South Africa embarks on a pioneering journey to unlock the potential of open banking. Global payments-as-a-service specialist, advocates for a partnership and collaborative approach to effectively unlock the yet-to-be-tapped opportunities of open banking in the country.
And while the benefits of open banking are widely acknowledged globally, the strategies for its adoption on the other hand vary, with some regions going with regulatory-led initiatives.
South Africa Potential of Open Banking
In the UK and EU, a regulatory-led approach has demonstrated success, resulting in job creation and a sector valued at £4.1 billion. Similarly, the three major African players in open banking – Nigeria, Egypt, and Kenya – have opted for this regulatory path. In contrast, South Africa has embraced a market-led approach, enabling local banks to establish partnerships with fintechs in a more organic manner.
Richard Kadiaka, Regional Managing Director – Southern Africa & Palops at Network International, underscores the significance of fostering a collaborative mindset to cultivate successful partnerships. He emphasizes that local banks collaborating with fintechs can establish a lower-risk environment, leveraging global expertise to introduce innovative products.
While South Africa’s market-led approach demonstrates advancements, Kadiaka emphasizes the necessity for a sector-wide shift in mindset. Open banking, regarded as a catalyst for fostering valuable partnerships, necessitates the resolution of commercial and legal considerations to introduce new services to customers.
What the Network International Group MD for Processing Business in Africa Thinks About This Development
Dr. Reda Helal, Network International Group MD for Processing Business in Africa, highlights successful instances of open banking implementation across the continent. Nigeria embraced open banking following the publication of guidelines, Kenya adopted a phased approach, and Ghana initiated a four-year plan, incorporating a regulatory sandbox for testing innovations.
Helal also underscores the success of government-led and market-led approaches in Saudi Arabia and the UAE, respectively, proposing the establishment of regulatory sandboxes for controlled testing environments.
The Gap Between Deployment and Adoption
Kadiaka acknowledges the gap between deployment and adoption but remains optimistic, citing the 200 third-party API integrations as evidence of the potential of open banking. Despite challenges, he believes that South Africa’s advanced banking system is well-positioned for successful modernization and advocates for collaboration with experienced partners in open banking.
What You Need To Know About Network International
Network International, a technology company listed on the FTSE, operates across the Middle East and Africa, providing comprehensive payment processing solutions. With a presence in 50 countries, the company fosters collaboration to enrich the wider payments ecosystem, thereby enhancing consumer experience and driving revenue growth. As South Africa embraces a market-led approach to open banking, the sector anticipates the infusion of beneficial innovation and heightened collaboration between banks and fintech companies.
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