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The credit industry has been evolving, especially in recent years. The development of information technology is making the risk assessment process more precise. The increasing use of technology reduces information asymmetry, one of the problems of the credit market. In this scenario of rising technology, relevant data is essential. Only by using technology to collect and store this data will we be able to reduce the difference in access to information between creditor and debtor, the two main agents in a credit relationship. By relevant data, we mean financial information that can legally circulate between credit agents. In this second and final article on the study “Credit and its socio-economic role in Brazil”, I emphasize credit for the present and the future.
Today, here in Brazil, most financial data is concentrated almost exclusively in banks and credit agencies. The trend is that this data will soon be under the control of consumers. And why is this important? Because consumers themselves will be able to choose whether to use it to gain advantages for themselves, such as access to financial services and payment methods on fairer terms. This change is also positive for the market, as it stimulates competitiveness by strengthening fintechs, companies that offer financial products and services, as well as cooperatives and retailers. This is the direction taken by open banking, an initiative supported by the Central Bank and which, like the Cadastro Positivo, is part of the opt-out, of the BC+ Agenda.
In this context, APIs (Programmable Application Interfaces) play a key role. These digital access systems aimed at integrating software and services will allow a huge variety of financial services to be created in open banking. The platforms of banks and fintechs will be integrated on the premise that financial data belongs to people, in accordance with the General Data Protection Law (LGPD), which will come into force in February 2020.
What is already certain is that these same people, whether individuals or companies, will be able to use their payment information to gain access to credit. Or, if they already have access to credit, they will be able to take it out at fairer interest rates. With the new Positive Registry coming into force on July 9th, the credit market will benefit as a whole. The lender will be able to carry out a much more assertive analysis of the borrower's ability to pay, since it will also have access to paid bills, and not just unpaid ones, as is currently the case. The borrower, as I said, will be able to use their positive payment history to their advantage. It is legislative advances such as the amendment to the CP law that allow the credit market to develop.
Technology should be even more present in the future, with the use of neural networks or artificial intelligence systems. These resources will analyze an immense set of raw data and understand patterns, with the aim of improving credit assessment. Blockchain and facial recognition will be used to combat fraud.
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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor
