Author: ewanrobertson

I Increasing financial inclusion is vital in supporting the financial wellbeing of individuals and SMEs and to drive economic growth.

In the UK, the government plays a crucial role in enabling financial inclusion. For example the House of Commons Treasury Committee Inquiry into SME Finance, the establishment of the Centre for Finance, Innovation and Technology (CFIT) last year, as well as the UK’s Economic Secretary’s announcement of a new industry-led Open Finance Taskforce focused on how financial data can be safely unlocked to improve SMEs’ access to credit.

By leveraging open banking data, and other alternative data sources, we can improve inclusion by assessing creditworthiness for those who may not have traditional credit histories. Analysing real-time financial data such as income, spending patterns, and banking transactions allows lenders to make more accurate lending decisions and extend credit to individuals who were previously underserved or excluded from traditional financial services.

HMRC tax data can also improve lending decisions for SMEs by 25%, as demonstrated in the recent CFIT proof-of-concept led by HSBC. The trailblazing Financial Conduct Authority (FCA) makes it possible to test these novel approaches through their Innovation Hub’s Permanent Digital Sandbox, Innovation Pathways and Regulatory Sandbox services.

Lastly, financial inclusion can be undoubtedly propelled further through new technologies that improve access to financial services for individuals in remote areas, streamline the application process for loans and credit, and enable more accurate assessment of creditworthiness for underserved populations. From mobile banking apps to digital payment platforms, as well as artificial intelligence for alternative credit scoring, there is exciting tech that can expand financial inclusion and improve financial wellness and resilience.

Darren Smith

Executive Director Finexos, an FDATA Europe Member

I Open Finance has been used as a promising avenue to enable financial inclusion for millions of Latin Americans, especially in countries like Brazil, Chile, and Colombia, which have made significant regulatory advancements.

In Chile, for example, the Comisión para el Mercado Financiero (CMF) has been actively working to implement regulations that favor Open Finance. The recently approved Fintech Law establishes a clear regulatory framework for integrating new digital financial services, promoting competition and innovation.

In Colombia, the Financial Superintendency has launched a series of initiatives to strengthen the Open Banking infrastructure. Colombian regulation has focused on ensuring consumer data security and privacy while facilitating collaboration between traditional banks and fintechs. This can create a more inclusive environment where more people can access modern and efficient financial services.

An essential pathway for the success of these data-sharing infrastructures will be instant payments, which will enable inclusion and the creation of more data on users’ financial behavior, allowing the development of more use cases. Pix in Brazil, for example, was efficient in this approach, including more than 75 million people and generating more behavioral data about users.

Brazil has stood out in use cases in the region thanks to the advanced framework implemented. What is essential for the success of this infrastructure is precisely the creation of use cases, and we can already see the industry innovating from it. For example, Palenca is allowing financial institutions to access gig economy data for credit evaluations. This is particularly relevant in a market where many workers do not have formal income and, therefore, have difficulty accessing traditional financial services. Banco do Brasil has also implemented solutions that allow users to better aggregate and manage their financial information, helping them better understand their financial situation across different accounts. Another relevant case is BBVA, which, through the analysis of financial transactions via Open Finance, had a significant social impact. After Hurricane Odile in Mexico, BBVA helped the Mexican government identify which regions were recovering more slowly, allowing for more effective and targeted resource allocation.

Open Finance is proving to be a powerful tool for financial inclusion in Latin America, not only by including more people but also by making the Latin American financial system more efficient. With recent advancements in Chile and Colombia and the interest of countries in the region in adopting instant payments, we will likely see more relevant use cases in Latin America. Open Finance has immense opportunities, and the main one is to ensure that those who did not participate in the financial system have the opportunity to benefit from it.

Walter Pereira

FDATA LATAM REgion Director

I Financial inclusion remains a global challenge, with millions lacking access to vital financial services. Yet, within this challenge, lies an opportunity for innovation and collaboration. At Ozone API, we see open banking as pivotal in fostering financial inclusion worldwide. And it’s not just us that thinks so. A number of regulators are putting financial inclusion objectives at the heart of open banking and open finance frameworks. Done well it can create the right conditions to drive significant societal impact. Regulations must however be defined in a way that balances innovation with consumer protection and data privacy.

Put simply, open banking helps to remove some of the very real and significant barriers to financial inclusion. Through access to customer permissioned data, lenders can make more informed decisions, enabling previously excluded groups to get access to credit. It also creates the conditions which allow innovative providers to more effectively target underserved segments. Combining their specialist sector focus with the power of traditional banking and using partnerships to drive better solutions. And finally it helps reduce the cost and friction of payments, ensuring digital payment solutions can spread to more parts of society.

Open banking revolutionises access to banking services, especially in regions like Latin America where cash transactions dominate due to high card payment costs and traditional credit bureaus lack insight into large sections of the population. Additionally, open banking addresses credit history challenges, enabling rapid credit profile building for gig workers in regions like the Middle East. This unlocks access to financial services and empowers individuals to achieve financial goals.

Cross-border collaboration and data sharing among regulators are key to the future of financial inclusion. Enabling consent-based access across jurisdictions allows individuals to use their open banking-based credit history globally, though challenges like regulatory alignment and data privacy persist.

Timely regulatory interventions are crucial to accelerate financial inclusion. Prioritising regulations, facilitating data sharing, promoting interoperability, and safeguarding consumer rights will foster an inclusive environment that encourages innovation and expands financial access for all.

Technologies like open banking, digital payments, and blockchain propel financial inclusion by lowering costs and improving access to credit. Conversely, technologies exacerbating exclusion, such as restrictive data practices, must be re-evaluated to align with inclusivity and affordability principles.

In conclusion, advancing financial inclusion demands collective efforts from stakeholders. At Ozone API, we’re committed to leveraging our expertise, our technology and partnerships to drive change and create a more inclusive financial future for all. Specifically, we help regulators develop the rules and standards needed to enable a secure open finance ecosystem. We also provide robust, proven open finance infrastructure to banks and financial institutions, to reduce the time and cost of implementation, thereby speeding up the benefits of addressing critical challenges such as financial inclusion.

Huw Davies

Co-founder & Co-CEO of Ozone API an FDATA Global Member