Although open banking is in the early stages of development in South Africa, it has the power to revolutionise the country’s financial services industry and create unprecedented opportunities for digital innovation.
That’s because it facilitates the seamless exchange of consumer permissioned financial data between regulated third-party financial service providers (TPPs) and banks and non-bank financial institutions through open APIs.
South Africa is the ideal environment for open banking [link to new Yodlee open banking 101 blog article], as it’s an economic powerhouse. Yet many South Africans require greater access to financial services1, and more than 90% of payment transactions are with cash.2
Even though cash is king, World Bank data indicates that 72 percent of South Africans are digitally active. Reaching these consumers through open banking channels has the potential to improve financial inclusion, facilitate access to credit, and increase consumer access to innovative financial products and services.
Among other opportunities, open banking data-sharing can:
Facilitate industry collaboration: Open banking partnerships between banks, FinTechs, telcos, insurers, and retailers can empower the creation and delivery of a broader range of products and services that can extend market reach, lower costs for businesses, support financial wellness, and increase consumer choice.3
Drive financial inclusion: By facilitating access to alternative credit data, open banking can enable financial service providers to better understand their consumers’ creditworthiness and empower customers with limited or non-existent credit history to benefit from responsible credit, access to credit cards, micro-insurance, and other services previously out of reach.
Create more personalised experiences: By leveraging transactional financial data and insights, FinTechs, banks and other financial institutions can better understand their customers’ financial needs, journeys and deliver the value-added products, services, and experiences their customers require.
Leverage the Open Banking Opportunity with Envestnet | Yodlee
As a global open banking leader, recognised in the Forrester Wave™: Open Banking Intermediaries, Q1 2023 report, Envestnet | Yodlee is ready to help you connect to consumer-permissioned data in South Africa and around the world. Our data aggregation API and other open banking solutions can help you uncover and act on growth opportunities by connecting vast, enriched data sets, surfacing actionable insights, and powering dynamic customer experiences.
With South Africa starting to embrace open banking initiatives, new possibilities for collaboration and financial innovation are beginning to emerge. With the right data connections and partnerships, you can position yourself at the forefront of this financial technology revolution. Reach out to us to learn how.
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