Banco Bice is betting big on open banking in Chile, with a strategy for embedded finance.
Bicecorp, the Chilean bank’s parent company, is expanding its ecosystem of financial solutions with the launch of Bice Connect, a company that provides banking products to third parties through application programming interfaces (APIs), a model known as Banking as a Service (BaaS).
Bice’s move towards BaaS follows a broader trend in which banks are applying API technologies and open finance examples to experiment with innovative business models.
Bice Connect has been inspired by Europe’s BaaS leaders Solaris Bank and Coltis, which together achieved EUR100 million (US$102.2 million) in net revenue in 2021, representing year-on-year growth of more than 90%, with their private label propositions.
“We call the long-term vision embedded finance, where a company that is a client of the bank will be able to offer its clients – whether they are companies or individuals – financial services through the technology and financial services infrastructure that we are building at Bice Connect,” Sebastián Fuenzalida, manager of Bice Connect, tells iupana.
Bicecorp Group labelled Banking as a Services as a strategic project in March when it unveiled its 2022-2025 plan, with the aim of complementing the group’s various verticals – insurance, banking and investments.
This month, Bice Connect is debuting an automated payments solution using APIs. Its inaugural client is B2B fintech Shinkansen and, through it, it will be able to offer services to two more companies in the digital world.
Bice Connect is expected to evolve in line with market demand, although the bank has three planned phases for its roll-out, says Fuenzalida. In the first stage, the Bice Connect APIs are ready to make payments.
In the second, the company expects to help generate value within its rails for corporate clients, something they hope to be executing next year. And in the third phase, they aim to be players in embedded finance and provide white labels.
In the last stage “we have to have the know your customer process, the regulatory process of validating our customers and also, obviously, offer the product itself. In addition, in the future we see room for other types of products such as Lending as a Service and Investments as a Service,” says Fuenzalida.
Bicecorp leverages Open Finance in Chile
Chilean market experts expect that the Fintech Law, which incorporates Open Finance, will be enacted in October .
Against this backdrop, Fuenzalida says Bice Connect has been structured to operate within the open finance schemes, following regulatory parameters of the European Union.
“We think that the world of finance is open, collaborative and that all the information has to be kept safe for clients, but without a doubt with much easier and faster connections that generate value, not only for bank clients, but for the whole economy in general,” he says.
The banking and fintech industries have their foot on the accelerator and want to take advantage of the benefits that Open Finance will bring to Chile. They have even signed a Framework Agreement to self-regulate practices such as web scraping, an issue that had generated controversy between the two players last year.
The collaboration between banks and fintechs “is highly favorable” he adds.
At the technological level, Bice Connect has APIs that can scale and operate in shared data environments. This development required Banco Bice and an external partner -whose name was not disclosed – to support the developers of Bice Connect.
“We want the integration experience, the ease of integration, to be what differentiates us, that is, we have our clients’ developments in mind,” says Fuenzalida.