Beyond Open Banking: How Africa’s Digital Pioneers Are Building Inclusive Open Finance Ecosystems

Open finance promises to spur competition, lower costs, and enable tailored services. To succeed, African policymakers and innovators must invest in digital infrastructure, privacy safeguards and governance frameworks that reflect local realities.

Imagine a young entrepreneur in Lagos who runs an online marketplace selling handmade crafts. She relies on multiple financial relationships: a mobile money account for daily transactions, a micro‑lender for working capital, a savings group for emergencies and a marketplace platform that pays her in digital vouchers. Today, these accounts operate in silos. When she applies for a business loan, she must manually compile her transaction history from each service, which is time‑consuming and incomplete. If open finance were fully implemented, she could authorise a new lender to access her consolidated financial data via secure APIs. Within minutes, the lender would see her cash flows, marketplace ratings, repayment history and savings patterns, enabling a more accurate risk assessment and a customised loan offer. This vision of seamless, consent‑based data sharing lies at the heart of open finance.

Open finance builds on the concept of open banking, which mandates that banks share customer data with third parties through standardised interfaces upon the customer’s request. Open banking originated in the United Kingdom and the European Union to promote competition and empower consumers. Open finance extends this principle beyond banks to include mobile network operators, payment service providers, microfinance institutions, insurers, investment platforms, and even non‑financial data sources such as utility companies and agribusinesses. In an inclusive open finance ecosystem, individuals and small businesses have greater control over their data and can seamlessly switch providers or access new services.

Africa has unique advantages and challenges when it comes to open finance. On the plus side, mobile money adoption is widespread; Sub‑Saharan Africa processed over 65 percent of global mobile money transactions in 2023. This creates a rich trove of transactional data outside of traditional banking. The region also has thriving fintech ecosystems in cities like Lagos, Nairobi, Cape Town and Accra, with start‑ups offering innovative solutions for payments, lending, savings and remittances. On the other hand, formal banking penetration remains low, regulatory frameworks are fragmented and digital infrastructure, such as reliable internet and national digital identity systems, is uneven.

The CGAP working paper, Building Blocks Supporting Open Finance, identifies three foundational components of inclusive data ecosystems: digital public infrastructure, consumer consent mechanisms, and interoperable data standards. Digital public infrastructure includes national ID systems, mobile networks, payment rails and government databases. These systems create reliable, unique identifiers and transaction records that can be shared across providers. The paper emphasises that inclusive data ecosystems must include products and providers relevant to low‑income users, ensure that common data trails exist and offer identity verification adaptable to contexts with limited centralised IDs.

Consumer consent mechanisms are essential to build trust. Customers must have the power to authorise and revoke data sharing. Consent dashboards should show what data are shared, with whom and for what purpose. Interoperable standards, such as common APIs, data schemas and encryption protocols, enable seamless connections between disparate systems. Without standardisation, each bilateral integration becomes costly and error‑prone. In Kenya, the government’s National Payments System and the Kenya Bankers Association’s PesaLink provide examples of domestic interoperability, but cross‑provider data sharing remains limited.

Open finance promises several benefits:

1. Increased competition and innovation. When customers can switch providers easily, and new entrants can access customer data (with consent), incumbents face pressure to improve service quality and pricing. Start‑ups can develop niche offerings, such as micro‑insurance for farmers or dynamic savings plans for gig workers, by combining data from multiple sources. The CGAP paper notes that open finance can lower customer acquisition costs, improve risk assessments and enable targeted products.
2. Financial inclusion. For individuals with no formal credit history, access to alternative data, such as mobile money transactions, utility payments or satellite imagery, can help them obtain credit or insurance. Open finance platforms can serve as data brokers, pooling information from diverse sources to build robust profiles. This is particularly valuable for women, youth and rural entrepreneurs who are underserved by traditional banks.
3. Customer empowerment. Open finance shifts data ownership from institutions to individuals. Customers can decide which providers access their data and can revoke consent at any time. They can also view and correct their data, reducing errors and fraud.
4. Operational efficiency. Shared APIs reduce duplication of KYC checks and improve customer onboarding. Lenders can automate credit decisioning by accessing verified data, speeding up approvals and reducing manual paperwork. Regulators can monitor systemic risks more effectively when data flows are standardised and transparent.

