At the end of November 2024, Cenfri had the opportunity to participate in the BIS Workshop on fostering financial inclusion through open finance in Basel. The event was jointly organised by the Financial Stability Institute (FSI) of the Bank for International Settlements (BIS), CGAP, and the World Bank. It brought together representatives from over 50 countries at different stages of open finance adoption – ranging from initial explorations to full-scale implementation.

A major takeaway from the workshop is that the implementation of open finance across much of the world is increasingly inevitable – it’s no longer a question of if, but when. Despite this, even the earliest adopters are still actively refining, redesigning and recalibrating their approaches to create effective incentives and rules that ensure positive outcomes for business, consumers and market stability.

No African country has established a fully operational framework for open banking or open finance yet. Progress has so far been mostly limited to initial exploratory studies, reflecting a cautious but deliberate approach by regulators.

However, as momentum grows with the proliferation of open finance implementation across the world, the pressure on less developed countries to adopt open finance is growing from multiple quarters:

• Donors and development partners: These stakeholders are encouraging countries to accelerate financial inclusion and innovation through open finance.
• Peer influence: Countries are motivated to align with regional and global peers to remain competitive and take advantage of the benefits open finance can offer.
• Market dynamics: Fintechs and investors are drawn to jurisdictions with more advanced open finance frameworks, prompting regulators to consider how to keep their markets attractive.

This increasing pressure raises the stakes for African decision-makers, who will need to proactively equip themselves to make informed decisions on what would be appropriate and effective within their context. Poorly planned, rushed, or copy-pasted approaches from other countries—despite their success in different contexts—could result in regulatory gaps, fragmented systems, and challenges with financial inclusion. This is particularly critical for developing countries, which often contend with large digital divides. Delays in adopting open finance may also leave some countries struggling to attract investment and realise the full potential of these frameworks. This requires them to

1. Assess and understand the readiness and realities of their existing markets to ensure that any intervention is appropriately tailored, and
2. Actively learn from other countries that have already taken steps towards implementation.

Assessing readiness

A number of African regulators spoke about their approaches to understanding their own market readiness:

Morocco: In 2023, a market readiness survey was conducted to evaluate the feasibility of an open banking framework. The survey gathered insights on key topics, including potential benefits, information-sharing mechanisms, and capacity development needs.

Zambia: A feasibility study completed in early 2024 identified key opportunities, enablers, and challenges for implementing open finance in the country.

South Africa: Despite several publications on open finance over the past few years, no regulations have been implemented yet. However, South Africa is taking steps toward progress, with a cost-benefit analysis planned for early next year to lay the groundwork for future implementation.

Within the last 18 months, we have supported both the National Bank of Rwanda and the Bank of Zambia to similarly understand their market readiness (Khan et al., 2024)].

Lessons learnt from early adopters

Reflections from those countries already implementing open finance highlight that there are no model answers for open finance implementation. At least not yet. Some of the key areas that many countries are grappling with include:

Pricing models. For open finance to succeed, it requires high-quality data and user-friendly interfaces that facilitate consumer interaction with the ecosystem. These features demand investment from providers, which means appropriate incentives for active participation must be in place. Pricing models are an obvious incentive, but setting the wrong price point can impact both provider participation and consumer adoption.

Initially, Brazil considered implementing a pricing mechanism but decided against it, recognising that the largest data transmitters are also the largest data recipients, which offsets the need for fees. India, in contrast, initially disallowed data holders from charging fees but has since introduced a pricing structure permitting data holders to charge data users for access.

Governance models. Governance structures in open finance are shaped by the specific policy objectives a country seeks to achieve and the existing regulatory and policy structures. Regulators and policymakers play an important role in ensuring oversight and alignment with these goals, while private-sector involvement is essential to foster innovation and ensure operational success. However, incorporating non-traditional players, such as fintechs and third-party providers, can introduce supervisory challenges. Similarly, effectively integrating consumer and civil society in a meaningful way requires careful consideration. A poorly designed governance structure can hinder implementation and stall progress.

Brazil is refining its open finance governance framework to address representational and operational challenges. The new structure is built around three key principles: improving representativeness, achieving a better balance between voting power and funding contributions, and preventing any single participant from holding disproportionate influence. In the UK, consumer and civil society representation were key stakeholders during the initial design phase, however, their ongoing role, voice and funding remain open questions. In the EU, the European Commission, through the proposed Financial Data Access (FiDA) regulation, is developing a governance approach based on financial data-sharing schemes.

Liability and fraud. In traditional banking, consumers primarily interact with a limited number of well-established institutions, which reduces the likelihood of oversharing sensitive information. Open finance, however, broadens the ecosystem to include numerous new platforms and third-party providers. As consumers engage with these platforms, they are often required to share personal and financial data repeatedly. This frequent sharing increases the risk of individuals unintentionally oversharing or not fully scrutinising where and how their information is being used. Coupled with limited familiarity with the open finance ecosystem, this creates heightened vulnerabilities for consumers.

A key challenge in this expanded ecosystem is determining accountability when issues arise – whether with banks, third-party providers, or even the consumers themselves. Resolving disputes and clarifying liability remain significant hurdles, as frameworks for these responsibilities are still evolving.

The UK Financial Conduct Authority (FCA) now requires firms to reimburse consumers who are victims of scams. Previously, providers had less financial incentive to implement comprehensive safeguards, as they only bore liability where they were themselves at fault. Now, with the responsibility further shifted to firms, there is a stronger push to reduce scams and fraud. However, it also raises concerns about de-risking, particularly if applied in developing countries. If replicated, this model could unintentionally limit access for low-income consumers, as providers might perceive them as higher-risk and avoid serving them altogether.

It is clear that there is a lot of momentum globally towards open finance. This offers major opportunities across countries to improve competition, value to consumers and financial inclusion. However, not all countries have the existing infrastructure, skills, and market context for these potential benefits to manifest. For African decision-makers, the focus must be on making well-informed, evidence-based decisions rooted in local context while drawing on global lessons. It is equally crucial that African regulators and policymakers resist global pressures to implement open finance solely because it is a global trend. Doing so risks, at best, a lost opportunity to achieve some of their national goals through open finance and, at worst, creating fragmented systems that undermine financial inclusion and consumer protection.