No, we're not talking about the kind of bees beekeepers use to produce honey. When we talk about APIs, we’re referring to application programming interfaces that institutions open so third parties can access financial information.

Open APIs are increasingly common in Europe in the context of Open Banking and Open Finance. In this article, we’ll dive into their characteristics and what lies ahead for Latin America.

‍

How Has Open Banking Been Implemented Around the World?

Before diving deeper, let’s recall what Open Banking is and how it differs from Open Finance. The spirit of both concepts is to share financial data that flows from one organization to another and is accessible to third parties—always with the customer’s consent. The main difference is in scope: Open Banking includes only banking information, whereas Open Finance broadens the spectrum to non-banking data such as pensions and taxes.

It’s important to understand which technologies are used to access and collect information. The most common method is web scraping, which involves extracting data from a screen so another application can display it. The problem is that this method is slow and unreliable. If a bank changes its code, the software that scans and collects the data may fail, making it an unsustainable process for building products that add value to clients.

Another method is known as reverse engineering. This process allows access to bank APIs to gather a large amount of real-time data with user permission. In essence, it interacts with the server the same way the bank's app does, increasing data reliability and enabling more official relationships that foster institutional security.

This brings us to the future of Open Banking and Open Finance: open APIs that make all data available to create products and services, resulting in better financial options for the entire ecosystem.

‍

What Are Open APIs?

In the context of Open Banking, open APIs are application programming interfaces that use a common language or structure to promote more universal access to financial data.

Open APIs require institutions to modernize, representing a necessary cultural shift in the banking industry, contributing to greater transparency, innovation, and financial inclusion.

When financial institutions expose their data through open APIs, they allow Fintechs to integrate this data into their applications. As a result, these entities create an ecosystem of external developers to deliver innovative, personalized experiences to clients, without having to develop everything internally.

They can also connect with other financial service providers and offer new solutions to their users. Thanks to this technology, a bank can quickly assess whether it can beat a potential client's current rate and, for example, offer a better investment strategy or mortgage rate.

This is a paradigm shift from a monolithic approach to an ecosystem composed of multiple players, strengthening the value chain. However, many financial institutions—especially in Latin America—are still midway through their digital transformation journey, with Open Banking regulations just starting to take shape.

‍

The Reality and Path of Latin America

Global experience shows that Open Banking and Open Finance regulations drive greater competition and innovation in financial markets. This has been the case in Europe, where banks operate with open APIs under the PSD2 legislation.

In Latin America, more and more countries are approving regulations that give consumers control over their financial data and allow them to consent to third-party providers (TPPs) accessing this information. Mexico, Brazil, Colombia, and recently Chile already have Fintech regulations that strengthen the ecosystem and provide better legal and security assurances for both financial institutions and users.

But until open APIs become the common standard in Latin America, the question remains: how can we access high-quality, reliable, and accurate data to build excellent solutions?

One current way is through official agreements with financial institutions. For example, a Fintech may sign an agreement with a bank. Specifically, an API is configured and made available to provide information that helps clients obtain better financial products or conditions.

To reach this level of trust, Fintechs must operate under criteria that prioritize data protection with consumer consent, acting as a bridge that allows people to securely share their financial information with a third party.

Security, of course, is key in the context of Open Banking and Open Finance. That’s why it’s crucial for financial institutions to know how to recognize a secure Fintech. Companies that undergo ethical hacking tests, comply with ISO 27001 certification, and respect data protection laws are ahead of the curve.

Through official agreements and best practices, Fintechs and other industry entities can help companies and individuals access stable, secure, and scalable connections, enriching the financial ecosystem and, ultimately, advancing the path toward open APIs.

‍

How Does Floid Do It?

Our commitment as a provider of quality financial information is to be transparent with the market. While the region progresses with regulations paving the way to open finance, at Floid we prioritize official agreements with public and private institutions.

We believe this is a safe and reliable way to access the broadest range of information on companies and individuals in Latin America, always protecting the integrity of financial data.

Today, there are many ways to maintain connections with financial institutions. At Floid, we want you to have access to the best one.

‍