4 ways apis can change the face of africas
4 ways apis can change the face of africas

4 Ways APIs Can Change the Face of Africa’s Banking Sector


In recent times, Africa’s banking sector has been on the verge of increasing and putting all deliberate efforts into business growth and customer retention through collaboration with Fin-Tech organizations and shifting more attention to the use of technology in connecting with their partners and customers. Most African banks face the challenge of increasing customer expectations, unexpected digital disruption, and competing with new contenders — all these challenges and much more combined, exert pressure on banks to constantly innovate for the delivery of exceptional services in order not to lose to other fast-rising competitors. Financial institutions have been forced to evolve under a new era of transparency in the last decade, at least from a regulatory perspective, banks have been encouraged to be more transparent and take certain steps to ensure that consumer protection is maintained in the face of all business activities being conducted so they can lay the groundwork for future success. A major technology force to drive the success of transparency is application programming interfaces (APIs).

What are APIs?

APIs (application programming interfaces) are in their simplest form communication tools for software applications. APIs allow one computer program to communicate with another computer program to consume data, perform actions, or both. APIs typically decrease the complication of getting access to technology systems and automate the interaction between systems in seamless ways for companies and for individual end-users.

In a banking context, this interfacing enables a third-party application to access a bank’s common tools, services, and valuable assets, such as financial information, customer accounts, and product catalogs.

How do APIs help Banking Sectors/How Can APIs help Banking Sectors in Africa?

APIs have numerous benefits for the banking sector, especially in African countries. one of the biggest challenges FinTechs and banks are confronted with is getting innovative applications to market. This can be solved with the dominance of open development platforms precisely for the financial sector.

Rudy Kawmi, head of Retail Banking Sales across Africa at Finastra, asserted that “while African Fin-Techs are proliferating and banks are keen to innovate, there have been challenges in the way of getting great new innovations to market quickly and securely. For banks, it can be equally challenging to innovate within the confines of stringent controls. To overcome these challenges, the world is starting to move towards a collaborative approach to digital innovation in banking through the introduction and use of APIs”.

Let us consider some ways in which APIs can benefit the banking sector in Africa:

1. Aids Flexibility

With API banking, banks and innovators have more flexibility to provide the best attributes and services to streamline financial services, thereby creating a flow of competition and innovation in fintech products. With real-time capabilities, innovators can get enhanced visibility of cash flow, cash position, and more, across currencies. Administrative hurdles can also be reduced with regard to managing finances like applying for a business loan, checking creditworthiness, and more. It enables customers to have a single view of all their finances while being able to control, track, and examine all financial movements, all in one place

Inherently, it all boils down to banks having a choice — they can maintain the monolithic model with one-off APIs that meet a specific customer or regulatory requirement or build a new banking platform that supports future conformity, scalability, and adaptability to innovate.

2. Drives Transparency

With authorities taking unprecedented steps to ensure consumer protection is maintained in the face of business activity, banks are to ensure transparency in their dealings with customers. This may require big banks to share their customer data with third parties.

Open banking is a banking practice that provides third-party financial service providers with open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of APIs.

3. Facilitates Networking

It facilitates the networking of accounts and data across institutions for use by consumers, financial establishments and third-party service providers. It is recognized to be a major source of innovation that is assured to reshape the face of banking.

Traditionally APIs would be referred to as technical interfaces for software programs; however, today they have become increasingly sophisticated, representing integral components of the Internet of things, whereby smart devices utilize APIs to deliver solutions to customers.

For example, a smartphone might be used to pay for an item in a shop, with the device then sending data via an API call to update the customer’s bank account balance after payment. As such, APIs make communication between relevant parties more convenient and efficient

4. Quick and Convenience.

APIs make it quick, convenient, and cost-effective for the bank and the third party to connect. By facilitating access to valuable shared customer data, clients can have a clearly better overall experience when conducting their financial affairs.

For example, an API can be used to analyze customer-transaction data and extract which available financial offerings are most suitable to which customer, such as a lower-interest credit card, specific loan product, or higher-interest savings account — translating into the bank being empowered to offer a more personalized service conveniently.

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