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THE Open Finance It's new to many customers, and if you're part of the group that has no idea what this is, stick around.
Also called the Open Financial System, Open Finance proposes the sharing of customer data between different financial institutions. But is this proposal safe? What is it for?
In today's content, we will briefly discuss the subject in order to conclude whether this is a good proposal or if it is better to let it pass. Continue reading and check it out!
What is Open Finance?
Have you ever felt frustrated after having your credit card denied by one bank, when another company offers the same service with a high limit?
If so, you’re probably wondering why one bank considers you a customer with good payment potential, while another considers it risky to offer you a credit card. This is because of your history.
You probably have a good relationship with the bank that provides you with the card, while with the other bank, you may not even have an account. For the financial system, this lack of history is a barrier to granting credit.
Open Finance promises to solve this situation, as it allows the sharing of customer data between financial institutions authorized by the Central Bank.
This way, if you do not have a history with an institution, this will not be a problem, as the company can evaluate your data with another bank to obtain a complete credit assessment.
Open Finance vs. Open Banking: What’s the Difference?
If you’re new to Open Finance, you’ve probably heard about Open Banking. What’s the difference between the two?
The central proposal is very similar, since Open Banking is a procedure by which the customer authorizes a certain bank to consult data from their account in another.
It is worth mentioning that in Open Banking this request is manual and targeted, so the customer must request the provision of information to a specific company.
Open Finance is an expansion of this service, as your data is generally shared with financial institutions authorized by the Central Bank.
This way, you do not need to perform specific authorizations, and your data can be accessed by banks authorized by the Central Bank.
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What are the advantages of Open Finance?
At this point you already understand that Open Finance creates a type of database with your information, and makes it available to financial institutions authorized by the Central Bank.
For some consumers, this service may convey a negative image. After all, what about the issue of banking secrecy?
We will talk about this later. For now, we will present 2 advantages of Open Finance so that you understand why the service was created.
Best credit opportunities
As we saw previously, sometimes just having a good income does not guarantee obtaining credit, after all, the customer's history counts a lot for banks.
By joining Open Finance you avoid this problem, as your financial information becomes accessible to all authorized institutions, which helps in building an overall history.
Less bureaucracy when contracting financial products
Open Banking is a good option for those who want to authorize specific financial inquiries, but the big problem with this proposal is bureaucracy.
Authorizing one bank to make inquiries in another is not such a simple procedure, as it requires authentication in both apps.
When joining Open Finance, this process is more practical, since the authorization becomes general, and the procedures do not need to be carried out for each consultation.
Does Open Finance have risks?
When it comes to Open Finance, conservative clients may take a step back, after all, this proposal subtly “clashes” with banking secrecy rules.
This is because, in theory, financial information between the client and the company should be restricted to the parties in order to avoid exposure.
However, in the case of this resource, this data sharing only occurs between institutions authorized by the Central Bank. Therefore, your data will not be exposed to anyone.
In any case, it is worth mentioning that the risk of the proposal lies in the exposure of the profile to both positive and negative aspects.
This means that if you have a financial problem with a bank, when you join Open Finance, another bank may consult you, and therefore your credit opportunities with this second company are reduced.
Furthermore, there are no significant risks, since this proposal is regulated by the Central Bank.
How to join Open Finance?
Joining Open Finance is very simple: all you need to do is access your bank's app and look for the option.
After finding the option in your bank's app, simply authorize the sharing of information, and this means that the data from this institution can be consulted by others.
Do this at all authorized banks, and enjoy the benefits of Open Finance to improve your financial life!
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