LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org June 4-17, 2020 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión Will New Rules BBVA Argentina Pablo Barahona President & COO, Sees 36.2% Decline Global Retail Markets West, Liberty Mutual Group Improve Banking in Profit for Q1 Felipe Carvallo BBVA Argentina reported $3.1 Vice President - Analyst billion in net income for the first Latin America Banking for Brazilians? Moody’s Investors Service quarter, a 36.2 percent decline from the same quarter a year ago. Richard Child Page 2 CEO, Mattrix Group Michael Diaz Jr. PENSIONS Partner, Diaz, Reus & Targ Colombia May Ernesto Fernández Holmann Allow Partial Chairman of the Board, Ayucus Withdrawals From Rich Fogarty Pension Plans Managing Director, Alvarez and Marsal The country’s government may allow pension fund holders to Desiree Green make partial withdrawals during Vice President, Brazil’s central bank has approved new “open banking” rules that will allow banks to share International Government Affairs, consumers’ data with each other, among other measures. // File Photo: Empresa Brasil de the economic crisis caused by the Prudential Financial Comunicação. Covid-19 pandemic, said Finance Earl Jarrett Under new “open banking” rules approved by Brazil’s central Minister Alberto Carrasquilla. Chief Executive Officer, bank, Brazilian financial institutions can share, at their Page 2 The Jamaica National Group customers’ discretion, account holders’ personal and trans- Thomas Morante FINANCIAL TECHNOLOGY Chair, Insurance Regulatory & Q actional data with other financial institutions. The central Transactional Practice Group bank says the data sharing will promote competition among financial WhatsApp Kaufman, Dolowich & Voluck institutions and ease customers’ access to better products and services Manuel Orozco Launches Payment Director, at lower costs. To what extent will the new rules benefit customers? Feature in Brazil Migration, Remittances & Development, Inter-American Dialogue How much does open banking increase concerns about privacy and WhatsApp has launched a pay- ments feature in Brazil that will Adalberto Palma-Gomez the security of customers’ information, and are consumers adequately Senior Partner, protected? How will the change affect Brazilian financial institutions and be free for individual users. Chief Proxy, Gobernanza Corporativa Operating Officer Matt Idema said their business models? Rodolfo Pittaluga Brazil is among the top countries Adjunct Professor, in which customers use WhatsApp Florida International University to communicate with businesses. Candido Botelho Bracher, president and chief executive College of Law Page 2 Fabian Saide officer of Itaú Unibanco Holding: “The new open banking Founder, CEO and President, rules have the potential to bring better products with lower Paykii costs for customers, as they facilitate the comparison among Roberto Teixeira da Costa A Founder & Board Member Emeritus competing offers and conditions. In addition, customers will be able to CEBRI use information aggregators, which will bring consolidated data about Mario Trujillo CEO, their relationship with different financial institutions, allowing for better DolEx Dollar Express planning and control of their finances. Customers will be protected both by the General Data Protection Law and by robust information security systems in the financial system. That said, in Brazil most of the financial fraud to clients is done by social engineering, that is, by groups that man- age to persuade clients to deliver information or carry out transactions that enable or characterize fraud. Open banking will bring greater ease and speed to transactions, in addition to a large flow of data between Idema // File Photo: LinkedIn. Continued on page 3 COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR June 4-17, 2020 BANKING NEWS to interact with merchants, the unit’s chief NEWS BRIEFS operating officer, Matt Idema, told Bloomberg BBVA Argentina Sees News. More than five million merchants world- Remittances to Mexico wide use a business version of WhatsApp, and Drop 2.6% in April 36.2 Percent Decline the messaging application is the main, or only, online presence for many small retailers in In April, Mexicans living abroad sent $2.86 in Profit for Q1 some countries including Brazil. In Brazil, more billion back to relatives in Mexico, according than 120 million people use WhatsApp, Reuters to the country’s central bank, the Associated BBVA Argentina on June 8 reported $3.1 reported. “WhatsApp is heavily used there, Press reported June 5. The amount declined billion in net income for the first quarter, a 36.2 both by people and small businesses,” Idema 2.6 percent as compared to April of last year, percent decline from the same quarter a year told the wire service. “We think we can help but Mexico’s level of remittances did not drop earlier and 20.1 percent lower than the fourth