Open Finance can be defined as the sharing of consumer data between financial service providers (FSPs) and/or third-party providers on the basis of consumer consent.

Improved use of data and effective data sharing can support a better functioning market by facilitating greater competition and enabling innovation within the financial sector. This in turn, strengthens the business case and ability for FSPs (including fintech players) to tailor products and reach underserved populations – both individuals and micro, small and medium sized enterprises (MSMEs) – with better designed financial services that improve their resilience to shocks, productivity and inclusion in the formalised economy.

Collation of industry-wide data and accompanying access, also offers the potential for public sector decision-makers to use it to inform decisions. Financial regulators could use better data to more proactively and accurately identify potential risks or consumer abuses, as well as the impact of systemic shocks on both providers and their consumers. Policymakers could improve their ability to make new policy that contributes towards positive societal outcomes or evaluate existing policy by examining industry-wide transaction-level data on all formal financial flows throughout the economy.

However, whilst the promise of Open Finance and data sharing is significant in principle, in practice, the implementation of data-sharing approaches that are not fit for the local contextual realities in under-developed markets can introduce extensive risks, both systemic and for individual consumers. These include increased cyber risk, potential data theft and the possibility of increasing the operational cost for providers without realising the benefits. For individuals, and particularly vulnerable groups, this can translate into the direct risk of theft of both their data and savings, whilst the increased costs may be passed down to them from FSPs, exacerbating, rather than ameliorating, exclusion from the formal financial sector.

In 2023, Cenfri and Smart Africa, supported by the Hewlett Foundation, initiated a two-year study to conduct Open Finance market assessments and feasibility studies in Rwanda and Zambia.  The goal of this project is to assess the feasibility, and design for the inclusive implementation, of Open Finance within African markets. The aim is to positively contribute to societal outcomes by enhancing the use of data to improve financial sector innovation and competition, and by improving public sector decision-making. 

We successfully completed our study in Rwanda at the end of 2023, culminating in a tailored multi-year implementation plan. This achievement was realised in partnership with the National Bank of Rwanda and through detailed consultations with key industry stakeholders. At the same time, we launched the study’s Zambian phase with the Bank of Zambia in the last quarter of the year, anticipating completion by mid-2024. The goal is to build on the lessons from these focus countries to inform pan-African guidance on Open Finance. 

During our first webinar in our series on Open Finance, titled ‘Open Finance: Emerging evidence from Africa‘, we shared early lessons identified through our ongoing research. The webinar went beyond the basics of Open Finance, by presenting the approach used for conducting an initial high-level feasibility assessment, with insights from the focus countries. We introduced the key elements for an effective Open Finance framework based on our analysis of global implementation methods, setting the stage for future planned webinars. The event concluded with a panel discussion with distinguished guests from both the private and public sectors, who offered perspectives into the motivations for Open Finance and data sharing and some of the challenges encountered by each sector. 

Click here to watch the webinar recording.

Read insights from our webinar on ‘Emerging evidence for Open Finance in Africa’ (February 2024): 

Read our focus note:

Read our initial exploration into open finance:

Read insights from our Rwanda Validation Workshop (August 2023):

If you are interested in learning more about this project or in collaborating with us, please email Jeremy Gray (jeremy@cenfri.org).