Several African countries have initiated open finance or open banking frameworks. Nigeria launched an open banking regulation in 2023, spearheaded by the Central Bank of Nigeria and the Open Banking Nigeria initiative. The regulation defines API standards, data categories and governance structures. It covers deposit-taking banks, payment service providers, and FinTechs. South Africa has an industry‑led open banking project called SAFICA (South African Financial Information Exchange), which is developing API standards and exploring regulatory support. Kenya, through the National Payments Strategy (2022–2025), has signalled plans to support open APIs and data sharing, although specific regulations are forthcoming.

These initiatives face challenges. Many banks and mobile network operators are reluctant to open their data for fear of losing a competitive advantage. Smaller fintechs may lack the resources to adopt API standards. Regulators must balance innovation with consumer protection and financial stability. Moreover, open finance must align with data protection laws to ensure customer privacy. Without clear rules on consent, data storage and liability, data sharing can expose customers to fraud and misuse.

Open finance introduces new risks. Cybersecurity is paramount: APIs expand the attack surface, and a breach at one provider could expose data across the ecosystem. Providers must implement strong encryption, multi‑factor authentication and continuous monitoring. Data misuse is another concern. If customers’ financial histories, location data or social connections are shared without adequate safeguards, they could be targeted by predatory lenders or scams. Regulators should require data minimisation, sharing only what is necessary for the service, and limit how long data can be stored.

Market concentration is a risk when large technology firms with vast data reserves dominate the ecosystem. Interoperability rules should encourage reciprocity: any provider accessing others’ data must also make its own data accessible. Competition regulators should monitor anti‑competitive behaviours and prevent data monopolies. Another challenge is digital literacy. Customers must understand consent flows, the implications of sharing data and how to revoke access. Public awareness campaigns and consumer protection hotlines can help.

While most open finance initiatives in Africa are in early stages, pilot projects offer insights:

1. Ghana’s Universal QR Code. The Ghana Interbank Payment and Settlement Systems (GhIPSS) rolled out a universal QR code that allows merchants to accept payments from any bank or mobile money account. Though not strictly open finance, this interoperability demonstrates the benefits of shared infrastructure for merchant payments. Banks reported increased transaction volumes and reduced cash handling costs.
2. India’s Account Aggregator model (relevant for Africa). India’s Account Aggregator framework allows consumers to share financial data across banks, insurers, pensions and tax authorities through licensed data brokers called account aggregators. Early results show improved credit access for self‑employed individuals. African policymakers are studying this model as a blueprint, adapting it to include mobile money and agriculture data.
3. Kenya’s M‑Akiba Bond. The Kenyan government issued a retail bond accessible via mobile money, enabling small investors to purchase government securities. This initiative relied on integrating Kenya’s mobile money infrastructure with the capital markets system. In an open finance environment, citizens could share their investment history to access other financial products more easily.

Implementing open finance in Africa will require coordinated action:

1. Harmonise regulations. Regional bodies like COMESA, EAC and ECOWAS can lead efforts to develop common open finance standards, data protection rules and supervisory frameworks. This would facilitate cross‑border services and reduce regulatory fragmentation.
2. Invest in digital public infrastructure. Governments should prioritise digital ID systems, interoperable payment rails, reliable internet and cyber‑resilient cloud services. Development institutions and investors can fund these backbone systems.
3. Develop inclusive data policies. Data governance must consider informal and rural users. For example, identity verification should work with community IDs or phone‑based KYC where national IDs are lacking. Regulatory sandboxes can test inclusive models before scaling.
4. Encourage industry collaboration. Financial institutions, fintechs and telecoms should collaborate on API standards, consent frameworks and liability allocation. Industry associations can develop voluntary codes of conduct while regulators formalise them.
5. Educate consumers. Public information campaigns should explain the benefits and risks of open finance, how to manage consent, and how to recognise scams. Civil society groups can advocate for consumer rights.

Open finance could transform Africa’s financial landscape by democratising access to data and enabling new services. It could reduce the cost of credit, encourage savings, expand insurance coverage and integrate agricultural value chains. The benefits are particularly important for small businesses, women and rural communities who are currently excluded from formal finance. However, without proper governance, open finance could deepen inequalities, expose customers to exploitation and concentrate power in a few firms. Policymakers must therefore design frameworks that are pro‑competition, privacy‑preserving and inclusive.

Open finance is not a silver bullet, but it is a powerful tool for inclusive growth. By empowering individuals to control and share their data, open finance can unlock innovation and competition across Africa. The next decade will determine whether the continent harnesses open finance to build resilient economies or falls into digital colonialism and data monopolies. Success will depend on visionary leadership, collaboration across sectors and a commitment to protecting consumers. With the right policies and investments, Africa can pioneer open finance models that respect privacy, empower consumers and drive sustainable development.