By
Abiodun Ayobami
Picture this: A small-scale farmer in rural Nigeria, previously cut off from formal financial services, now able to access loans, make payments, and manage her finances through her basic smartphone. That’s the power of open banking in action.
Open banking is like giving people the keys to their financial data. It allows third-party providers to access financial information from banks and financial institutions through APIs. In emerging markets, where traditional banking infrastructure is often lacking, this is revolutionary.
Let’s look at some numbers. According to the World Bank (2021), about 1.7 billion adults globally remain unbanked. But here’s the kicker – two-thirds of them own a mobile phone. Open banking is bridging this gap. In Kenya, for instance, the adoption of open banking APIs has led to a 20% increase in financial inclusion in just two years (Central Bank of Kenya, 2023).
But it’s not just about access; it’s about empowerment. Open banking allows for more personalized financial products. In India, fintech companies leveraging open banking have reduced loan approval times from weeks to minutes, increasing access to credit for small businesses by 35% (McKinsey & Company, 2022).
The operational efficiency is mind-blowing too. Banks adopting open banking technologies have seen a 30% reduction in customer onboarding costs and a 50% increase in customer retention rates (Accenture, 2023). That’s a win-win for both financial institutions and customers.
However, it’s not all smooth sailing. Data security and privacy concerns are real, especially in markets with evolving regulatory frameworks. But the potential benefits far outweigh the risks. With proper safeguards, open banking can be the key to unlocking financial inclusion at scale. In my years working with fintech startups, I’ve seen how open banking can transform lives. It’s not just about technology; it’s about giving people the tools to take control of their financial futures. And in emerging markets, that’s nothing short of revolutionary
