an account at bank X and you want to switch to bank Y. The problem is that, in the latter, you will have a lower credit limit. Using Open Banking Brasil, you can share your transaction history of bank X with bank Y quickly and easily, and thus bank Y can use your history in bank X to offer a higher credit limit.
Open Banking Brasil does not only involve credit limits. Third-party financial services will also be offered: insurance, investments, foreign exchange and credit cards.
All will be offered through APIs (Application Programming Interface), such as those offered by BRITech, which provide customers and partners with a programmatic solution to integrate data and calculations from our platform with other legacy products and systems.
How to manage investment funds well?
Since the management of investment funds is a selection, control and negotiation of resources in a given portfolio through a specialized manager, it is important to emphasize some aspects of good performance by this professional, let’s see:
Have the versatility to understand different scenarios
Understanding the financial market is quite complicated, as it is not possible to predict what will happen in the coming months. Therefore, the versatility to deal with different scenarios is essential, understanding every detail of your projections so that they then have better knowledge of the fund’s performance.
Have a periodic communication with the customer
It is essential that you keep your clients updated and informed about their investments, as it is essential for shareholders to have communicative managers who use an objective and easy-to-understand language.
Keep up to date
Building portfolios and making decisions requires study and dedication to analyze market trends. Therefore, apply the most varied methodologies in your routine and always make use of new technologies, such as those offered by BRITech.
Have emotional control and confidence in your expertise
This approach will give you more results in your work, since, using reason more than emotion, you will build your management based on logic, data and trends, applying strategy and structured plans that will help in disastrous times and in volatile markets, providing greater security for investors and shareholders.
How can systems integration help?
We can conclude that the results that a manager delivers demand study and application of the most diverse methodologies, aiming at the production of a good portfolio and risk mitigation. A good solution to maximize these desired results is to use an investment fund management software such as those offered by our Wealth Tech. BRITech offers investment management, risk management and compliance systems. Our custom solutions help the community navigate the complex and ever-changing environment of changing investor preferences, regulatory frameworks and emerging technologies.
With the implementation of Open Banking in Brazil, BRITech will play an important role in promoting the improvement of the integration between these systems, helping to share customer service with other market players. If you want to have a differentiated management of investment funds, be sure to follow in our blog the next steps in the implementation of Open Banking in Brazil, to have first-hand access to the solutions that are and will be presented by BRITech to facilitate the integration of our systems.