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No Open Banking

The southernmost country in the world, Chile, is developing its Open Finance journey.

At the beginning of 2021, 80% of Chileans had access to the internet. 

Since January 2023, Open Finance is regulated against the country’s Fintech Law. With specific reference to Law 21.521, the intention is to promote competition, financial inclusion and innovation. This law defines regulated participants as: Data Providers; Data Service Providers; Account Service Providers, and Payment Initiation Service Providers. Some institutions named as being mandated to share data include: credit institutions; broker-dealers; asset managers, and insurance companies.

In late 2020, a Financial Portability Law, a regulation that allows individuals and companies to freely change financial product providers, was passed in Chile. This is considered an antecedent of Open Banking (p. 17). Following the Financial Portability Law, Chile’s Fintech Bill officially began its legislative journey in September 2021. In the same month, a report containing guidelines for the development of a nationwide Open Banking and Open Finance ecosystem was published.

The Chilean Financial Market Commission (CMF), in coordination with the Chilean Ministry of Finance and the Central Bank of Chile, has developed Guidelines for the Development of an Open Finance Framework in Chile, with a Focus on Competition and Financial Inclusion. Recently, the Association of Banks and Financial Institutions (ABIF), BancoEstado, and the Association of Fintech Companies of Chile (FinteChile) have signed a Framework Agreement that establishes security standards, responsibility, and mechanisms for reading data from customers in a controlled manner via web scraping. The agreement constitutes the first step toward an Open Finance system in Chile, which will provide a framework for action while other reading mechanisms are established, and without prejudice to the regulatory changes that are approved in the future. Although there are still several obstacles to overcome, a clear framework for collaboration between banks and Fintech companies under Open Finance models is defined. 

The Guidelines for the Development of an Open Finance Framework in Chile, with a Focus on Competition and Financial Inclusion, highlight interoperability among participants. Rules to safeguard nondiscriminatory access and interoperability, such as excessive authentication requirements, data quality, and service stability, are proposed in the guidelines. Therefore the regulation is expected to adopt unified technical standards and operating procedures that support the interoperability of the ecosystem.

The model for retail payments adopted in Chile is a focused approach in which interoperability is required or encouraged, either for only a given set of payment types or for only some payment service providers (PSPs).

According to The Global Findex Database, In Latin America, Chile is the country with the highest banking penetration, with 87% of Chileans having bank accounts in 2021, leaving 13% unbanked. One of the main motivations for Open Finance from the consumer perspective is financial access and inclusion.

The public policy motivations for an Open Finance system include objectives such as increasing competition in financial services provision, promoting financial access and inclusion, and stimulating innovation and the emergence of Fintech business models. Regulating principles mentioned in the Guidelines for the Development of an Open Finance Framework in Chile, with a Focus on Competition and Financial Inclusion, a general obligation for participating institutions in the Open Finance system to comply with transparency standards; security and privacy of shared data; data quality; non-discriminatory treatment; and interoperability among participants.

One of the¬†aims of Chile’s Open Finance¬†journey is to promote competition in financial services, stimulate innovation and see an increase in new Fintechs. According to¬†Belvo, 179 Fintechs operated in Chile in 2020 (p. 13).

The Chilean government has recently invested in programmes helping workers and also specifically women, to enhance their digital and technical skills. 

Chile ranked 98th out of 134 countries in¬†Wiley’s Digital Skills Global Index 2021.