Online banking services
FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).
API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.
Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.
BaaS – Bank as a Service/BaaP – Bank as a Platform:
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.
Attitude of the country towards online-banking services
Digital banking in Mexico has had an exponential growth, since it is estimated that there are 47 million users of internet banking, leveraged on recent digital onboarding alternatives and increased digital user experiences. In addition to such commercial trends, the FinTech law introduced a concept of Open Finance, under which regulated financial institutions must share information on products and services, aggregated statistical information or client transactional data through standardised APIs, and third-party providers would be licensed to access such APIs.
As of this day, the regulator in charge of issuing the API rules needed to allow for open banking has only defined the characteristics such APIs need to comply in order to allow the third-party to receive “Open Financial Data”, that is, data that contains no personal information, such as details of products, branches locations etc. Therefore, financial institution are still not obliged to share more in-depth information with third-parties. Future developments are expected to allow more sophisticated open-finance services, allowing, for example, customers of several financial institutions to see their aggregate balances on a single app or track their global expenses.
On the other hand, banking-as-a-service like platforms are not viewed positively by the regulators. Although not technically prohibited, regulators are not keen to authorising business models where financial services are rendered on a white label form.
Obligations and requirements to provide online-banking services described above
As described above, API banking is required for all financial institutions. Each financial institution is directly required to assume the infrastructure costs to implement the open finance API (although entities will be allowed to collect a fee from the third party accessing the information, particularly for the sharing of transactional data).
BaaS models will not be authorised by regulators.
Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area
Market size for online-banking services and biggest companies in this business area
As with all other features introduces with the FinTech Law, the solutions are very recent and there is very limited market information publicly available. Notwithstanding the above, the market for API based open finance solutions is massive, since every single financial regulated entity is required to implement an API for third party access.
Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area
Open finance is viewed as an important challenge for traditional banking channels compete with. For such reason, there is active lobbying by traditional banks which has limited the enforcement of open finance rules (or restricted market access for third parties to request API access to financial information).