The COVID-19 pandemic has accelerated the adoption of fintech services in Latin America, ushering in new patterns of behavior. Right now, there’s a wealth of opportunities for Open Finance, in a region where up to 50% of the population does not have a traditional bank account and must find other means to carry out financial transactions.
Open Banking: what it is and how it drives innovation
Open Banking and Open Finance models allow customers to give permission for their bank to share their financial data with authorized financial services providers. Third-party providers and developers can use software Application Programming Interfaces (APIs) to connect to the data.
The aim of Open Banking is to increase competition and innovation in the sector and foster the development of new applications that help customers better manage their money.
For example, budgeting apps can use data on a customer’s income and expenses to help them track their spending and improve their financial situation. And, incumbent banks are moving into the fintech space with new mobile apps and services in a bid to take on the new fintech challengers.
Rapid eCommerce growth and strong mobile phone use in Latin America provide ripe conditions for the rollout of digital services.
While Open Banking regulation is advancing at an irregular speed across Latin American countries, API providers like Belvo are helping companies anticipate its benefits and start accessing financial data in a simple and secure way.
What is proptech and what are its benefits
The property technology (proptech) sector applies technological innovation to the real estate market, enabling companies to offer new solutions that streamline the way the market operates. The property industry in Latin America is relatively unstructured, presenting opportunities for innovators to disrupt the market with efficient solutions that enhance the customer experience.
Manage risk assessment
By analyzing the income and recurrent expenses of potential applicants, companies can validate their eligibility for mortgages, loans and rental contracts. This can speed up the lending process and reduce the risk of customers defaulting in the future on loans that are beyond their ability to repay.
Open Banking can combine account transaction data with reports from credit or scoring agencies to gain a fuller picture of an applicant’s financial status.
Speed up account verification
By checking a customer’s banking details, companies can confirm their identity for onboarding, minimizing the possibility of fraudulent activity. Fraud typically occurs when paper records are falsified, so the linking of digital data bypasses this risk. Companies can quickly verify the identity of the account holder and confirm legitimate salary payments and account expenditures.
Open Banking solutions are a perfect match for proptech companies
Put simply, Open Banking solutions provide a way for you to connect, in a simple and secure way, with your customers’ financial data to offer them better services. Companies like Yave and Nirica in Mexico have built successful proptech business models using Belvo’s Open Banking solutions.
Yave, previously known as Smart Lending, is a Mexican fintech that offers mortgage loan services. The company offers credits for property buyers, with a good credit history, who are looking to obtain an innovative financing product with competitive interest rates. It also provides liquidity credits, with mortgage guarantee, for customers looking for credit with lower rates than personal loans or credit cards by using their property as collateral.
Yave uses the Belvo API to securely automate accessing customers’ financial information to facilitate the application process. The company has improved the accuracy and efficiency of its customer evaluations. All by gaining fast access to data that provides a complete picture of their expenses and financial situation, reducing the risk of granting credit.
Nirica offers a secure and transparent Mexican real estate leasing tool that eliminates manual processes and inefficient paperwork. It uses the Belvo API for income verification to assess and approve tenants for rental properties. This reduces the waiting time for prospective tenants and property owners as by providing access to their account data, tenants can give a clear summary of their financial information within minutes.
Working to eliminate proptech’s inefficiencies
Open Banking can help drive forward the property industry by digitizing processes and providing accurate financial analysis to empower decision-makers. And, from the other perspective, Proptech companies can succeed by using Open Banking to provide advanced solutions that add value to traditional financial services.
What’s more, proptech companies in Latin America can use APIs to build an ecosystem that makes real use of Open Banking. Ultimately, it means that you can go beyond the scope of traditional financial services models. Plus, you can collate data feeds from multiple sources to capture accurate data in real-time and provide detailed insights.
You can also make assessments based on a customer’s credit history, income, expenses, and risk profile, and identify suspicious activity or potential fraud. Together, this can drive faster decision-making and allow you to focus on the financial needs of your customer – after all, that’s what really matters.
Reach out to us today to find out how you can propel your proptech business with Belvo.