Grace Ashiru
As the program prepares for the next generation of African investors, it stays dedicated to empowering diverse talent and fostering an environment that reflects the continent’s strong entrepreneurial spirit.
South Africa has been paying close attention to international trends and is now ready to accept this game-changing idea, as local businesses and consumers realize that open banking has the potential to make transactions efficient and faster.
Shanaaz Trethewey, COO of Comcorp South Africa and a leading software innovator and specialist in authentication technology solutions, notes that “South Africa has laws of a global standard, and our financial institutions have very stringent compliance requirements with our verification processes being of a world-class standard.”
“As we add automated solutions to meet these standards, the permission-based sharing models, comparable to some open banking principles, provide us with the best opportunity to obtain authentic supporting documents.
We can see this all around us, whether it’s in how people give permission for credit checks or how they pay for things when they shop online. As a business and a group of consumers, we need to think outside the box to make the most of how we do business.
Open Banking allows banks, financial institutions, and third-party providers to share data safely. This removes the need for manual document presentation, which saves a lot of time and effort on compliance and verification. The idea was first presented in the UK in 2018. Since then, it has been used in many countries worldwide, which led South Africa to look into how it could be used there.
Permission-based data sharing makes it easier to evaluate and verify the information. Still, open banking goes a step further by focusing on the person and what data they own. This is done by putting all the needed information on a different platform to share securely with various businesses and third-party service providers when they ask for it.
The main goal of open banking is to give people more power by giving them more control over their financial information and access to more financial services. It also wants to make the financial market more open and competitive so consumers can easily use the wide range of products and services.
As interest rates go up and inflation increases, it gets harder for customers and lenders to get what they need. Lenders must be more careful with their risk assessments to keep up with the loan demand.
It’s important to know how and what you have to spend money on and how much you make. The scope of a consumer’s risk assessment is constantly growing, which causes businesses to add more layers of compliance and consumers to question the need for repeated document production.
“The scope of a consumer’s risk assessment is always growing. We see this when businesses add another layer of compliance or a customer asks, “Why do we have to show the document again?” Trethewey goes on.
“A unified view is the answer, and the answer is to unpack open banking as an industry. This is true for how businesses buy things in groups and how people work in our digital world.”
The answer is to look at things as a whole and support open banking as a business. This method can change how businesses buy in bulk and help people work better in today’s digital world.
South Africa already has the rules, knowledge, and technology needed for open banking. All that’s left is for businesses to come together as a community and fully embrace open banking, which supports transparency, makes business processes easier, and gives consumers more choices.
The country’s strong legal system, strict requirements for compliance, and modern technological infrastructure also make it a good place for open banking. Trethewey says that the puzzle is already put together. What’s left is for companies, banks, and customers to work together and fully accept open banking.
South Africa already has a lot of rules in place, as well as a lot of information and technology that can be used. She says, “All that’s left is for businesses to come together as a group and support Open Banking for its ability to increase transparency, make business processes easier, and give consumers more choices.”
Open banking fosters the creation of innovative and customized financial goods and services, enhancing the overall user experience. It reduces customer expenses and promotes financial inclusion by extending access to financial assistance to those previously overlooked by conventional banking systems. Most significantly, it boosts competition by inviting non-banking participants into the ecosystem.
Open banking possesses the capacity to revolutionize South Africa’s financial services industry. It can equip banks with new income avenues through partnerships with fintech firms while reducing customer acquisition costs.
It can also bolster the value proposition of fintech companies by empowering them to construct innovative business models, experiences, products, and services and offer customers more personalized and value-driven services.
Moreover, open banking can enhance the security and dependability of financial transactions by offering a secure and standardized method for customers to share and retrieve their financial data. In sum, open banking holds the potential to confer advantages on all participants in the ecosystem.
