For some years now, the global financial landscape has changed dramatically as a result of technology. One major innovation is open banking. This model is currently transforming how individuals, companies, and banks conduct money transfers and manage financial data.
In Latin America, the banking system has historically been somewhat closed and bureaucratic, but over time, technology companies have emerged that connect banks, platforms, and individuals. These companies develop tools that enable fast, secure, and cost-effective money transfers.
What does the concept of open banking mean?
This is a model within the financial sector that enables the exchange of banking information between different platforms. It is important that security is always present and that the user must authorize it.
Open banking makes it possible for different applications or companies to be connected with banks and for them to access financial data or carry out operations with the user’s authorization.
This is made possible by tools called APIs (Application Programming Interfaces). These can be likened to a bridge because they connect banks with digital platforms. As a result, technology companies develop services such as automatic transfers, direct bank payments, bank account verification, and financial information assessment, among others.
This system has undoubtedly made the financial sector more open, innovative, and accessible.
How open banking works
It can be said that the operation is quite simple.
The first thing to consider is that the user authorizes the financial platform to access their account information. Later, through an API, the platform connects with the bank and compiles the necessary information to provide the requested service.
For example, a company can use open banking to obtain confirmation about the existence of a bank account or to carry out a money transfer.
In this sense, technology is able to act as an intermediary between a bank and applications or services websites.
Importance of this system today
Open banking is important for several reasons.
The world of finance is becoming increasingly digital, and this trend is growing all the time. Every year, more and more people are choosing to use digital applications to make payments, transfer money, or manage their finances.
Latin America still has a large percentage of its population without access to a traditional banking system. Therefore, companies based on open banking models contribute to making existing services accessible and inclusive.
Another important point is that there is a possibility that new companies can develop modern financial products without needing a traditional banking entity.
Some benefits of open banking companies
Companies that work with this system offer certain advantages to finance.
Transactions are completed quickly, there are no intermediaries, and commissions are zero or very low. There is greater innovation because new solutions can be developed in the financial field. Connections are made through regulated and secure protocols, and users can easily manage their money through various platforms.
Companies that help boost open banking transfers in Latin America
There are different companies of this type around the world, but those named below help simplify transfers in the region.
Prometeo
This is a technology company founded in Uruguay. It develops technological infrastructure to connect banking institutions and digital platforms through APIs.
Prometeo can access bank details, validate accounts, and make payments or transfers between accounts of different entities.
A major advantage is that it has a single API for connecting with different financial institutions, making technological integration simpler.
Belvo
This is a major player in the Latin American open banking sector. Founded in 2019, this company provides a platform for businesses to access financial information and make payments directly from bank accounts.
Belvo carries out its work with financial entities, technology companies and digital companies in different countries.
Thanks to its system, banking data can be analyzed to achieve improvements in certain services such as, for example, loans or identity verification.
Fintoc
This is a technology company of Chilean origin, and it is also dedicated to the development of technology to connect applications and banks.
Their main goal is to enable digital platforms to interact with people’s bank accounts through an API.
The most notable aspect is the focus on payments through direct transfers.
Salt Edge
This is a Fintech company that provides open banking solutions for banking entities and technology companies.
The company provides tools to connect applications with hundreds of banks and to access financial information or make payments.
Salt Edge specializes in cooperating with banks and technology companies so that they can implement open banking solutions in their systems.
Open banking undoubtedly transforms the financial system around the world.
As a result of this model, banks have the possibility of connecting with modern platforms and taking advantage of better quality, faster and more accessible services for users.
