Is Open Finance safe, what risks, benefits and who participates?
In an era where data is golden, any caution is welcome. Therefore, before deciding which institutions you agree to share your data with, you need to be sure that Open Finance is safe.
And to help you with this information, we have prepared this blog article. Just keep reading with us!
What is Open Finance?
Also known as the last phase of Open Banking , Open Finance consists of a financial system in which users can agree to share their data so that the institutions involved can improve their experience, promoting products and services that are increasingly suited to their profile.
Is Open Finance safe?
The answer is yes! Open Finance is safe. You are the one who controls what data you want to share, who has access to it and for how long – institutions are required to renew authorizations periodically.
In addition, the necessary security measures for you to access the application of a financial institution or internet banking service are also applied in Open Finance, such as confirming your identity through authentication.
The Central Bank, responsible for running Open Finance, also manages a series of security procedures for participating institutions. Among them, alignment with the LGPD, which regulates any type of activity – from collection to elimination – of personal data.
What are the risks of Open Finance?
The main points of attention in relation to Open Finance involve data leakage through cyber scams, such as the use of information for e-commerce purchases or other types of theft.
The truth is that no system is completely secure, but financial institutions have invested heavily in security mechanisms to comply with Central Bank regulations.
What are the benefits of Open Finance?
Open Finance promises to create an even more competitive environment among financial institutions, as these companies have access to customer information and are able to offer users the best conditions and experiences in products and services.
Customers, in turn, have the opportunity to start a relationship journey with a personalized financial institution, as they are able to take advantage of their history for different companies, with the possibility of guaranteeing even more benefits.
Another important advantage is that it is free, as sharing information is free of charge for the end customer.
These advantages also include legal entities as customers – that is, if you have a company, business data can also be shared according to the decision of those responsible, so that this organization has the freedom, autonomy and security proposed by the system to physical persons.
Which institutions participate in Open Finance?
To answer this question, it is important to consider that Open Finance is one of the final stages of Open Banking implementation. This means that there is a difference between the institutions invited to participate in each phase of this novelty in the financial market.
Large banks, for example, are part of Open Banking and, consequently, of Open Finance. When companies go through the registration of complementary data, the option to participate or not in Open Finance is voluntary, even though the vast majority of institutions decide to participate due to the benefits generated for all parties.
Among the institutions that are authorized to participate in Open Finance, we have, in addition to large banks: securities and insurance brokers, investment platforms and pension and pension funds.
Will I be required to participate in Open Finance?
No, the choice to share your data is completely voluntary. As well as definitions of purpose, time for which you authorize the sharing of personal or legal information and the institutions that will have access to your data.
As foreseen by the security standards that regulate Open Finance, when you want to stop sharing your data, institutions must eliminate this information in a correct and safe way.
It is worth mentioning that there are two ways for customers to register with Open Finance: the first is passively, when they are contacted by the financial institution and authorize the sharing of registration data. And the second is when the customer looks for the bank or institution to request this service. The information sharing authorization and consent process is the same for both.
