South Africa Chases New Effort To Capture Untapped Wins In Open Banking

Global payments-as-a-service specialist, Network International, advocates for a collaborative mindset to unlock the untapped potential of open banking in South Africa. While the benefits of open banking have been globally acknowledged, the approach towards it varies, with some regions adopting regulatory-led strategies.

In the UK and EU, a regulatory-led approach has proven successful, creating jobs and a sector valued at £4.1 billion. The three major African players in open banking – Nigeria, Egypt, and Kenya – have also adopted this regulatory path. However, South Africa has chosen a market-led approach, allowing local banks to forge partnerships with fintechs more organically.

Richard Kadiaka, Regional Managing Director – Southern Africa & Palops at Network International, highlights the importance of a collaborative mindset for building effective partnerships. He emphasizes that local banks partnering with fintechs can create a lower-risk environment, leveraging global experience to deliver innovative products.

While South Africa’s market-led approach shows progress, Kadiaka underscores the need for a mindset shift throughout the sector. Open banking, seen as a means to accelerate valuable partnerships, requires addressing commercial and legal aspects to bring new services to customers.

Dr. Reda Helal, Network International Group MD for Processing Business in Africa, draws attention to successful examples of open banking implementation in Africa. Nigeria embraced open banking after publishing guidelines, Kenya adopted a phased approach, and Ghana initiated a four-year plan with a regulatory sandbox for testing innovations.

Helal also highlights successful government-led and market-led approaches in Saudi Arabia and the UAE, respectively, suggesting potential regulatory sandboxes for controlled testing environments.

Kadiaka notes the lag between deployment and adoption but expresses optimism based on the 200 third-party API integrations, showcasing the possibilities of open banking. Despite challenges, he believes South Africa’s advanced banking system positions it for successful modernization and encourages engagement with partners experienced in open banking.

Network International, a FTSE-listed technology company, operates across the Middle East and Africa, offering end-to-end payment processing capabilities. With a presence in 50 countries, the company supports collaboration to enhance the broader payments ecosystem, driving consumer experience and revenue growth.

As South Africa explores a market-led approach to open banking, the sector anticipates the injection of beneficial innovation and increased collaboration between banks and fintechs.