Em Conversa looks to uncover the secrets in Latin America (Latam) that have caused the fintech market to boom, from being worth less than $50million in 2016, to $2.1billion in 2022. This week Rodrigo Tumaián, the co-CEO and co-founder of Prometeo OpenBanking, one of the largest open banking API platforms in Latam, shares his views on how open banking is transforming the Latam credit market.
Prometeo is committed to financial innovation and to developing a more open and connected financial market in Latin America. The company provides a single point of access to information, transactions and payments through +100 APIs in more than 36 financial institutions and in 10 countries in the region.
Rodrigo Tumaián is the co-CEO and cofounder of Prometeo OpenBanking. He has more than 10 years of experience in computer security in national and international companies, such as TCS and AT&T. He has also held the role of president of the Uruguayan Chamber of Fintech since 2021.
Can you tell me a bit about the company and your role within it?
I am the co-founder and c-CEO of Prometeo Open Banking, the largest open banking platform in Latin America. We started almost four years ago, before officially founding Prometeo we developed a PFM (personal finance management).
Back then, when we got together with other fintechs and told them about our idea, we started talking about financial education, usability, user experience and the conversation turned to interoperability, how to access data, standardise and provide that connection to third parties.
There we learned about open banking in Europe. When the fintech law arrived in Mexico in 2018, we said ‘this is a paradigm shift in the ecosystem’. So we took the technology we had already developed and founded Prometeo. Today, we provide a single access point to banking information, transactions and payments to multiple financial institutions in the region.
How are open banking and open finance transforming the Latam credit market?
Open banking is about accessing and connecting information between banks, financial institutions and any other third parties through APIs, with the user consent and for its benefit. If we observe, in our region there is a high internet penetration and 70 per cent of the population has access to a smartphone; and at the same time 70 per cent of the population is unbanked.
From the users’ perspective open banking and open finance brings more options, by accessing their information through APIs these users may access credits and loans from financial institutions. At the same time, these institutions may access trusted and standardised information to be able to evaluate the users’ scoring and provide them credit or other types of financial services.
There are very interesting experiences from some of our fintech clients that are providing credits and using your cell phone line as a guarantee. So at the end of the day it is all about developing new applications and financial services that adapt to the specific needs of Latin American consumers.
Is there anything exclusive to the Latam region that we’re seeing in terms of open banking and finance development?
Latam’s middle class has grown by more than 50 per cent in the past decade, so there’s a huge demand for better financial products and services. Dealing with money in Latam is a pretty tough task, and digital banks and fintech companies are providing more accessible services and a better user experience. In Latam the financial infrastructure is very uneven and APIs provide a layer of standardisation that is very much needed. APIs allow siloed systems to communicate with each other to develop products more agilely that are personalised to users.
What are the benefits of optimising open banking with open finance; how will end-users’ financial data be extra secured?
It is still to this day that some of Latam’s traditional financial institutions still follow outdated methodologies and have manual processes. This can occasionally mean a lack of automated and standardised infrastructure for payments and money management, which can explain why nearly half of Latam’s population are unbanked or have difficulty opening bank accounts. But this doesn’t mean they are financially inactive; they need loans and want to open savings accounts.
This is when open banking takes action, enabling processes to become more efficient and quickly, improving financial inclusion in the region as well as encouraging the circulation of money.
Open banking and its path to open finance is the solution as they give third-party providers access to data from financial institutions in a safe and efficient way to speed up financial processes. This information is secured as the customers are the ones who have the power of consent to give it to the third parties; without them it wouldn’t be possible to have the access.
What’s the role of regulators in driving the development of open finance in Latam? Do they have the same impact worldwide, or is their impact exclusive to the region?
Regulators are becoming more and more driven to implement and create laws that will lead to open finance.
At the same time, companies are not waiting for legislation to implement technologies to deliver more value to their customers, such as allowing a company to automatically and quickly manage multiple bank accounts around the region, access customer financial information to analyse credit eligibility, or directly link the e-wallet to a customer’s bank account and the business to enable payments, rather than waiting for a global standard. Banks are approaching companies like Prometeo more and more to form alliances because they see that we bring value and that there is business to be done.
Can you tell me about Prometeo’s latest offering which is helping with the development of open finance in the region?
In Prometeo we know that the next step in open banking is account to account payments. We have been working hard to launch our A2A direct payment solution for Latin Americans in the upcoming weeks. This will be the only A2A solution with a regional coverage in Latam and the benefits for merchants and users are huge. We are coming with a payment service with no intermediaries, reduced fees and real-time payments. The entire payment process is frictionless and executed in a few steps from the merchant app or website, this also facilitates the conciliation process for them as the payment is reconciled automatically.
Our data and information solutions are also growing and we keep developing connections with the most important financial institutions in Latam.
Are there any plans to expand to another region? What does the company’s roadmap and growth plan look like?
We recently landed in Peru and we have a dedicated team there working with our clients. Peru is a very important market for us, we have full banking coverage and many clients connecting to our APIs. We are now focusing on expanding in Chile and Mexico. We are also partnering with other fintech companies such as crypto and digital wallets. We really enjoy finding synergies and common projects, we strongly believe that’s the right path for open banking and open finance to grow.
Any final thoughts?
If we see the big picture in terms of open banking and open finance, we can say 2022 is the year of partnerships. As we were just speaking, these alliances are a great way to join efforts and keep opening Latin America financial system.