- Interoperability and financial portability will be central in this new stage
- Other key aspects: security standards required for Third Data Receivers and approval of alternative technologies for data access
Colombia’s Financial Superintendence (SFC) has taken a crucial step for the future of the financial industry with the initiation of the second phase of its Open Finance strategy, marked by the issuance of Circular Externa 004 of 2024.
This measure was announced by the Financial Superintendent, César Ferrari, and promises to transform the Colombian financial landscape, fostering fair competition and financial inclusion.
The main objective of Phase 2 of Open Finance is to facilitate interoperability among banking entities, allowing the exchange of information securely and transparently. It is expected that within the next 18 months, banks will be able to share information, fostering healthy competition in the sector. Regulatory authorities have evaluated this as the most significant advancement in the financial sector in the last 20 years.
The central focus of this phase is to break the information asymmetry in the financial system, especially in the credit market, where banks are expected to have access to information about their customers and among themselves. Currently, credit markets in Colombia have high costs, hindering financial inclusion.
Circular Externa 004 establishes clear obligations for financial entities regarding transparency and information security. It also defines guidelines for the marketing of technology and infrastructure to third parties, ensuring data protection in the Open Finance ecosystem. This regulatory framework aims to empower consumers by giving them full control over their financial data and providing access to personalized and competitive offers.
The strategy also encompasses financial portability, a right established in the National Development Plan, allowing consumers to transfer their financial products efficiently from one entity to another. It is expected that this additional regulation by the Ministry of Finance will be ready later this year.
The regulation has opted for APIs as the ideal method for sharing information but acknowledges that further maturity of the financial ecosystem is needed for the widespread implementation of these tools. Therefore, a transition period of 18 months is established during which entities can continue to use alternative methods for data access with all security guarantees.
With the implementation of these regulations, Colombia positions itself at the forefront of Latin America in adopting open finance models.
The second phase is projected to conclude in December 2024, followed by the third phase in September 2025. These changes not only promise to transform how citizens interact with the financial system, increasing transparency and competitive markets but also to improve the efficiency of the Colombian banking system.