The adoption of open finance in Latin America has yet to take off due to certain structural challenges, such as the lack of technical standardization that would allow different institutions to communicate with one another, cybersecurity concerns, and the regulatory framework.
But beyond these macro challenges, there are a handful of obstacles that may be underestimated and are similarly hindering the widespread adoption of this technology, which is the dream of many fintech companies.
Open finance is the natural evolution of open banking, as it allows users to share not only their banking data but also information on insurance, investments, pensions, and loans. However, sharing this data has many implications.
The challenge of the chaotic data boom
For different institutions to communicate with one another, they need a uniform language—one based on quality information. In other words, the data must be clean and structured. After all, there’s no point in receiving a payment labeled “payment_01” if we don’t know whether it’s for car insurance or a Netflix subscription.
Open finance is very useful when a fintech company seeks to assess the risk of a user applying for a loan. The challenge is that this information isn’t always consolidated, centralized, and organized, says Oscar Hernández, CEO of the consulting firm Bluetab Latam.
Sometimes this data isn’t standardized. For example, in the sea of data, it might appear that there are three users: ‘Maria,’ ‘Maria Lopez,’ and ‘Maria L.,’ when in reality it is the same customer.
“What we’re really looking for is for the information to be consistent and reliable, because you can end up with erroneous data in these massive databases,” said Hernández in an interview with Contxto.
Organizing data isn’t magic, explained Hernández; at Bluetab, they help financial institutions classify the information they are sharing. The consulting firm, which was acquired by IBM in 2021, helps organizations turn their data into real decisions that generate value for the business.
“All that data is knowledge generated by the industry; organizing it is turning it into knowledge,” said Hernández.
The CEO believes it is important to share data without neglecting privacy: “The traceability of information is also very important—how a name is used, how it is transferred to different sources to offer a product, a campaign, a new service, personalized advice, and so on.”
As a Mexican, Hernández knows that sharing this information requires meticulous control over user consent: what data is shared, for what purpose, and for how long.
In Mexico, open finance operates under the Fintech Law. Article 76 establishes that transactional data may only be shared with the customer’s prior and explicit consent. This data, considered the most sensitive, may include account balances, deposit and withdrawal history, credit card transactions, loan payment history, and active investments.
The challenge of sharing with consent
Natalia Landeta, CEO and co-founder of Certena, has identified a market need that relates precisely to consent and privacy.
From Colombia, she believes that “data is being handled very rapidly, and there will come a time when it must be controlled and regulated through consent.”
Certena’s business model encourages companies to clearly enable the consent option so that users are aware of what data they are sharing. It is an intermediary that empowers the user, Landeta asserts in an interview with Contxto.
“The open banking system is based on trust, and trust means that the user must manage their own data,” she affirmed.
But this trust remains a barrier to the democratization of open finance. The average user is still wary of granting access to their accounts. If the benefit (better rates or personalized advice) isn’t clearly communicated, the customer will simply say “no.”
Landeta says that Certera aims to help companies not only comply with regulations but also maintain consent as a living, active document. She proposes that this consent for various financial institutions—and even telecommunications companies—be managed through her platform. This would mitigate the risk of consumer fatigue from managing dozens of permissions across different apps.
