The Era of Technology and Transformations in the Banking Sector
Under the influence of technology, the banking sector is undergoing revolutionary and continuous transformations that affect the entire financial and economic system. These changes compel industry professionals to stay updated to remain operational and meet market demands. One of the significant ongoing innovations is Open Banking.
What is Open Banking?
Open Banking is a fully digital and intermediary-free banking system. It introduces a collaborative economy that allows everyone to participate in financial services without necessarily being a financial institution. This concept is implemented through interconnected digital channels, particularly Open APIs (open programming interfaces).
These APIs enable developers to create digital solutions around banks and microfinance institutions (MFIs), allowing clients to make their banking data public, which becomes their exclusive property rather than the bank’s. This data sharing with third parties fosters the creation of increasingly innovative services.
Concrete Examples of Applications
With Open Banking, project owners can, for example, avoid high-interest rates of traditional loans by turning to individuals who are clients of financial institutions. These individuals can offer loans at more competitive rates based on the public data available.
Current applications of Open Banking include:
- Crowdfunding
- Crowdlending
- Crowdsourcing
Global Adoption and Rise in Africa
Open Banking was launched in the UK in 2016 and emerged in Europe and the USA in 2018. Latin America, Asia, and Australia are also following the trend. In Africa, Nigeria is the frontrunner. In Central Africa, financial and monetary authorities are working intensively to establish an adequate regulatory framework for this innovation.
An Opportunity for Development for Financial Institutions
Financial institutions in the CEMAC zone have much to gain by viewing this technological revolution not as a threat but as an opportunity for development through digital transformation. The financial inclusion promoted by Open Banking will allow banks and MFIs that embrace this innovation to see a significant increase in their added value thanks to the digital products and services developed around their Open APIs.
Challenges for the Cameroonian Context
For Cameroon, the main challenges are security, regulation, and trust (integration into the financial culture). Authorities encourage Fintech companies to propose suitable solutions so that regulation can follow.
Conclusion
Open Banking is an imminent and unavoidable evolution that will profoundly transform the banking sector. It is crucial to prepare and anticipate this revolution to make the most of it. For financial institutions in the CEMAC zone, this represents a unique opportunity to develop and thrive in an increasingly digital environment.