Open Banking in the Africa & Mena Region
Open Banking has been the new phase of optimized access to handling banks and other financial accounts. It has significantly enhanced the consumer’s banking experience and has reshaped the competitive banking industry. With third-party financial service providers such as VERICASH taking the charge, customers can control access to their financial information with authorized providers to manage their money and its security better.
What is Open Banking?
Open banking is a streamlined banking practice, where third-party financial service providers can gain open access to the customer’s financial, banking, and other financial data after clear consent by the customer. It is made possible with the effective use of the Application Programming Interface (API). Specialized banking is the innovation that networks financial accounts and data across various institutions that can be made use of by the customers and financial institution.
Before allowing access to third-party financial service providers, customers will have to give consent in the form of a signature or checking the box of terms and conditions. Once the access is granted, the data is utilized by the financial institutions to compare any customer’s accounts, making account changes on the customer’s behalf, aggregate data to the financial institutions who can find it useful, etc
Thus, we can conclude that open banking allows customers to share their financial information with other financial institutions securely on a network-relied mechanism rather than a centralized mechanism
Transition to open banking in Africa & the MENA region
The Middle East and African regions have seen tremendous numbers of mobile penetration rates across the world lately. The desire of customers in the Middle East and Gulf region has been to have the utmost control over their finances and a better range of services.
Open banking in Africa & the MENA region was mainly powered by the combined forces of regulations and fintech startups. Regulators across the regions are taking major steps to implement open banking frameworks. There have also been massive investments channeled to the fintech startups belonging to the Middle East and the African countries.
Open banking has proved to offer a wide range of services. The baking services provided by VERICASH are sought to cut costs and improve efficiency, implementing the best practice of digital transformation across the whole region.
Open banking to transform finance in the MENA region
As per the latest survey conducted by many reputed financial institutions, tech-driven innovations like open banking have proved to be highly efficient in cutting major costs in the UAE and other Africa. The countries in the MENA region are transitioning to adopt open APIs that can facilitate better enabling of optimized mobile wallets and digital payments ecosystem. More significance to cloud infrastructure management has led to the creative integration of fintech with the help of APIs
These open APIs feature by enabling third parties to access the customer’s bank accounts, after receiving the consent of the customers. This has allowed customers in the Africa region to open their financial umbrella and browse through many other financial products and easily switch bank accounts and process payments
What this translates into for everyday consumers, is a leapfrog into empowering them and their choices as to who, when, where, and how they get to conduct any financial service. Whether this is opening a new bank account from scratch, applying for a savings account or an investment product, making instant payments to merchants, businesses, or other individuals, or even making cross-border financial services. The entire dynamics in which all this is executed with almost real-time processing and instantaneous transactional settlement
Now, what does this mean for incumbent banks and other large financial institutions?
They need to make a ton of serious and fast decisions to overhaul the way they manage their status quo operational workflows and more importantly adopt a technology platform that could deliver on all the above! So, even if a lot of the global banking groups have already undertaken significant measures to establish more tech-savvy approaches to delivering their current portfolios of products and services, this will not suffice to adapt to evolving needs of consumers who would like to flexibly manage all their financial accounts and get to say how to move their funds around between them or external parties from using just one application or more correctly one platform
These open APIs feature by enabling third parties to access the customer’s bank accounts, after receiving the consent of the customers. This has allowed customers in the Africa region to open their financial umbrella and browse through many other financial products and easily switch bank accounts and process payments.
With all the existing and anticipated influx of variant forms of Fintechs expected to flourish in the coming years, and with them having easy access to rich customer data from all these incumbents, their slick and easy to use, agile applications could easily cause serious turbulence. The need for a platform agile enough to easily accommodate all these new mandates combined with the quick-to-the-market launch of new innovative financial products and services that could tend to the volatile personalized needs of consumers would be the winning card here.
VERICASH’s digital financial platform has been able to foresee this and interpreted its already agile and powerful platform to align itself with many of the incumbent banks and newer and much younger Fintechs to deliver a user-friendly and easy to manage open banking environment. One clear example is in prominent African markets like Nigeria and Egypt, which have already taken initial steps to commence adopting light versions of the open banking concept.
Though, it is seen that there have been some regulatory loopholes in forming retroactive guidelines for open banking across the Middle East. Other fintech and financial institutions are also asking regulators to provide a clear roadmap for enabling open banking in their countries. However, it is seen that authorities and regulators have been working closely to practice efficient open banking in the MENA region and to untap the unparalleled opportunities open banking poses. When it comes to the African region, The CBA has been making the best of the flexibility of its digital banking platforms to connect banking systems of Africa with the help of APIs and interfaces developed by third parties.
Several banking majors in the region have also launched their separate digital banks to test the markets. Banks are beginning to embrace the advantages of open banking as it brings them a very cost-efficient structure and at the same time also streamlines the banking transactions and security on the customer’s part.
In the African region, the CBA has made the digital banking platforms move into new markets for the need of developing a good hand in rapid credit decisions to customers in Kenya and in other countries like Morocco, Nigeria, and Egypt.
In Conclusion
The future of the digital payment and processing ecosystem looks revolutionizing with the technologies of open banking and API making banking highly efficient and collaborative. Though the technology of open banking came into significance late in the Middle East, now many banking and finance majors have understood its unparalleled benefits in promoting a secure and convenient digital financial transactions environment between customers and retailers.
Open banking has led to more streamlined payment processing with the innovations like “Request to Pay,” etc. It has posed more flexible payment options to the customers and the suppliers, making their lives way much easier. It has also led to real-time effective and secured invoice reconciliation. Moreover, it also offers a centralized mechanism that can help the banking data to be consolidated at one single dashboard and to give customers an all-in-one platform for all their financial needs.
Open banking is considered to be the most probable cross-selling opportunity among the countries in the Africa & MENA region. Also, the regulations for open banking in the MENA region would need to be more streamlined and made efficient to practice. As the new normal has changed how we used to perform our banking before, people have reduced going to banks and interacting with people. Therefore to increase the customer’s engagements, fintech and the banks have to go digital with technologies of API and open banking.
VERICASH is serving as a unified financial services platform for all customers, especially in the Middle East region. With the huge network of financial services, VERICASH is now a medium to provide open banking services, microfinance banking, payment service provider services, and VAS providers. The innovative financial services by VERICASH have also introduced people to open digital payment solutions, agency banking and management, international money transfer, and complete digital payment.
To know more about open banking, visit VERICASH’s site now