The open banking movement is accelerating around the globe, and one country currently attracting a lot of interest is South Africa.
Open Banking enables regulated third-party financial service providers to access consumer-permissioned financial data from banks and other financial service providers through established APIs. This data-sharing environment opens the door to financial innovation, industry collaboration, and increased consumer choices.
While Nigeria, Kenya, and Ghana have all taken regulatory-led approaches to open banking, it remains to be seen whether South Africa will join them. However, in 2023, South Africa's Financial Sector Conduct Authority (FSCA) published a draft Position Paper on Open Finance, communicating the FSCA's view that the implementation of a suitable Open Finance regime and making consumer data available to regulated participants would help create value for consumers through digital personalized financial products and services. We eagerly await the FSCAs final position paper.
Even though open banking is primarily market-led, six of the country's largest banks have already embraced it and are seeing good returns1. Many local banks have seen the value of collaborating with FinTechs and other third-party providers to digitize their data to create a broader range of products and services.2
Open banking also offers the potential to facilitate financial inclusion for the unbanked or underbanked – a critical issue in South Africa, with more than 90% of payment transactions currently made using cash.3
By fostering an environment that enables secure, improved access to consumer-permissioned financial data, we believe South Africa could soon find itself at the forefront of open banking transformation. In separate blog posts, we'll dive deeper into the benefits of open banking for the region and potential regulations.
The benefits will be well worth it, and we’ll cover them in greater detail in our next blog article in this series. To learn more about open banking opportunities in South Africa and other locations around the globe, contact our team.
Learn more about unlocking the benefits of open banking
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READ THE SECOND ATICLE IN THIS SERIES