grow digital payments, help grow the digital as sharply as transfers to some other Latin quarter of last year. “The quarter-over-quarter economy with small businesses, and help American countries, such as Guatemala and decrease is mainly explained by the fall in support financial inclusion.” WhatsApp hopes El Salvador. The average remittance amount in economic activity, and the sharp decline in the rollout in Brazil benefits customers who are April was $329, according to Mexico’s central interest rate derived from changes in the coun- quarantined at home during the coronavirus bank. In the first four months of 2020, Mexico’s try’s monetary policy and the beginning of the pandemic, Idema added. “We can’t have the remittances rose 12.6 percent, year-on-year. mandatory lockdown, due to [the] Covid-19 pan- kind of interactions with each other that we demic,” Ines Lanusse, the bank’s investor rela- normally would, if you want to lend someone tions manager, told analysts in a conference cash or if you want to buy something from a lo- Wells Fargo Reportedly call. Lanusse said the year-over-year decline cal business,” he told Reuters. Initially, holders in profit was mainly explained by the bank’s of debit and credit cards from Banco do Brasil, Pulling Payments Service one-time sale of Prisma Medios de Pago, which Nubank and Sicredi will be able to use the Zelle Out of Venezuela occurred in the first quarter of 2019. payments service, Reuters reported. In a state- Wells Fargo has reportedly told clients in Ven- ment, Visa said it is working with Facebook to ezuela that it will no longer support payments power the new payments feature on WhatsApp. service Zelle there, one of the most popular FINANCIAL TECHNOLOGY NEWS The payments on WhatsApp will use the capa- services in the Andean nation to send and bilities of Visa Direct and Visa Cloud Tokeniza- receive U.S. dollars, Decrypt reported June 8. WhatsApp Launches tion, the payment processor said. More than 60 percent of payments in Venezu- ela’s urban centers are made with dollars, and Payments Feature for about 12 percent of these payments used Zelle, PENSIONS NEWS according to Asdrúbal Oliveros, director of Ven- Users in Brazil ezuelan economic consultancy Ecoanalítica. Colombia May Allow Wells Fargo has not made a formal announce- WhatsApp, which is owned by Facebook, on ment, and it did not reply to Decrypt’s request June 15 launched a payments feature in Brazil, Partial Withdrawals for comment. Bloomberg News reported. It will be free for users to make payments using the messaging From Pension Plans platform, whether they send to other people or to businesses to pay for goods and services. Colombia may allow people to make partial Fitch Assigns Initial Rating WhatsApp will charge businesses a fee. The withdrawals from their pension funds during of BBB+ to Credicorp Facebook unit is partnering with Brazilian pay- the economic crisis brought on by the coro- Fitch Ratings on June 9 said it has assigned ments company Cielo to process the transac- navirus pandemic, Finance Minister Alberto Peru’s Credicorp an initial long-term foreign tions, Bloomberg News reported. Over the past Carrasquilla said June 10, Reuters reported. currency issuer default rating of BBB+ and a two years, WhatsApp has tested a payments As of the end of March, Colombia’s pension short-term issuer default rating of F2 with a feature in several countries, including Mexico funds held approximately 281 trillion pesos negative long-term outlook. The ratings agency and India. However, the rollout in Brazil, where ($77.13 billion) in compulsory and voluntary also assigned the Lima-based financial holding Facebook began testing the feature a month pensions, according to industry association company’s new senior unsecured notes a rating ago, marks the first location where the service Asofondos, which has opposed the withdrawal of BBB+. Credicorp’s ratings are mainly driven will be fully offered. Brazil is among the top plan, El Tiempo reported. “We have made great by the issuer default ratings of its main subsid- countries in which customers use WhatsApp strides regarding the subject of partial pension iary, Banco de Crédito del Perú, Fitch said. COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR June 4-17, 2020 withdrawals, we haven’t made a decision FEATURED Q&A / Continued from page 1 yet, but there have been meetings within the finance ministry, and we have spoken with different participants in the system. There- consumer data control, explaining principles pension and severance funds,” Carrasquilla fore, this type of fraud can be enhanced. of consumer protection and the protection said in a virtual appearance before a lower Institutions will have to compete in a more of their personal data and ensuring that the house congressional committee. He did not open market, in which competing business inclusion proposed by open banking does provide further details about the plan.