A few months ago, the Superintendency of Finance Colombia’s Financial System Supervisory Authority (SFC) issued an internal circular establishing the rules for implementing Open Finance in the country. This corresponds to the second of four planned phases, and thus continues to promote the adoption of this growing financial model, which aims to… The goal is to empower consumers by giving them full control over their financial data.
The SFC points out that “this regulatory development is aligned with the search for greater financial inclusion and digitalization in the country”, although its regulatory framework is still under construction, Colombia is moving in the right direction and has the potential to become an example for the region.
Open Finance and financial innovation
Currently, Brazil is leading the way in the implementation of Open Finance: “there are more than 29 million active individual consents, with more than 800 institutions participating,” reports the newspaper La República.. This success is mainly due to the fact that the Central Bank established detailed guidelines on how financial entities should share user data, guaranteeing the security and privacy of the information.
For the South American giant, open data has given fintechs and financial startups the opportunity to compete on equal terms with traditional banks, driving innovation in financial products.
According to Diego Jara , Payment Methods Manager at Intexus , collaboration between traditional banks and fintechs is becoming increasingly close.since both require solutions that provide new functionalities and foster great synergies. He adds that “digital banking is gaining prominence, as carrying out procedures in an office is becoming less important.” Users demand a much more agile and simpler banking experience.
Open Finance and data protection
Although the future of Open Finance looks promising, the open data ecosystem is not without risks, and in this context, doubts arise about the exchange of sensitive information. Identity theft, fraud, and cyberattacks could endanger user data. Therefore, Open Finance must incorporate key measures that guarantee protection, privacy, and security in the handling of financial data between users and entities.
“Data protection needs to be more robust. For there to be a thriving collaboration between the entities that are part of the financial environment, it is essential that data is transferred and stored securely, and this can only be achieved by working together,” says Jara.
For Colombia to continue progressing towards Open Finance, it must overcome several challenges, with data protection being one of the most critical. This is not only because data is now the most valuable asset for organizations, but also because potential breaches or leaks of information could jeopardize the success of open finance and undermine user trust in the financial system as a whole.
If the country manages to successfully implement Open Finance, the sharing of data between various entities and platforms could increase the risk of leaks unless robust security measures such as encryption and tokenization are adopted.
Furthermore, it is essential to foster a cybersecurity culture within organizations and ensure continuous collaboration between regulators, providers of advanced cybersecurity solutions, and third-party data recipients to understand the new security threats that have evolved and must be constantly monitored.