BBVA API Market
Mexico continues to climb rungs in the new open financial market. On March 9, Banco de México (Banxico) published the first rules of the open banking model, laid down in the ‘Law regulating financial technology institutions‘, known as the ‘Fintech Law’. Mexico was a pioneer in launching this regulation back in March 2018. Its article 76 was especially innovative at an international level, which establishes the obligation for the different actors in the financial ecosystem to offer application programming interfaces (APIs) in order to share information with each other.
This progress in the law is now taking hold in a country that is already the fintech market leader in Latin America, with more than 394 companies offering financial services with the help of technology, according to the Fintech Radars, prepared by Finnovista. Brazil follows, with 380; and Colombia, with more than 180.
Like any serious regulatory process on the financial market, this law is guided by the principles of protecting the user against fraud, fostering competition between actors, safeguarding savings and taking care of the stability of the financial system as a whole. But, in turn, these points stand out:
With the initial operating rules of programming interfaces now established, we know the authentication mechanisms for access to data, the standards for the exchange of information and the way and terms to request such information.
According to the standard, the entities compelled to create the APIs will be able to share three types of data:
With these initial steps of defining the ‘Fintech Law’, Mexico begins to get on a path taken by previous initiatives such as that of open banking in the UK and the European Union’s Payment Service Directive PSD2. With these experiences in mind, we can get an idea of the form that the Mexican regulation could take and the possible benefits that could be generated by allowing users to share their financial information with whomever they deem appropriate.
However, there is still a long way to go. According to the aforementioned Deloitte article, the recent Banxico circular, in addition to being limited in scope in terms of data types, is also limited in terms of actors: it only affects credit reporting companies and clearing houses; therefore, the provisions for banks, popular finance companies and savings and loan cooperatives, among other institutions, are still pending. Further implementation of this regulation is expected from 2021.
BBVA has offered its APIs in the Mexican market since 2017, making it one of the pioneers in doing so, even before the first regulation on open banking in the country. The Accounts, Auto Loan and Locations APIs are currently available.
Accounts allows the customer to sign up for a digital account from their app through their user ID, with which they can operate on their platform and access the BBVA ATM network. Loans Auto connects the vehicle trade business with BBVA to simulate and obtain a car loan quote for the end customer, showing the monthly installment, the loan term, the interest rate and an amortization schedule. Locations facilitates searching for and locating BBVA branches and ATMs in a simple and precise way in any digital product or app.
Open banking has changed the financial paradigm as we have known it so far. The widespread use of new digital platforms, connected devices and technology consumers has led to a boom in business opportunities for every company, many of which are already leveraging their benefits as much as possible.
The digital transformation has not been fully implemented in the automotive sector yet, at least not as quickly as in other distribution sectors. APIs can be this sector's best ally by speeding up its digitization, especially in those areas involving the purchasing process.
In just one year, the second European Payment Services Directive—or PSD2 as it is better known—has created a new scenario combining innovation and security, in which banks have been progressively opening up access to their infrastructure to third parties.